Anne Marie Verstraeten, BNP Paribas UK Country head reflects on how material science, clean tech, and policy will shape the sustainable finance agenda in the UK. This article was originally published on LinkedIn.
COP26 was a pivotal turning point in bringing industry leaders, policy makers, community activists and scientists together, and my experience of being at the conference is sure to shape my perspective on how we can move forward towards net zero through collaborating across a spectrum of expertise.
Every month I have been encouraged by the sustainability momentum building in finance and our clients in the UK are increasingly integrating sustainable finance into their strategy to help progress their net zero journeys, as recently demonstrated by Marks and Spencer’s progressive sustainability linked loan. Over the last year I have witnessed several new developments in the UK finance sector when it comes to sustainability, and these will inevitably mature as the transition becomes a central objective across every UK financial institution.
Material science matters
At COP26, we saw the importance of material science in addressing transition towards net zero. There were a multitude of new announcements on key areas including; a global pledge for 30% reduction in methane emissions by 2030, a halt to deforestation, calls for net zero emissions in shipping by 2050, commitments to phase down coal, pledges for the development of hydrogen and low carbon steel, in addition to agreements on EVs. Nature was also high on the agenda given the interdependence of the climate and biodiversity crises. How will this affect finance?
The industries our clients operate in are dramatically shifting to accelerate transition and address material emissions reduction across carbon, methane, sulphur and other green- house gases. In parallel, many environmental strategies aim to address nature loss and understand the interconnectivity between the biodiversity crisis and supply chains, especially in the agriculture, retail and fashion sectors. These developments leave no sector untouched. 2022 will be the defining year for embedding material science into sustainable finance, especially here in the UK where many of the world’s largest companies in oil and gas, steel, manufacturing and retail sectors operate.
This means deepening discussions across emissions scopes, understanding the value chains of our clients, materials and waste footprint, and continued innovation so that the metrics for bespoke financing address the transition trajectory in a scientific way.
Collaboration with clean tech is valuable
The role of clean tech is valuable in bridging innovation between existing industry leaders and those at the cutting edge of transition technologies. For the last two years in the UK, we have been collaborating with Tech Nation on its Net Zero programme. It is the UK’s leading growth platform for tech scale ups tackling transition, and the first government-backed programme for supporting the most promising climate tech companies for accelerating the UK’s net zero pathway. These companies are creating new solutions across energy and electricity, agriculture, buildings and cities, supply chain decarbonisation, transport, low carbon data solutions and more. BNP Paribas decided to partner with Tech Nation as many of our clients are grappling with these same challenges. By making the bridge between them and tech founders in their respective fields to create transition technologies, we aim to progress innovation and increase knowledge sharing. We also gathered these groups together at COP26, where we hosted a joint BNP Paribas Tech Nation event with Arctic Basecamp – an organisation that seeks to share scientific knowledge across stakeholder groups. In 2022 we will continue to collaborate with Tech Nation and others at the forefront of clean tech industries.
UK policy push
Policy is a driving force in the UK and will continue to shape 2022 for UK businesses and finance. At COP26 the government outlined a roadmap to scale up transition through encouraging disclosures, collaboration in taskforces and transparency on the transition towards net zero. This includes requiring asset managers, regulated asset owners and listed companies to publish transition plans by 2023. The UK was also the first G20 country to make disclosures aligned to the TCFD mandatory across the UK economy. The government also published a progressive net-zero strategy in October 2021, aimed at accelerating reduction in greenhouse gas emissions and which covers specific sector policies across power, buildings, transport, hydrogen, natural resources, waste, carbon capture and beyond.
We heard several times at COP26 that the confluence of common climate objectives is emerging across policy and business and ultimately marks a turning point in how public and private sector stakeholders are collaborating on solutions to address net zero. This was evident at the COP26 Confederation of British Industry (CBI) hustings where the importance of finance in fostering a sustainable economy, communities and markets was underlined.
Policy in co-operation with finance will undoubtedly remain an important push in the UK in 2022, as businesses navigate the net zero landscape and scale up climate action.