The Social Market Foundation (SMF) said its sustainability bond plan would give ministers more incentive to meet their carbon footprint targets and help boost the UK’s prospects of becoming a global financial hub for green finances. A report released by thinktank on Tuesday called on the chancellor to follow the example of Chile, the first country to link borrowing costs to its public debt in the face of global warming. Scott Corfe, director of research at SMF, said: “Financial services will be the key to zero net supply and green financing could be one of Britain’s big financial success stories by 2020. Already, 200,000 Financial services workers are in green jobs – a number that will undoubtedly increase in the coming years. “The government needs to work with the financial services industry to make Britain the leading funding hub for sustainability. As an example, the chancellor will have to issue a new generation of sustainability-linked government bonds, linking interest payments to the country’s net zero targets. “Not only would this support green financial services, but the prospect of financial sanctions for the loss of net zero targets would strengthen the government’s commitment to carbon emissions.” Corfe said Sunak would have to start small to test investor interest, but added that the Chilean example suggests that demand will be high. In March, Chile issued a $ 2 billion (1, 1.6 billion) bond related to sustainability, which was overpaid four times. Returns to investors depend on meeting its commitments on climate change, including that it emits no more than 95 metric tons of carbon dioxide or equivalent by 2030, and renewables account for up to 60% of electricity generation 2032. If Chile does not achieve a goal, it carries a fine. Sunak wants London to become a center of green economics and last year announced a plan to use green bond revenues for environmental projects. The Treasury Department says two bond issues had already raised 16 16 billion, but it should be certain that new forms of financing will lead to strong, sustained demand and value for taxpayers. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk “The United Kingdom is a world leader in green finance and the chancellor has set a clear path for Cop26 to make the United Kingdom the first clean zero financial center in the world,” said a spokesman for the finance ministry. SMF said the issuance of a sustainability bond would show that the government is “fully committed” to getting rid of carbon emissions. The threat of financial sanctions for excessive promises and promises could prove to be “a powerful way to keep the government true to its word for zero”. The interest rate or coupon of a typical government bond is set when it is auctioned to investors, with the rates of the indexed bonds adjusted according to inflation.
