U.K. Plans Its First Green Bonds in Financial Services Overhaul
Sunak to Lay Out Post-Brexit Financial Services Plan
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak is planning to issue the U.K.’s first green gilts as part of efforts to boost the country’s status as a global financial center and a leader in carbon reduction after Brexit.
The bonds plan is part of the government’s efforts to burnish the U.K.’s green credentials as the country gears up to host a major set of United Nations climate change talks next year, according to a person familiar with the plan, who spoke on the condition of anonymity. The Treasury declined to comment.
Sunak is due to address the House of Commons on Monday, delivering his first major statement on financial services since becoming Chancellor in February, setting out a broader vision for the industry after Brexit.
That includes the country’s approach to the equivalence process governing cross-border financial cooperation with the European Union once it exits the Brexit transition period at the end of the year. The U.K.’s “attractiveness as a global financial center is underpinned by openness to international markets and robust regulatory standards,” the Treasury said.
Sunak’s speech comes before the House of Commons debates the government’s Financial Services Bill later in the day. The legislation aims to shape the new post-Brexit regulatory framework. It includes measures to update the regulatory regime to implement Basel III standards, and to ease the transition for banks to stop using the scandal-plagued Libor benchmark.
Green Finance
Sunak is also due to say how the U.K. aims to extend its leadership in green finance, with proposals to “accelerate the drive for net zero” ahead of United Nations climate talks that Britain will host in Glasgow, Scotland, at the end of 2021.
The Financial Conduct Authority, the country’s financial watchdog, has already said on Monday that it will introduce new rules requiring the majority of the U.K.’s listed companies to make better disclosures about how climate change affects their business.
The regulation will cover firms making up two-thirds of the market value of U.K.-listed equities, the regulator’s Chief Executive Officr Nikhil Rathi said at a conference Monday. Initially, firms will need to comply with the requirements or explain why they cannot. The FCA will consider making the rules mandatory in the future.
The chancellor may also announce other plans to boost the U.K.’s appeal to investors and foreign companies and compete with New York as a global financial center, according to people familiar with the matter, who asked not to be named discussing private information.
Government and London Stock Exchange Group Plc officials have held consultations with London representatives in recent weeks on how to increase the appeal of LSE as a listing venue relative to its U.S. and European rivals, according to some of the people. Key issues raised include the minimum free float requirement, which may discourage large companies from choosing London as their primary venue, they said. Another point of discussion was dual class shares, which are allowed on the Nasdaq, the people said.
Sunak may detail the government’s approach to a temporary permissions regime that will seek to avoid regulatory tit-for-tat with Europe and instead maintain the U.K. as an open regime, one of the people said.
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