1. Create positive, enabling conditions for decarbonising investment opportunities

Actions taken by policymakers now, including addressing systemic investment barriers to the growth of the low-carbon economy (e.g. planning rules, grid connectivity, and energy market reform), will determine how much global investment the UK is able to capitalise on domestically. UKSIF’s 2024 ‘Financing the Future’ thought leadership report series outlined concrete recommendations to government on behalf of investors aimed at tackling each of these systemic barriers. Redressing skills gaps in strategic growth areas will also allow the UK to attract greater green investment and capitalise on the full benefits of our climate leadership through long-term job creation and economic growth.

2. Industrial decarbonisation strategies

Long term sector decarbonisation strategies can provide welcome clarity and certainty for investors on a sector’s direction of travel. This will allow the UK government to support specific sectors and foster supply chains in those areas in which the UK can excel, increasing our competitiveness at home and in global markets. The government should deliver on its commitment to publish an ambitious long-term decarbonisation plan for freight, with a focus on HGVs and larger vehicles. This would deliver certainty and unlock more investment in the production of alternative fuels. Across the board, we continue to strongly support granular decarbonisation pathways for individual sectors, as recommended by the independent Transition Finance Market Review (TFMR), including for those sectors where policy certainty may be particularly lacking.

3. A clear regulatory framework to support sustainable finance and transition finance, including robust transition planning

According to an OECD global survey, 79% of financial market participants have cited the lack of detailed information on corporate transition plans as a barrier to transition finance. At present, the continued absence of credible transition plans from many businesses makes it more complex for investors to navigate investment risks and opportunities on behalf of their clients.

As with any major economic transition, starting early and progressing steadily is typically better for extant businesses than sudden shocks and precipices. Accompanied by complementary measures such as clear sector decarbonisation pathways, mandating transition plans across the economy that are both ambitious and practical can give UK businesses a long-term horizon and direction of travel as we progress towards 2050.

4. UK leadership on investor stewardship should be further cemented and continue to evolve, including accounting for systemic stewardship approaches

Many of our members have been leading the way in company engagement, but systemic risks such as a climate change and nature loss increasingly require a broader approach. Asset owners and asset managers should look to enhance not only their corporate engagement but also their engagement with wider actors, including governments, regulators, and international standard-setting bodies (e.g. IFRS Foundation, IOSCO). This role could help to ensure a more enabling policy environment for net-zero, with consistent policy signals supporting the competitiveness of assets and holdings and the ultimate effectiveness of investor stewardship.