For place-based climate action to be successful, considerable flows of private and public finance will be needed, along with breakthrough innovations. Established in 2019, the PCAN Finance Platform aims to build a community of practice which helps to connect the supply and demand for finance at the local and regional levels, starting with the three Climate Commissions in Belfast, Edinburgh and Leeds.
To do this, the Platform will seek to work at three levels:
i. Mobilise finance within place: The Platform works with the Climate Commissions in the three PCAN cities, aiming to identify the scale of finance required, the potential sources of finance and innovative tools that can be used.
ii. Mobilise finance into place: The Platform works with key UK financial sector institutions, alliances and policymakers to improve the flows of capital into place-based climate action. This will build on initiatives such as the UK’s Green Finance strategy.
iii. Mobilise finance from place: Once the Platform is up and running, it will also explore how the financial community within the PCAN cities can play a catalytic role within their immediate areas and regions and potentially beyond.
To achieve these goals, the Platform will conduct research into critical challenges, identify emerging solutions, convene place-based workshops connecting key stakeholders and set out critical actions that are needed across the financial system.
The Platform is led by Nick Robins, Professor in Practice for Sustainable Finance at the LSE’s Grantham Research Institute.
Workstream: financing place-based action for the just transition
The initial focus of the Finance Platform has been to identify how finance can support a just transition at the local level. The just transition is recognised as a key dimension of a successful shift to a net zero and resilient economy. As the UK’s Committee on Climate Change, for example, has concluded that strategies are needed to ensure that the transition “is fair and is perceived to be fair” (Net Zero: The UK's Contribution to Stopping Global Warming). Questions of how the transition will affect workers and communities are top of the list of priorities in place-based action, not least how to ensure that climate action can positively contribute to reducing inequality and exclusion and leave no-one behind.
Here, the Platform has built on the pioneering research and dialogue conducted by the LSE’s Grantham Research Institute on Climate Change and the Environment, working in partnership with the University of Leeds to understand the role of the finance sector in the just transition.
- Investing in a Just Transition: More than 30 UK investors have committed to support the just transition and a Roadmap of actions was published in October 2019 with PCAN. The Roadmap was developed by the LSE and Leeds University working in partnership with the Principles for Responsible Investment (PRI) and the Trades Union Congress (TUC). It focused on how investors can respond to place-based needs in the Yorkshire and Humber region through a series of case-studies in different Barnsley, Hull, Leeds, Selby and Sheffield. The Roadmap includes key recommendations for action including shareholder engagement, capital allocation and policy reform.
- Banking on a Just Transition: Banking is the largest segment of the UK financial sector and will be critical to ensure flows of finance for place-based climate action. The Banking on a Just Transition project aims to identify how banking can support a just transition across the regions of the UK. An initial discussion paper was produced in October 2019 with PCAN. This pilot project is led by the LSE’s Grantham Research Institute, working in partnership with the University of Leeds and UK Finance.
The Platform has co-convened a number of place-based finance workshops to understand the critical needs and opportunities:
- Edinburgh: This workshop focused on how banks and investors can channel capital for climate action both in the city of Edinburgh and Scotland more broadly. Scotland has established a Just Transition Commission and Scotland’s Minister of Public Finance spoke at the event attended by leading representatives of finance, policy and civil society. (See this commentary.)
- Birmingham: Hosted at HSBC UK’s headquarters, this event focused on the particular needs of small and medium sized enterprises (SMEs) to gain access to capital to deliver a just transition. Key insights included the need to ensure that the transition is fair for entrepreneurs, particularly in black and minority ethnic communities.
- Bristol: Held with the Cabot Institute and Bristol City Council, this event highlighted the potential for green finance innovation at the local level, learning from Bristol’s City Leap process as well as leading banks and investors in the city. It also highlighted the importance of involving vulnerable communities in decisions about finance.
- Leeds: Housing is one of the key areas for climate action and this workshop hosted with the University of Leeds examined how finance can be raised to make all buildings net-zero and resilient and do this in ways that gave priority to ending fuel poverty. The workshop also highlighted the need for finance to support high social standards along the construction and building value chain.
- Cornwall: Rural areas are often marginalised in terms of finance and national climate action. This event with Cornwall County Council at the Eden Centre highlighted the need for anchor institutions such as the new South West Mutual to meet the needs of local households and businesses in the transition. (Read the press release from Cornwall Council.)
- Belfast: The Belfast Climate Commission held a first meeting to identify the role of the finance sector in ensuring a just transition in Northern Ireland at Queen’s University Belfast (QUB) on Friday 24 January. Over 40 senior stakeholders from across banking, investment, devolved and local government, academia and civil society met to discuss how a just transition can be achieved in Northern Ireland and what the role of the finance sector should be. (Read the news story.)
Further place based dialogues are planned for March 2020 in Cardiff and Manchester.
The final report of the Banking on a Just Transition pilot project will be published in July 2020
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