Green Finance Strategy of the United Kingdom

In early 2023, the UK government, in collaboration with relevant government agencies, endorsed the Green Finance Strategy for the year. This document delineates the UK’s aspiration to attain zero carbon emission compliance and aims to establish itself as the premier global financial centre in this regard. The strategy also articulates the government’s commitment to promoting the commercialization and financing of green technologies, leveraging its expertise to spearhead the global shift towards green finance, particularly in emerging markets.

Addressing the crucial role of sustainable finance in facilitating effective global action on climate change and the transition to a low-carbon economy, the strategy emphasizes the importance of ensuring financial stability and aligning financial systems with sustainable development goals. H.E. Mark Clayton, the Ambassador of the United Kingdom to Georgia, underscores the significance of collaboration between the government, private sector, and society in driving the sustainable transformation process.

Great Britain is funding a number of projects in Georgia. What are the priority areas and main target groups in our country?

Ever since Georgia’s independence, the UK has been committed to supporting Georgia’s sovereignty and territorial integrity. We are supporting Georgia’s NATO membership, and its further integration into Euro Atlantic structures. And we put this at the heart of everything we do in Georgia. Our programming work supports these broad over-arching goals, and has a particular focus on supporting the reforms necessary for these goals. For example, we are supporting a programme that will reform Georgia’s public administration system, making it more robust and effective; we fund consultation work on a new Climate law, so that Georgia can deliver on its international commitments; we are working closely with Georgian Ministry of Defence to enhance their capability and interoperability; we are funding programmes to help protect human rights, minorities,  and the LGBT+ community; and we are working closely with other partners to put together a programme to monitor next year’s elections. We also support work on cyber security, and have a programme to support an independent, pluralistic media environment and counter disinformation. On the economic front, we are funding the Investors Council to build better links between business and Government.

Investors Council is funded by the UK Government’s Good Governance Fund (GGF) through the European Bank for Reconstruction and Development (EBRD) and is supported by the Government of Georgia with the objective of supporting dialogue between the business community, international financial institutions, donors and the Government of Georgia to promote business and investment climate in Georgia. Could you please tell us more about this partnership?

The Investors Council is a great opportunity for business leaders to raise any issues or concerns directly with the Georgian Government, support consultation on how the Government can strengthen the business climate in Georgia, helping to drive investment, growth and jobs. 

The Council also plays an advocacy role in helping to promote Georgia as an attractive destination for investment.  For example, they have recently encouraged the business community in Georgia to support the development of the climate legislation, essential for Georgia’s sustainable future. Helping Georgia to flourish and prosper as part of the wider European family is a key goal for the UK. Our support for education reform and English language teaching through the British Council, as well as our funding for the Investors Council, is a key part of that.

Why development of sustainable finance is important for the country and society? And why it is important for the development of investment climate in the country?

Harnessing sustainable finance is key to supporting effective global action on climate change and to support the shift to a low-carbon economy, ensuring financial stability and aligning financial systems with broader sustainability objectives. Its development is crucial for societal and national progress, addressing environmental and social challenges, fostering equity, and ensuring economic resilience.

Earlier this year the UK Government issued the 2023 Green Finance Strategy, coordinated across Government departments and setting out: the UK’s ambition to become the first global financial centre aligned with net-zero carbon emissions; how the Government is supporting the commercialisation and financing of green technologies; and how the UK will use its expertise to lead a global shift towards green financing, especially in emerging markets.   

What is the influence of sustainable finance on market dynamics, including the rise of green bonds, ESG indices, and the evolving investor landscape?

Sustainable finance represents not simply a shift in how finance is allocated but why it is done so.  The surge in green bonds and ESG indices echoes a collective commitment to responsible investing. We see individuals and institutions aligning their financial goals with their commitment to environmental and social stewardship. The growing prominence of Environmental, Social, and Governance (ESG) considerations is steering investments toward companies who embody ethical practices in everything they do. In this evolving investor landscape, values matter as much as returns.

In order to promote the business and investment climate in Georgia, what are the challenges, and how is Great Britain supporting the Georgian society, private sector, and the government to address those challenges?

Although different in scale, the economies of Georgia and the UK have some similarities in structure: in both our countries the service sector accounts for a high proportion of GDP, while manufacturing and agriculture have a smaller share. We also share the same goal aim of attracting Foreign Direct Investment (FDI) across diverse sectors. I am pleased to say that the UK has been one of the leading sources of FDI into Georgia for many years, and there is a growing trend of companies expressing interest in investing or establishing their presence in the Georgian market. The British Embassy in Tbilisi plays an active role in fostering robust connections between the private sectors of Georgia and the United Kingdom.

In the context of sustainable finance, the UK is a Board member of the European Bank for Reconstruction and Development (EBRD), the World Bank, the International Monetary Fund (IMF) and the Asian Development Bank (ADB), all of whom are actively involved in financing economic developments in Georgia. At a government-to-government level, our Embassy regularly exchanges information with the all relevant ministries and agencies in Tbilisi, including the National Bank of Georgia.

Many countries are going to accelerate the transition to a circular economy; what Georgia has to do in order to achieve a successful transition to a circular economy? What is the role of the business in this regard?

If I consider my own country’s experience of approaching this issue, government has a crucial role to play in developing legislation and policies that incentivize the establishment of a circular economy. For example, it is for Government to establish frameworks that promote recycling, resource efficiency, and the reduction of waste. Collaboration with international partners, including countries with successful circular economy models, can provide valuable insights.

But this work is not for Governments alone – businesses have a pivotal role to play in the transition. They can adopt sustainable practices such as product life extension, recycling initiatives, and eco-friendly production processes. Furthermore, fostering innovation is key. Encouraging research and development in eco-friendly technologies and sustainable materials can have the dual benefit of contributing to a circular economy and creating business revenue and jobs. 

Why it is important to promote financial literacy and education on sustainable finance principles among both financial institutions and the general public to raise awareness and build capacity in this area? What is the role of the government, financial institutions, and development organizations to enhance access to financial education?

Promoting financial literacy is a real challenge, but in recent years we have seen a real drive from governments and financial institutions to consolidate and come up with a vision. Everyone agrees that financial literacy is an important element of the policy mix for financial stability; it can contribute to global economic growth and sustainable development and can support the achievement of broader economic and social outcomes. And while significant progress has been made and we are on the right path, many challenges remain. It is incumbent on all those you mention to play a role in developing this knowledge. I’m proud to say that the UK has played a leading role in the development of the Fintech sector in Georgia, a sector that is at the cutting edge of developing financial and other instruments, including sustainable ones. I look forward to this sector growing rapidly in Georgia in the future. And I hope the UK will continue to be at the heart of that success story.

What are your recommendations for businesses and governments in terms of sustainable finance and implementation of SDG Agenda 2030? What would you say about Georgia’s sustainable future?

The SDG Agenda 2030, as well as the Paris Agreement under the United Nations Framework on Climate Change (UNFCCC), serves as a comprehensive roadmap, fostering collaboration among governments, the private sector, and the public to achieve its ambitious targets. This collective approach recognises that sustainable transformation requires a unified effort.

Governments play a pivotal role in policy formulation and implementation, creating an enabling environment for businesses. The private sector, in turn, contributes innovation, resources, and expertise to drive sustainable practices. Engaging the public ensures widespread awareness and participation, fostering a sense of shared responsibility. Taken together, all these players can form a powerful alliance, aligning their efforts to address global challenges and build a resilient, inclusive, and sustainable future for all.