Business comment: How Scotland's financial services sector can lead the green revolution
The rapid onset of the Omicron variant of coronavirus in recent weeks has certainly served as a stark reminder of the difficulty faced by many as we draw the close on another hugely challenging year.
For businesses across Scotland, this has been a period of upheaval, priorities have changed, and models adapted in the face of extreme pressure. And yet, through this unprecedented difficulty, there remains opportunity.
Glasgow had the privilege of hosting global leaders for the COP26 summit in the autumn and the sheer scale of the climate challenge we all face was laid bare. Since the conference, we have awaited as to whether two weeks of heated deliberation and discussion would be matched by the light of meaningful and long-term action from governments across the globe.
There have been some signs of intent that provide optimism. The Chancellor used his platform at COP26 to announce a series of measures that aim to reposition the UK as the world’s first net zero aligned financial centre. This was a welcome intervention and one that reflects SFE’s clear ambition to establish Scotland as a global centre of green finance as highlighted in our new strategy published earlier this year.
Scotland has a unique opportunity to be at the forefront of this ambition. Financial services and energy are the two largest sectors in Scotland by GVA, employing an estimated 375,000 people between them.
We have enviable tools across both sectors at our disposal; a world class talent pool supporting a globally recognised business environment underpinned by a pioneering entrepreneurial spirit. Added to this, we have the capability of our world class universities and colleges, and an outstanding professional services ecosystem.
These are extremely powerful ingredients for success and we must harness them all to their fullest if we are to continue to create long term sustainable growth in the low-carbon economy.
This context is particularly compelling for the north east of Scotland, which has the ability to harness 40 years’ experience of developing a world class oil and gas industry and use it to reposition itself as the net zero energy capital of Europe.
The scale of the energy transition opportunity is huge. To take just one example, the Scottish Government will announce successful bidders for Scotwind, the commercial offshore wind leasing round, in January. These will generate 11 gigawatts of power, including one gigawatt from floating wind by 2030.
Ports the length and breadth of Scotland, including Aberdeen, will have the opportunity to manufacture, fabricate and maintain the structures to support this massive undertaking which will in turn create billions of pounds investment and the creation of jobs and sustainable growth for the long term.
Of course, the acceleration of these types of developments requires the unlocking of private sector investment and the financial services industry is also at a watershed moment in terms of environmental commitments. It faces pressure from customers, shareholders, regulators and the wider public to play its role in accelerating a just transition. There is a window of opportunity to seize the initiative and SFE will enter the year with a real sense of impetus seeking to do precisely that with two initial priorities.
Firstly, we are aiming to bring leaders of both Scotland’s energy and financial services sectors for a summit in the spring. Through collaboration with the energy sector, we can act as a bridge between the wider industry and Scotland’s natural resources to identify and finance carbon-offsetting opportunities. We can align long-term capital pools with green projects to facilitate innovative investment opportunities, and we can lead the way for transparent disclosure on climate risk and aligning the data requirements and standards across the industry.
Secondly, SFE has made a proposal to the UK government to establish a Scottish-London financial services forum. This forum would have senior UK ministerial and civil servant representation reflecting the existing model of working we have with the Scottish Government through quarterly meetings of the Financial Services Advisory Board which is to be relaunched in the coming weeks.
These are important steps in our clear desire to work more closely with government in the interests of our members, the broader industry, and the communities we represent.
That is not to say we will always agree with the decisions both governments take. But, through these forums, we will create a formal and regular channel of dialogue where the views and priorities of industry and government alike can be shared, discussed and acted upon. The challenges we face are complex, and the best approach is to work together on the solutions.
At the very top of the agenda for our engagement with both governments in 2022 will be to explore ways in which Scotland’s leading role in green finance can be accelerated. Much more work is needed to ensure we intensify our efforts and continue reaching net zero targets and the next stage of our national economic development needs to be transformational, taking full advantage of our key industries, assets and natural resources.
The race to net zero has begun. SFE is determined to put Scotland at the front of the pack.
- Sandy Begbie CBE, chief executive of Scottish Financial Enterprise (SFE)
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