FLA calls for Net Zero guarantee

In response to the government’s Call for Evidence on its Green Finance Strategy, the Finance & Leasing Association (FLA) has set out the need for a Green Finance Wholesale Guarantee so that the funding of all types of greener technology is seen as an attractive and solidly investable proposition.

Lender involvement is critical to the government’s Net Zero plans as finance will be needed to put green options within customers’ reach – whether that’s vehicles, plant and machinery, home improvements or business equipment.

However, because many green goods are new to the market, pricing their lifespan, depreciation or obsolescence can be difficult, which creates elevated residual value risk. Sharing that risk with government will help to keep the price of finance manageable for businesses and individual customers.

Simon Goldie, FLA director of business finance said: “We welcome the fact that the government recognises the role of finance in achieving the Net Zero targets, but we have been very clear about the need for a Green Finance Wholesale Guarantee to share the inherent risks of transitioning to greener technology at a pace that does not allow the market to evolve naturally.

“The government’s Call for Evidence also asks how local authorities can support the mobilisation of private and public investment to key sectors and technologies. FLA members are already working with several local authorities to support the implementation of low or zero emission zones – but if government was to connect our members with all the local authorities in receipt of grants to implement these types of schemes, more could be done to help local businesses prepare.”