27 June 2022
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.
Shire Leasing worked closely with Bath and North East Somerset Council (B&NES) to develop a pioneering financing initiative that provides direct support to local businesses so they can upgrade pre-Euro 6 Diesel and Pre-Euro 4 Petrol LGVs, HGVs, buses, coaches and taxis that regularly enter the centre of Bath and have a particularly negative impact on air quality. The initiative formed the basis of a national framework that further local authorities can adopt (some of which Shire are actively engaged with), allowing businesses across the UK to benefit from a grant and/or interest free finance to help them spread the cost of acquiring low or no emission vehicles.
Julie Henehan, Corporate Development Director at Shire Leasing: “The Clean Air Zone Financial Assistance Scheme framework is already improving air quality in localised areas. Delivering finance through initiatives such as these is enabling UK SMEs to improve their environmental impact, without straining cash flow.”
Note to editors:
- The FLA’s response to the Government’s Call for Evidence can be found here
- You can read more about Shire Leasing’s finance initiative here
- In 2021, FLA members provided £132 billion of new finance to UK businesses and households. £101 billion of this was in the form of consumer credit representing over a third of total new consumer credit written in the UK in 2021. £31 billion of finance was provided to businesses and the public sector. FLA members financed more than a third of UK investment in machinery, equipment and purchased software in the UK in 2021.
- For media enquiries, please contact the FLA press office on 020 7420 9656