UK Export Finance Joins Forces to Drive Towards Carbon Neutrality

The UK Export Finance (UKEF) has taken a significant stride in contributing to the global effort to achieve net-zero emissions by 2050. UKEF, in collaboration with other export credit agencies (ECAs), has become a founding member of a new international alliance aimed at promoting and supporting carbon neutrality within export finance.

This momentous announcement was made at COP28, where UKEF unveiled its participation in the ‘Net Zero Export Credit Agencies Alliance.’ Convened by the UN and supported by the UN’s Environment Programme Finance Initiative, this partnership seeks to drive greater action from export credit agencies and EXIM banks worldwide in working towards achieving net-zero emissions by the mid-century mark. Furthermore, the alliance will collaborate with the Glasgow Financial Alliance for Net Zero, thus amplifying its impact.

Presently, the alliance consists of UKEF, Export and Investment Fund of Denmark (EIFO), Export Development Canada (EDC), and the Swedish National Export Credits Guarantee Board and Swedish Export Credit Corporation (EKN and SEK) as full members, with ECAs from the UAE, Kazakhstan, and Spain joining as affiliates.

Aligned with its commitment to achieving net-zero financed emissions by 2050, UKEF ceased its support for overseas fossil-fuel projects in 2021, except in very limited circumstances. It is expected that other members of the alliance will similarly pledge to achieve net-zero in their portfolios and operations by the target year.

Tim Reid, the CEO of UK Export Finance, emphasized the critical role played by export credit agencies in facilitating the transition towards net-zero and promoting finance for climate-friendly projects and investments. He anticipates a fruitful collaboration with UKEF’s international counterparts in driving this shared mission forward.

This partnership announcement follows recent changes to the OECD Arrangement, which now allows export credit agencies to provide greater incentives for climate-friendly transactions. According to Eric Usher, Head of UNEP FI, ECAs are well-positioned to facilitate more sustainable global trade and play an essential role in supporting the real economy transition, thereby aiding countries in fulfilling their commitments under the Paris Agreement.

Moreover, UKEF has made significant advancements in securing multimillion-pound financing for transactions that support climate adaptation and sustainability in Africa and the Middle East. For example, the ECA has announced its involvement in securing £226 million in financing for the Iraqi government to develop essential infrastructure, including drainage systems and sewage treatment stations near Hillah city, benefiting thousands of households with access to clean water.

In light of these developments, it is evident that UKEF is spearheading commendable efforts in driving forward the global agenda for achieving carbon neutrality and promoting sustainable initiatives. The alliance formed with other ECAs underscores the commitment of these agencies towards a more environmentally responsible future.