Baroness Northover (LD)

My Lords, in moving Amendment 34 I will speak to Amendments 55, 65 and 91. I will speak briefly. I thank noble Lords for their support and that of Peers for the Planet. There can be no doubt of the climate challenges we face after another summer of drought, wildfires and loss of life. Underlying all these amendments is concern about the vulnerability of the financial system and the huge consequences of that. We saw the results of ignoring weaknesses in the financial crash of 2008 and its aftermath. The adaptation committee of the Climate Change Committee emphasises the risks in the UK of intensifying heat, floods and wildfires. We need to ensure that these risks are addressed in the financial system. Clause 17 removes whole swathes of protection, to be replaced by as yet undefined strategies. The FCA is to be given huge new responsibilities, when we know that regulators have a poor track record in monitoring areas under their responsibility, let alone in horizon scanning for new risks. The deletion in the Bill takes out regard for climate change as well as the need to focus on sustainable growth and to be compliant with the Climate Change Act. Amendment 34 addresses climate risk. It would replace Clause 17’s amendments to the regulators’ general duties with a single new duty requiring both regulators to consider the financial stability risks associated with climate change. I am grateful to the noble Baroness, Lady Hayman, and the right reverend Prelate the Bishop of Manchester for their support. There have been extensive discussions about the sweeping away of the duties in this clause, and this amendment seeks at the very least to ensure that climate risk must be addressed. Amendment 55 would require annual reports by the FCA and the PRA to include consideration of climate-related financial stability risks. This way, we can see exactly how climate risk is being factored in. Amendment 65, which is led by the noble Baroness, Lady Hayman, seeks to enable the Government to set out how and when they intend to implement their manifesto commitment to mandate UK-regulated financial institutions to develop and implement credible transition plans. Amendment 91 is relevant to climate risk in the housing sector. It would require the Treasury to report on the case for clearer standards for mortgage products that are described as green. We need to develop measures that will drive higher environmental standards in the housing market, including ensuring that measures are taken to improve a property’s resilience to climate risk. I am encouraged by what I have heard informally about the Minister’s sympathy in relation to this group. I am led to believe that he fully gets the potential risk to the financial sector and thence to the whole of the economy and society. What is always best in this House is if people come together and find a positive way forward, where the Government see the case and help to draft suitable changes to legislation to move things forward. I hope that is what we will see here. I therefore look forward to hearing how the Minister proposes to address these risks.