Illuminating Climate

Illuminating Climate

UKEF: Facing the climate challenge with sustainable finance

Chloe Evans, Project Finance Credit Risk Manager and Helen Meekings, Head of Policy and Climate Change at UK Export Finance (UKEF) outline the part the UK’s ECA is playing in the runup to COP26 and its role in meeting the country’s net zero commitments
Chloe Evans
Chloe Evans
Project Finance Credit Risk Manager, UK Export Finance (UKEF)
Helen Meekings
Helen Meekings
Head of Policy and Climate Change, UK Export Finance (UKEF)

Climate change is a global challenge. It is at the forefront of considerations internationally as economies emerge from COVID-19 and ahead of the UK’s hosting of the UN Climate Change Conference (COP26) in November 2021. In response to this challenge and to the 2015 Paris Agreement which resulted from COP21, over 40 governments have now made time-bound net zero greenhouse gas emission commitments, in legislation or policy. The UK was the first major economy to do this, passing into law a domestic requirement for net zero greenhouse gas emissions by 2050.

Business and the finance sector have a vital role to play in meeting net zero commitments. It will require a transformation of the financial system. Businesses are essential in boosting innovation and transitioning away from high carbon sectors to clean growth alternatives, providing adaptation and resilience solutions, as well as in understanding their own climate-related risks and impacts.

UK Export Finance (UKEF) supports UK exporters and suppliers with access to trade and export finance and insurance. As the UK’s export credit agency, it has an important role to play in supporting UK business and exports as the UK and global economies transition.

UKEF has increased its support to the clean growth, climate adaptation and resilience sectors, supporting global mitigation and adaptation efforts. Last year, it launched a £2 billion direct lending facility for clean growth and renewable energy projects. Eligibility for this is based upon the core indicators of the ICMA Green Bond Principles.

UKEF has also launched a Transition Export Development Guarantee this year, which is an adaptation of UKEF’s successful Export Development Guarantee (EDG) which helps UK exporters access high value loan facilities for general working capital or capital expenditure purposes. UKEF’s Transition EDG has been developed to enable UK exporting companies transition their existing fossil fuels energy business to clean energy alternatives.

The Transition EDG was developed as part of the UK government’s policy ceasing support to the fossil fuel energy sector overseas. It means whether renewable energy is already a core part of a business’ strategy, or a business is transitioning from work in the oil and gas sector, the opportunities are there and UKEF can help.

Climate change has important implications for how UKEF takes account of risks and opportunities. In July 2019, UKEF committed to making financial disclosures in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and UKEF published its first TCFD report in June this year as part of its Annual Report and Accounts for 2020-21 (available here). Work on TCFD is on-going including throughout 2020-21 as UKEF further integrates climate change considerations proportionately across all its products. UKEF also aims to publish its Climate Change Strategy in September this year.

UKEF continues to work with its ECA peers in seeking further consideration of the opportunities and risks associated with climate change, and particularly in respect of updating OECD understandings on renewable energy and coal-fired power.

Case study: FoundOcean

One business taking advantage of this shift is FoundOcean, a specialist construction company based in Livingston, Scotland. The company recently won a contract to provide the foundations for a 100-turbine offshore wind farm in Taiwan after receiving financial support from UKEF, creating 30 new jobs at the firm.

FoundOcean provides the foundation grouting to enable wind turbines to be secured to the seabed to form offshore wind farms, and the deal means the wind farm will be able to produce over 1GW of power – equivalent to 20% of the level the UK produces.

The company now has clients spanning the globe in South East Asia, Gulf of Mexico and in the Netherlands, as it anticipates that over half of its contracts will be abroad this year. In fact, 80% of FoundOcean’s businesses now come from renewable energy projects, after the firm restructured away from oil and gas. It is just one example of the potential for business growth – and jobs – that can be achieved by taking advantage of green export opportunities.

More BUlletin Publications

What's on the horizon for 2023?


What's on the horizon for 2023?

The pick of key issues to look out for in 2023 – from macro trends, potentially choppy seas for smaller ECAs,  possibilities for using Islamic finance in the renewable energy transition, China&...

Digitalisation as a business leadership imperative


Digitalisation as a business leadership imperative

Technology-driven trade and client interaction are nothing new. But increasing investment in digitalisation of fundamental business processes and decision making is driving a new way of looking at trade finance and risk underwriting. Authors highlight successes and challen...

Mobilising Africa's Potential


Mobilising Africa's Potential

Despite the challenges there are many positive opportunities emerging for Africa today

Curated by the BU Sub-Saharan Africa Working Group, authors for this special edition of the BUlletin explore areas of growth and the role of different sources of international finance tapping this

Ripples and After-effects


Ripples and After-effects

exploring the multiple secondary impacts of both the pandemic and the war in Ukraine

from sovereign risk in Africa, to energy security, political violence and the private CPRI market

Shocks and Short Circuits: The Rewiring of Global Trade


Shocks and short-circuits: The re-wiring of global trade

The bright shoots of economic growth are under threat once again
Assailed by commodity supply shocks and political instability exacerbated by the war in Ukraine
Contributors this month look at the complex impacts on trade and investment across developed and...

Diverging Risk


Some predict that 2022 may finally bring us beyond the thrall of the COVID-19 pandemic

But the events of past two years have brought significant divergence of risk across economic and geographic boundaries

Authors this month look at how this is playing out in a range of cases

New Foundations


If the global economy is truly on the road to recovery how can we build the surest path to sustainable growth in our new net-zero world?

New foundations in tech, data, and cooperative frameworks may help guide us into the next phase

In search of claims


Where is the avalanche of claims and insolvencies expected to emerge from COVID-19?
The picture so far is uneven across geographies, sectors and business lines
And for the future? Well, it depends...

Cross-roads for Africa's recovery


The economic impact of the COVID-19 pandemic on Africa has been considerable and the path of recovery depends on maintaining the support of local, regional and international stakeholders. But which approaches can best build upon the opportunities presented by growing intra-regional trade, and investment in sustainable infrastructure?

Navigating the Brave New World of Trade


With the wounds of the pandemic still under triage, a rebound in trade could the best hope for governments and businesses alike.
But trade is under immense pressure from myriad directions.
How can we maintain supply of finance, in the face of growing demand and irregular patterns of risk?

January 2020 BUlletin


Exploring the macro forces impacting trade, 2019 H1 Industry Data Snapshot + Analysis of the Economic Outlook for 2020

September 2019 BUlletin


This edition of the BUlletin juxtaposes themes of change and disorder with the celebration of a number of institutional anniversaries, symbolic of endurance.

• The new dynamics of 'trade in flux' • 100 years of UKEF • ICIEC on Partnerships for Development • Sector Spotlight: Shipping (GIEK) and Pharma (SE...

July 2019 BUlletin


Export Credit and Investment Insurance, Today and Tomorrow

We can see the seeds of the future in digitalisation, automation, applications of block-chain, or machine learning. But what will it mean in practice?

May 2019 BUlletin


Is international financing on target?

This edition of the BUlletin addresses the evolving role of various international financial institutions in generating sufficient risk capital for development projects and in particular investment in critical infrastructure and renewable energy.

Also featuring review of Bern...

2019 Spring Periodical


Spring Periodical with 2018 Year end statistics and commentary, plus results of the 2019 'State of the Industry Survey', conducted jointly with ICISA.

Berne Union Members covered a record USD 2.48 trillion of new business in 2018. At the same time, claims remained elevated at over USD 6 billion, for the forth consecutive year....

August 2018 BUlletin


Innovations in trade technology, e-commerce and insuretech | Rethinking local currency | LMA's new buyer credit facility 

Contributors this month explore diverse themes of innovation, from the foundations of trade in the form of smart ledgers through to new approaches to supporting e-commerce exports and the potential...

July 2018 BUlletin


IWG | 2H 2018 Risk Outlook | Trade Wars | Regulation and more...

Contributors to the July BUlletin explore the development of a new era in export credit, through the lens of proceedings at the IWG; trade wars; sustainability and export finance regulation

April 2018 BUlletin


Themes for this month focus on:

Linking Trade and Economic Growth / Collaborative approaches to Sustainable Development /Wind Financing / Digital Innovation / Venezuela / 

March 2018 Bulletin


By all accounts 2017 was an excellent year for Berne Union members

who once again made a tremendous positive impact on global cross-border trade and investment - providing a record USD 2.35 trillion in cover for cross-border trade and investment and now supporting 14% of total worldwide exports.

September 2017 BUlletin


"small business to big infrastructure – local currency to global economic policy"

Themes for September span the full scale of international finance in a bumper edition, with a selection of 12 articles from Berne Union members and industry experts, painting a telling picture of the relative pressures and priorities in ...

August 2017 BUlletin


"New Horizons: Changing Markets, Evolving Approaches"

This month’s contributors examine three economies seemingly at turning points – Argentina, Iran and the Côte d’Ivoire – considering in each case the forces actively influencing the trade environment and the approach of the financial ...

July 2017 BUlletin


"10 years of SERV, SMEs and Africa"

Commentators this month focus on support for small businesses, local contractors and risk in Africa - including energy sector and analysis of the Mozambique debt crisis. Detailed BU Data Snapshot on Africa and a member survey on approaches to SMEs set the scene...

May 2017 BUlletin


"Claims, Pricing and Regulation"

The first edition of the BUlletin kicks off with a 'State of the Industry' review from Berne Union Secretary General, Vinco David, where he considers three factors which could disrupt the status quo for the export credit and investment insurance industry...