The Insolvency Service, the government agency responsible for administering bankruptcies and liquidations in the UK, has published updated guidance that reframes its previously held view that a creditor is set at the point of entry into an insolvency procedure and remains a creditor even if payment in full is subsequently made.
The guidance, which was published in its most recent ‘Dear IP’ issue at the end of June, confirmed that the term “creditor” will be context specific and the office holder will be permitted to exercise their professional judgment in relation to whether paid creditors remain creditors. The update reframes the agency’s view on what defines a creditor and follows two court cases last year that found that the consent of paid secured creditors was not required in the context of an administration extension.
In 2024, the court in cases Boughey & Anor v Toogood International Transport and Agricultural Services Ltd and Re Pindar Scarborough Ltd (in administration) – commonly referred to as ‘Re Pindar’ and ‘Re Toogood’ – was asked to consider the issue of paid secured creditors in the context of administration extensions.
An administration automatically ends after one year, however, few administrations are concluded so quickly, so the administration can be extended by the court or for a period of up to one year by creditor consent.
Approaching secured and preferential creditors who have been repaid in full for their approval or consent has been a thorn in the side of administrators for a number of years. Many secured creditors, understandably, consider that once they had been repaid, they no longer have an interest in decisions in the insolvency process – so neither approve nor object to the request.
Consent refers to the actual consent of both secured and unsecured creditors unless the administrator has made a statement under paragraph 52(1)(b) of schedule b1 to the Insolvency Act 1986, in which case the consent of each secured creditor is required, or, if a distribution to preferential creditors is to be made, then the consent of each secured creditor and the preferential creditors of the company is required. The rationale is those creditors with an economic interest in the company are the decision makers.
In the Re Pindar and Re Toogood cases the court said that the definition of “secured creditor” in the Insolvency Act 1986 should be read in the present tense so that a secured creditor for decision-making purposes would only be a creditor who holds security in relation to a debt that is still owed.
In Re Toogood, the judge commented: “There is no reason why a commercial organisation such as a bank that has been repaid in full should have to be bothered thereafter with making administration decisions that do not affect it. Why should it spend its time, unremunerated, in doing so?”
The court’s view in these cases conflicted with the Insolvency Service’s interpretation at the time. In April 2022, the agency said: “It has been the government’s position for some time that the classification of a creditor is set at the point of entry to the procedure and that this remains, even if payment in full is subsequently made” – so underlining the need to obtain paid creditors’ consent, notwithstanding the practical difficulty obtaining it.
The judge in the Re Toogood case, His Honour Judge Matthew, challenged this view, stating: “If the government wishes there to be a different result, then it must legislate more clearly than it has done and moreover explain why those with no economic interest in the outcome of an administration should nevertheless determine what happens.”
In its latest guidance, the Insolvency Service stated it will no longer contend that the meaning of the word ‘creditor’ is fixed and crystallised at the date of entry into an insolvency procedure. The agency said it will be a matter for the officeholder’s professional judgement, with reference to the specific circumstances of the insolvency case in question, to determine whether an interpretation of the word “creditor” in an insolvency law provision will exclude a creditor whose debt has been repaid.
The update also highlighted that the officeholder should give “particular consideration” to whether the creditor in question may be prejudiced or disadvantaged by losing their status upon full repayment, in which case their creditor status should not be detached from them.
Commenting on the development, James Hillman, restructuring and insolvency expert at Pinsent Masons said: “The Insolvency Service’s reframed view will be welcome news for officeholders and brings its view closer to the view of the courts in relation to an issue that has been problematic for a number of years.”
The updated guidance provides welcome clarity on the definition of a ‘creditor’ in insolvency legislation, but Hillman said there are likely to be further court decisions on other procedural matters where uncertainty remains. “It does not deal with issues around obtaining consent where all secured creditors and preferential creditors have been paid or there weren’t any secured creditors to begin with, so we may see more court applications in this area,” he said. “However, the latest guidance is a positive step forward.”
FCA rule changes will clarify that serious bullying and harassment at any financial institution, including in some instances where it takes place in an individual’s private life, may affect whether they satisfy conduct rules and meet the fit and proper test.
As we previously explained, in 2023 the PRA and FCA each published consultation papers (CP 18/23 and 23/20 respectively) on diversity and inclusion (D&I) in financial services, highlighting the continued regulatory concern in this area. The 2023 consultation papers proposed reforms that included requiring financial services firms to maintain a D&I strategy, mandating that firms set diversity targets, and implementing additional D&I disclosure requirements for large firms. However, in March this year, we reported that the PRA and FCA announced that they were dropping these plans in an effort to boost growth in the UK.
Another important focus of the 2023 consultations was non-financial misconduct (NFM), a topic that had been on the regulators’ radars for some time as part of a broader focus on culture. The outcome of the NFM aspects of the consultations has been highly anticipated.
The FCA has now published in a policy statement its proposed rules on NFM alongside a consultation on draft guidance to support firms to apply its NFM rules if needed (CP 25/18). The policy statement extends the scope of the FCA’s NFM rules while the consultation sets out amended guidance in relation to NFM for the purposes of the conduct rules and fitness and propriety (F&P) assessments.
Extending existing NFM rules to include non-banks
The FCA Code of Conduct (COCON) sets out conduct rules for staff and provides guidance about those rules to firms whose staff are subject to them. The FCA has statutory powers as an enforcement body for breaches of COCON.
While NFM can amount to a breach of FCA rules in any firm, under the current rules, NFM will more commonly breach COCON in a bank than in a non-bank. To address this, yesterday’s publication confirms that the FCA is widening the scope of its rules for non-banks to align the approach across all SM&CR firms and bring more instances of NFM into its regulatory remit.
The NFM rule covers unwanted conduct that has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading or humiliating or offensive environment for an individual, or conduct that is violent towards an individual.
The new rule comes into effect on 1 September 2026 and will not apply retrospectively.
Consultation on additional Handbook guidance
The 2023 proposals included new guidance aimed at integrating NFM within the workplace and, in some circumstances, similarly serious behaviour in an individual’s personal or private life, into: (i) F&P assessments (for individuals performing a Senior Management Function or a certification function); (ii) COCON; and (iii) the suitability guidance on the Threshold Conditions for firms to carry on regulated activities.
Yesterday’s consultation sets out amended proposals for potential new Handbook guidance in COCON and the Fit and Proper test for Employees and Senior Personnel (FIT), which aims to make it easier for SM&CR firms to interpret and consistently apply the conduct rules and to clarify statutory and FCA requirements for F&P. The FCA is seeking views on whether additional guidance is needed at all and, if so, on the form it should take. The FCA will only take the guidance forward if there is clear support for it to do so.
The consultation on draft guidance closes on 10 September 2025.
How has the COCON guidance changed since 2023?
In 2023, the FCA made clear that not every instance of misconduct would amount to a breach. Factors to take into account when deciding whether misconduct was serious enough to amount to a breach included whether the conduct was repeated, the duration of the conduct, and the extent of the impact on the subject. Yesterday’s consultation contains new guidance and additional examples, including examples of scenarios illustrating the boundary between work and private life, material about the factors for determining whether NFM is serious enough to amount to a breach, and examples of reasonable steps for managers.
The boundary between work and private life
For instance, misconduct by a manager in relation to a member of the workforce at a social occasion organised by their firm would be in scope of COCON, but misconduct at a social occasion organised by them in their personal capacity would not. What was unclear in 2023 was what the FCA’s stance would be if misconduct occurred at a social occasion that took place after a firm-organised event. The proposed guidance now states that an occasion organised by the manager may be within the scope of COCON, taking into account that the manager’s direct reports may feel obliged to attend. If the event takes place after a firm event but at a separate location or venue, it may be within scope if it is a continuation of the first event or if the conduct started at the first event and continued in the new venue. Otherwise, COCON is likely to cease to apply because the connection between the event and the activities of the firm has been lost.
Further guidance is also provided on the use of social media. The FCA suggests that publishing material on a personal social media account is an example of how it is not possible to give a definitive answer to a scenario based on a single element. However, factors to consider include whether the material is directed at a fellow member of the workforce, whether the content of the social media posts is related to work at the firm, and whether the person uses a work-issued device. The fact that the person uploads the posts during working hours or while on the firm’s premises is not a strong factor pointing towards the application of COCON.
Determining whether NFM is ‘serious’
The use of the term ‘serious’ in COCON meant that the NFM had to have a seriously negative effect to amount to a potential rule breach. Following the 2023 consultation, there were concerns over the subjectivity of the term ‘serious’. Yesterday’s consultation confirms that the use of the term ‘serious’ is aimed at ensuring that minor incidents of poor workplace behaviour were not brought unnecessarily into scope of the FCA’s rules. The FCA has provided more guidance on factors for determining seriousness and the need to take an objective view. The FCA also clarifies that not all misconduct for which a firm might reasonably take disciplinary action under its own disciplinary policy will amount to a breach of COCON. The revised guidance makes it clear that seriousness is not the deciding or distinguishing factor in determining whether NFM is a breach of Conduct Rule 1 (acting with integrity) or Rule 2 (acting with due skill, care and diligence). In line with regulatory law, only deliberate or reckless misconduct is considered a breach of Rule 1. This means that in the absence of those factors, NFM is likely to be a breach of Rule 2.
Reasonable steps for managers
The FCA makes clear in the updated guidance that a manager should try to prevent harassment and other kinds of misconduct and will not be in breach of Conduct Rule 2 if they have acted reasonably. Examples of conduct by a manager that might be a breach include failing to intervene to stop such behaviour where appropriate if the manager knows or should know of it and failing to take seriously or to deal appropriately with complaints of behaviour. The wider context is important here, for example any limits or constraints on a manager’s ability to act if it is the firm’s policy that the HR function deals with allegations of misconduct.
How has the FIT guidance changed since 2023?
FIT sets out factors to which the FCA and firms should have regard when assessing whether an individual is fit and proper to perform their role.
In 2023, the FCA proposed that serious NFM in work and personal life could be relevant to F&P assessments. The rationale used was: (i) the risk that if conduct occurred at work it could go to F&P; (ii) the conduct may show that the individual lacks moral soundness, rectitude and steady adherence to an ethical code, which in turn raises doubts as to whether they will follow the requirements of the regulatory system; or (iii) conduct that is so disgraceful or morally reprehensible or otherwise sufficiently serious could undermine public confidence in the financial sector. According to the FCA, there was considerable support for its 2023 FIT proposals. However, key concerns included how the FCA would expect firms to deal with NFM in private life, the intersection between work and private life and the language used in the FCA’s draft instrument.
NFM in private life
In the new draft guidance, the FCA makes it clear that a firm will normally rely on formal findings, such as criminal convictions or the findings of a court, tribunal, regulator, arbitrator, public enquiry or other body, when assessing whether wrongdoing in private life has taken place. The FCA also clarifies that it does not expect firms to monitor their employees’ private lives to identify anything that is relevant to fitness. However, a firm may become aware of information about an individual’s private life that would – if substantiated – call into question their F&P. In these circumstances, the firm should consider what steps it can reasonably take to assess the possible impact, such as asking for an explanation from the member of staff where appropriate.
As above, social media activity may be relevant to F&P for the same reasons as other conduct. The FCA makes clear that, in principle, a person can lawfully express in their private or personal life their views on social media, even if those views are controversial or offensive and even if work colleagues are upset by those views, without calling into question their fitness under FIT. However, if a person’s social media activity in their private life indicates a real risk that the person will breach the requirements and standards of the regulatory system, then such activity will be relevant to their F&P. Examples could include threats of violence or clear involvement in criminal activities.
Subjective language and technical detail
Terms used in 2023 such as ‘moral soundness’ and ‘disgraceful’ have been replaced with more neutral language in yesterday’s publication and the FCA has also included more examples of the types of conduct both inside and outside work or a regulated role that may be relevant to F&P, such as conduct that is dishonest or shows a lack of integrity as well as repeated minor breaches of law.
Proposals not taken forward
In 2023, the FCA proposed to extend the guidance on the Suitability Threshold Condition in its COND sourcebook to make it clear that NFM and discriminatory practices in firms are relevant to its assessment of their suitability to undertake regulated activities. It also consulted on updating the guidance around regulatory references in SYSC to make it clear that it might be necessary to provide information on NFM or misconduct outside work to a firm requesting a reference.
Having considered the feedback, the FCA has decided not to proceed with its proposals for COND or SYSC. In relation to SYSC, the FCA’s existing rules on regulatory references require firms to disclose all breaches of the conduct rules for which disciplinary action was taken. Similarly, firms are required to provide any other information they reasonably believe to be relevant to the F&P assessment.
Comment
In 2023, the FCA and PRA set down a clear marker that they considered NFM as misconduct for regulatory purposes and that even conduct that occurs outside of the workplace could be relevant in certain circumstances. That was a significant, albeit not surprising, confirmation of the regulators’ approach. Yesterday’s publication only serves to underline the importance of NFM not just for banks, but for all firms bound by the SM&CR regime. Affected firms should consider taking steps now to ensure compliance ahead of the new rules taking effect next year.
For more information on the regulators’ approach to NFM and how these changes may affect your firm and its staff, please speak to the authors of this blog post or your usual Freshfields contact.
The global ecosystem of climate finance is complex, constantly changing and sometimes hard to understand. But understanding it is critical to demanding a green transition that’s just and fair. That’s why The Conversation has collaborated with climate finance experts to create this user-friendly guide, in partnership with Vogue Business. With definitions and short videos, we’ll add to this glossary as new terms emerge.
Blue bonds
Blue bonds are debt instruments designed to finance ocean-related conservation, like protecting coral reefs or sustainable fishing. They’re modelled after green bonds but focus specifically on the health of marine ecosystems – this is a key pillar of climate stability.
By investing in blue bonds, governments and private investors can fund marine projects that deliver both environmental benefits and long-term financial returns. Seychelles issued the first blue bond in 2018. Now, more are emerging as ocean conservation becomes a greater priority for global sustainability efforts.
By Narmin Nahidi, assistant professor in finance at the University of Exeter
Carbon border adjustment mechanism
Did you know that imported steel could soon face a carbon tax at the EU border? That’s because the carbon border adjustment mechanism is about to shake up the way we trade, produce and price carbon.
The carbon border adjustment mechanism is a proposed EU policy to put a carbon price on imports like iron, cement, fertiliser, aluminium and electricity. If a product is made in a country with weaker climate policies, the importer must pay the difference between that country’s carbon price and the EU’s. The goal is to avoid “carbon leakage” – when companies relocate to avoid emissions rules and to ensure fair competition on climate action.
But this mechanism is more than just a tariff tool. It’s a bold attempt to reshape global trade. Countries exporting to the EU may be pushed to adopt greener manufacturing or face higher tariffs.
The carbon border adjustment mechanism is controversial: some call it climate protectionism, others argue it could incentivise low-carbon innovation worldwide and be vital for achieving climate justice. Many developing nations worry it could penalise them unfairly unless there’s climate finance to support greener transitions.
Carbon border adjustment mechanism is still evolving, but it’s already forcing companies, investors and governments to rethink emissions accounting, supply chains and competitiveness. It’s a carbon price with global consequences.
By Narmin Nahidi, assistant professor in finance at the University of Exeter
Carbon budget
The Paris agreement aims to limit global warming to 1.5°C above pre-industrial levels by 2030. The carbon budget is the maximum amount of CO₂ emissions allowed, if we want a 67% chance of staying within this limit. The Intergovernmental Panel on Climate Change (IPCC) estimates that the remaining carbon budgets amount to 400 billion tonnes of CO₂ from 2020 onwards.
Think of the carbon budget as a climate allowance. Once it has been spent, the risk of extreme weather or sea level rise increases sharply. If emissions continue unchecked, the budget will be exhausted within years, risking severe climate consequences. The IPCC sets the global carbon budget based on climate science, and governments use this framework to set national emission targets, climate policies and pathways to net zero emissions.
By Dongna Zhang, assistant professor in economics and finance, Northumbria University
Carbon credits
Carbon credits are like a permit that allow companies to release a certain amount of carbon into the air. One credit usually equals one tonne of CO₂. These credits are issued by the local government or another authorised body and can be bought and sold. Think of it like a budget allowance for pollution. It encourages cuts in carbon emissions each year to stay within those global climate targets.
The aim is to put a price on carbon to encourage cuts in emissions. If a company reduces its emissions and has leftover credits, it can sell them to another company that is going over its limit. But there are issues. Some argue that carbon credit schemes allow polluters to pay their way out of real change, and not all credits are from trustworthy projects. Although carbon credits can play a role in addressing the climate crisis, they are not a solution on their own.
By Sankar Sivarajah, professor of circular economy, Kingston University London
Carbon credits explained.
Carbon offsetting
Carbon offsetting is a way for people or organisations to make up for the carbon emissions they are responsible for. For example, if you contribute to emissions by flying, driving or making goods, you can help balance that out by supporting projects that reduce emissions elsewhere. This might include planting trees (which absorb carbon dioxide) or building wind farms to produce renewable energy.
The idea is that your support helps cancel out the damage you are doing. For example, if your flight creates one tonne of carbon dioxide, you pay to support a project that removes the same amount.
While this sounds like a win-win, carbon offsetting is not perfect. Some argue that it lets people feel better without really changing their behaviour, a phenomenon sometimes referred to as greenwashing.
Not all projects are effective or well managed. For instance, some tree planting initiatives might have taken place anyway, even without the offset funding, deeming your contribution inconsequential. Others might plant the non-native trees in areas where they are unlikely to reach their potential in terms of absorbing carbon emissions.
So, offsetting can help, but it is no magic fix. It works best alongside real efforts to reduce greenhouse gas emissions and encourage low-carbon lifestyles or supply chains.
By Sankar Sivarajah, professor of circular economy, Kingston University London
Carbon offsetting explained.
Carbon tax
A carbon tax is designed to reduce greenhouse gas emissions by placing a direct price on CO₂ and other greenhouse gases.
A carbon tax is grounded in the concept of the social cost of carbon. This is an estimate of the economic damage caused by emitting one tonne of CO₂, including climate-related health, infrastructure and ecosystem impacts.
A carbon tax is typically levied per tonne of CO₂ emitted. The tax can be applied either upstream (on fossil fuel producers) or downstream (on consumers or power generators). This makes carbon-intensive activities more expensive, it incentivises nations, businesses and people to reduce their emissions, while untaxed renewable energy becomes more competitively priced and appealing.
Carbon tax was first introduced by Finland in 1990. Since then, more than 39 jurisdictions have implemented similar schemes. According to the World Bank, carbon pricing mechanisms (that’s both carbon taxes and emissions trading systems) now cover about 24% of global emissions. The remaining 76% are not priced, mainly due to limited coverage in both sectors and geographical areas, plus persistent fossil fuel subsidies. Expanding coverage would require extending carbon pricing to sectors like agriculture and transport, phasing out fossil fuel subsidies and strengthening international governance.
What is carbon tax?
Sweden has one of the world’s highest carbon tax rates and has cut emissions by 33% since 1990 while maintaining economic growth. The policy worked because Sweden started early, applied the tax across many industries and maintained clear, consistent communication that kept the public on board.
Canada introduced a national carbon tax in 2019. In Canada, most of the revenue from carbon taxes is returned directly to households through annual rebates, making the scheme revenue-neutral for most families. However, despite its economic logic, inflation and rising fuel prices led to public discontent – especially as many citizens were unaware they were receiving rebates.
Carbon taxes face challenges including political resistance, fairness concerns and low public awareness. Their success depends on clear communication and visible reinvestment of revenues into climate or social goals. A 2025 study that surveyed 40,000 people in 20 countries found that support for carbon taxes increases significantly when revenues are used for environmental infrastructure, rather than returned through tax rebates.
By Meilan Yan, associate professor and senior lecturer in financial economics, Loughborough University
Climate resilience
Floods, wildfires, heatwaves and rising seas are pushing our cities, towns and neighbourhoods to their limits. But there’s a powerful idea that’s helping cities fight back: climate resilience.
Resilience refers to the ability of a system, such as a city, a community or even an ecosystem – to anticipate, prepare for, respond to and recover from climate-related shocks and stresses.
Sometimes people say resilience is about bouncing back. But it’s not just about surviving the next storm. It’s about adapting, evolving and thriving in a changing world.
Resilience means building smarter and better. It means designing homes that stay cool during heatwaves. Roads that don’t wash away in floods. Power grids that don’t fail when the weather turns extreme.
It’s also about people. A truly resilient city protects its most vulnerable. It ensures that everyone – regardless of income, age or background – can weather the storm.
And resilience isn’t just reactive. It’s about using science, local knowledge and innovation to reduce a risk before disaster strikes. From restoring wetlands to cool cities and absorb floods, to creating early warning systems for heatwaves, climate resilience is about weaving strength into the very fabric of our cities.
By Paul O’Hare, senior lecturer in geography and development, Manchester Metropolitan University
The meaning of climate resilience.
Climate risk disclosure
Climate risk disclosure refers to how companies report the risks they face from climate change, such as flood damage, supply chain disruptions or regulatory costs. It includes both physical risks (like storms) and transition risks (like changing laws or consumer preferences).
Mandatory disclosures, such as those proposed by the UK and EU, aim to make climate-related risks transparent to investors. Done well, these reports can shape capital flows toward more sustainable business models. Done poorly, they become greenwashing tools.
By Narmin Nahidi, assistant professor in finance at the University of Exeter
Emissions trading scheme
An emissions trading scheme is the primary market-based approach for regulating greenhouse gas emissions in many countries, including Australia, Canada, China and Mexico.
Part of a government’s job is to decide how much of the economy’s carbon emissions it wants to avoid in order to fight climate change. It must put a cap on carbon emissions that economic production is not allowed to surpass. Preferably, the polluters (that’s the manufacturers, fossil fuel companies) should be the ones paying for the cost of climate mitigation.
Regulators could simply tell all the firms how much they are allowed to emit over the next ten years or so. But giving every firm the same allowance across the board is not cost efficient, because avoiding carbon emissions is much harder for some firms (such as steel producers) than others (such as tax consultants). Since governments cannot know each firm’s specific cost profile either, it can’t customise the allowances. Also, monitoring whether polluters actually abide by their assigned limits is extremely costly.
An emissions trading scheme cleverly solves this dilemma using the cap-and-trade mechanism. Instead of assigning each polluter a fixed quota and risking inefficiencies, the government issues a large number of tradable permits – each worth, say, a tonne of CO₂-equivalent (CO₂e) – that sum up to the cap. Firms that can cut greenhouse gas emissions relatively cheaply can then trade their surplus permits to those who find it harder – at a price that makes both better off.
By Mathias Weidinger, environmental economist, University of Oxford
Emissions trading schemes, explained by climate finance expert Mathias Weidinger.
Environmental, social and governance (ESG) investing
ESG investing stands for environmental, social and governance investing. In simple terms, these are a set of standards that investors use to screen a company’s potential investments.
ESG means choosing to invest in companies that are not only profitable but also responsible. Investors use ESG metrics to assess risks (such as climate liability, labour practices) and align portfolios with sustainability goals by looking at how a company affects our planet and treats its people and communities. While there isn’t one single global body governing ESG, various organisations, ratings agencies and governments all contribute to setting and evolving these metrics.
For example, investing in a company committed to renewable energy and fair labour practices might be considered “ESG aligned”. Supporters believe ESG helps identify risks and create long-term value. Critics argue it can be vague or used for greenwashing, where companies appear sustainable without real action. ESG works best when paired with transparency and clear data. A barrier is that standards vary, and it’s not always clear what counts as ESG.
Why do financial companies and institutions care? Issues like climate change and nature loss pose significant risks, affecting company values and the global economy.
Investing with ESG in mind can help manage these risks and unlock opportunities, with ESG assets projected to reach over US$40 trillion (£30 trillion) by 2030.
However, gathering reliable ESG information can be difficult. Companies often self-report, and the data isn’t always standardised or up to date. Researchers – including my team at the University of Oxford – are using geospatial data, like satellite imagery and artificial intelligence, to develop global databases for high-impact industries, across all major sectors and geographies, and independently assess environmental and social risks and impacts.
For instance, we can analyse satellite images of a facility over time to monitor its emissions effect on nature and biodiversity, or assess deforestation linked to a company’s supply chain. This allows us to map supply chains, identify high-impact assets, and detect hidden risks and opportunities in key industries, providing an objective, real-time look at their environmental footprint.
The goal is for this to improve ESG ratings and provide clearer, more consistent insights for investors. This approach could help us overcome current data limitations to build a more sustainable financial future.
By Amani Maalouf, senior researcher in spatial finance, University of Oxford
Environmental, social and governance investing explained.
Financed emissions
Financed emissions are the greenhouse gas emissions linked to a bank’s or investor’s lending and investment portfolio, rather than their own operations. For example, a bank that funds a coal mine or invests in fossil fuels is indirectly responsible for the carbon those activities produce.
Measuring financed emissions helps reveal the real climate impact of financial institutions not just their office energy use. It’s a cornerstone of climate accountability in finance and is becoming essential under net zero pledges.
By Narmin Nahidi, assistant professor in finance at the University of Exeter
Green bonds
Green bonds are loans issued to fund environmentally beneficial projects, such as energy-efficient buildings or clean transportation. Investors choose them to support climate solutions while earning returns.
Green bonds are a major tool to finance the shift to a low-carbon economy by directing finance toward climate solutions. As climate costs rise, green bonds could help close the funding gap while ensuring transparency and accountability.
Green bonds are required to ensure funds are spent as promised. For instance, imagine a city wants to upgrade its public transportation by adding electric buses to reduce pollution. Instead of raising taxes or slashing other budgets, the city can issue green bonds to raise the necessary capital. Investors buy the bonds, the city gets the funding, and the environment benefits from cleaner air and fewer emissions.
The growing participation of government issuers has improved the transparency and reliability of these investments. The green bond market has grown rapidly in recent years. According to the Bank for International Settlements, the green bond market reached US$2.9 trillion (£2.1 trillion) in 2024 – nearly six times larger than in 2018. At the same time, annual issuance (the total value of green bonds issued in a year) hit US$700 billion, highlighting the increasing role of green finance in tackling climate change.
By Dongna Zhang, assistant professor in economics and finance, Northumbria University
Just transition
Just transition is the process of moving to a low-carbon society that is environmentally sustainable and socially inclusive. In a broad sense, a just transition means focusing on creating a more fair and equal society.
Just transition has existed as a concept since the 1970s. It was originally applied to the green energy transition, protecting workers in the fossil fuel industry as we move towards more sustainable alternatives.
These days, it has so many overlapping issues of justice hidden within it, so the concept is hard to define. Even at the level of UN climate negotiations, global leaders struggle to agree on what a just transition means.
The big battle is between developed countries, who want a very restrictive definition around jobs and skills, and developing countries, who are looking for a much more holistic approach that considers wider system change and includes considerations around human rights, Indigenous people and creating an overall fairer global society.
A just transition is essentially about imagining a future where we have moved beyond fossil fuels and society works better for everyone – but that can look very different in a European city compared to a rural setting in south-east Asia.
For example, in a British city it might mean fewer cars and better public transport. In a rural setting, it might mean new ways of growing crops that are more sustainable, and building homes that are heatwave resistant.
By Alix Dietzel, climate justice and climate policy expert, University of Bristol
The meaning of just transition.
Loss and damage
A global loss and damage fund was agreed by nations at the UN climate summit (Cop27) in 2022. This means that the rich countries of the world put money into a fund that the least developed countries can then call upon when they have a climate emergency.
The World Bank has agreed to run the loss and damage fund but they are charging significant fees for doing so.
At the moment, the loss and damage fund is made up of relatively small pots of money. Much more will be needed to provide relief to those who need it most now and in the future.
By Mark Maslin, professor of earth system science, UCL
Mark Maslin explains loss and damage.
Mitigation v adaptation
Mitigation means cutting greenhouse gas emissions to slow climate change. Adaptation means adjusting to its effects, like building sea walls or growing heat-resistant crops. Both are essential: mitigation tackles the cause, while adaptation tackles the symptoms.
Globally, most funding goes to mitigation, but vulnerable communities often need adaptation support most. Balancing the two is a major challenge in climate policy, especially for developing countries facing immediate climate threats.
By Narmin Nahidi, assistant professor in finance at the University of Exeter
Nationally determined contributions
Nationally determined contributions (NDCs) are at the heart of the Paris agreement, the global effort to collectively combat climate change. NDCs are individual climate action plans created by each country. These targets and strategies outline how a country will reduce its greenhouse gas emissions and adapt to climate change.
Each nation sets its own goals based on its own circumstances and capabilities – there’s no standard NDC. These plans should be updated every five years and countries are encouraged to gradually increase their climate ambitions over time.
The aim is for NDCs to drive real action by guiding policies, attracting investment and inspiring innovation in clean technologies. But current NDCs fall short of the Paris agreement goals and many countries struggle to turn their plans into a reality. NDCs also vary widely in scope and detail so it’s hard to compare efforts across the board. Stronger international collaboration and greater accountability will be crucial.
By Doug Specht, reader in cultural geography and communication, University of Westminster
Fashion depends on water, soil and biodiversity – all natural capital. And forward-thinking designers are now asking: how do we create rather than deplete, how do we restore rather than extract?
Natural capital is the value assigned to the stock of forests, soils, oceans and even minerals such as lithium. It sustains every part of our economy. It’s the bees that pollinate our crops. It’s the wetlands that filter our water and it’s the trees that store carbon and cool our cities.
If we fail to value nature properly, we risk losing it. But if we succeed, we unlock a future that is not only sustainable but also truly regenerative.
My team at the University of Oxford is developing tools to integrate nature into national balance sheets, advising governments on biodiversity, and we’re helping industries from fashion to finance embed nature into their decision making.
Natural capital, explained by a climate finance expert.
By Mette Morsing, professor of business sustainability and director of the Smith School of Enterprise and the Environment, University of Oxford
Net zero
Reaching net zero means reducing the amount of additional greenhouse gas emissions that accumulate in the atmosphere to zero. This concept was popularised by the Paris agreement, a landmark deal that was agreed at the UN climate summit (Cop21) in 2015 to limit the impact of greenhouse gas emissions.
There are some emissions, from farming and aviation for example, that will be very difficult, if not impossible, to reach absolute zero. Hence, the “net”. This allows people, businesses and countries to find ways to suck greenhouse gas emissions out of the atmosphere, effectively cancelling out emissions while trying to reduce them. This can include reforestation, rewilding, direct air capture and carbon capture and storage. The goal is to reach net zero: the point at which no extra greenhouse gases accumulate in Earth’s atmosphere.
By Mark Maslin, professor of earth system science, UCL
Mark Maslin explains net zero.
For more expert explainer videos, visit The Conversation’s quick climate dictionary playlist here on YouTube.
The landmark tech regulation has come under scrutiny in Brussels as part of an effort by European Union officials to cut red tape to boost its economy. The AI Act in particular has faced intense lobbying pressure from American tech giants in past months.
European Commission tech chief Henna Virkkunen told POLITICO this week she would make a call on whether to pause the implementation by end August if standards and guidelines to implement the law are not ready in time.
The chief officials lamented that “unclear, overlapping and increasingly complex EU regulations” is disrupting their abilities to do business in Europe. A pause would signal that the EU is serious about simplification and competitiveness to innovators and investors, they added.
The pause should apply both to provisions on general-purpose AI that take affect on August 2, as well as systems classified as high-risk, that have to apply the rules in August 2026, the letter said.
Toronto, July 3, 2025 – Deloitte Canada is pleased to announce the acquisition of Allevar, a Toronto-based financial services technology & data enablement firm, offering expertise in key risk & compliance areas such as Fraud Management, Anti-Money Laundering (AML), Payment systems, and Know Your Customer (KYC).
“The acquisition of Allevar represents a strategic expansion of our capabilities in regulatory compliance and technology solutions for industries including financial services, and others preparing for the growth opportunities in the digital and AI age” says Anthony Viel, Chief Executive Officer, Deloitte Canada and Chile. “By integrating Allevar’s expertise, particularly in, Anti-Money Laundering, Fraud, Payments, and KYC we are poised to offer unparalleled value to our clients by ensuring they remain on their growth trajectory enabled by a solid foundation of regulatory compliance and operational efficiency.”
Allevar’s team brings extensive experience in technology and data driven solutions for managing risks related to Financial Crime, Fraud, AML, Know Your Customer, and Payments. These capabilities are strategically important for Canadian banks and Financial Services industry at large for protecting the public and consumers against bad actors, meeting regulatory expectations, and enabling growth.
Allevar’s growth has been driven by robust relationships with key executives and a commitment to meeting the increasing demands of banking, finance, and insurance sectors in Canada. Along with the Allevar’s team, the company’s C-suite executives Dan Wood, Dave Whyte and Maureen Binder Kotopski will be joining Deloitte Canada’s Regulatory & Risk practice.
“We are thrilled to announce that Allevar is joining forces with Deloitte Canada, marking a significant milestone in our growth journey,” says Dan Wood, CEO of Allevar. “This strategic decision is made with a focus on our people, clients, and the future, aligning with our core values and vision. By partnering with Deloitte, we are poised to enhance our capabilities and continue delivering exceptional service.”
This acquisition underscores Deloitte’s commitment to delivering industry-leading solutions and insights, reinforcing its position as a leader in the financial services technology and compliance landscape.
The integration of Allevar into Deloitte’s Strategy, Risk & Transactions (SR&T) business, specifically within Regulatory and Risk, will significantly enhance Deloitte’s ability to deliver comprehensive financial crime, AML & compliance solutions.
The State Bank of Pakistan (SBP) is working on a strategy to streamline and simplify digital payment systems for merchants. The initiative aims to introduce an easy-to-use package designed to encourage small businesses to adopt digital payment methods.
This was revealed during a high-level weekly meeting on cashless and digital economy at the Prime Minister’s House on Thursday.
On the occasion, Prime Minister Shehbaz Sharif emphasised the need to facilitate payments between citizens and businesses and to raise awareness about the use of digital systems. He stressed to implement the digital transaction system across the country saying it was vital to bring transparency to the economy.
The premier instructed the committees formed for the cashless economy to work closely with all stakeholders to present doable recommendations.
During the meeting, the prime minister was briefed that following the previous meeting, the Digital Payments Innovation and Adoption Committee, the Digital Public Infrastructure Committee, and the Government Payments Committee had been established.
A detailed briefing was given with respect to the committees’ proposals and strategies regarding the digitization of the economy.
It was informed that the State Bank of Pakistan was developing a strategy to simplify and ease digital payment methods for merchants. The target is to increase the number of mobile app users for digital payments from 95 million to 120 million, and the number of merchants using QR codes will be increased from 0.9 million to 2 million.
The total volume of digital payments is aimed to increase from Rs 7.5 billion to Rs 12 billion.
The prime minister directed that all these targets should be doubled.
The meeting was further informed that the “Digital National Pakistan” project for the digital economy had been initiated. The Islamabad City mobile application has so far recorded 1.3 million downloads, offering 15 services.
Through the Islamabad City App, Rs 15.5 billion has been collected under ICT Excise and Taxation, the meeting was informed.
Work is progressing rapidly on the completion of the Digital Pakistan ID project, while E-stamping facilities will also be launched in Islamabad soon.
The meeting was further informed that efforts were underway to provide Wi-Fi internet services across Islamabad, particularly in hospitals, educational institutions, government offices, parks, and metro bus lines.
The prime minister instructed that all these facilities should also be introduced in all federal areas, Azad Jammu & Kashmir, and Gilgit-Baltistan.
The meeting was attended by Minister for Information Technology and Telecom Shaza Fatima, Minister for Petroleum Ali Pervaiz Malik, Prime Minister’s Advisor Dr. Tauqir Shah, Minister of State for Finance and Railways Bilal Azhar Kayani, and other senior government officials.
In May 2025, the average price of transport services (services related to the transportation of individuals in various forms, including by railway, road, air, sea and inland waterways) in the EU was 1.7% higher than in May 2024. The prices of passenger transport by railway and road were up by 4.0% and 2.3%, respectively, while air transport prices were down by 3.0%.
Between May 2023 and May 2025, inflation for transport services saw moderate fluctuations. It started at +3.9% in May 2023, reached +11.9% in June 2023, then declined steadily and reached negative rates in late 2023 and early 2024. By August 2024, the annual rate of change rose to +3.5% and stayed at similar levels in the following months, peaking again in April 2025 (+7.3%).
Prices for passenger transport by railway were more stable than the overall transport services, maintaining annual rate changes between +0.8% and +5.7%. Similarly, passenger transport by road showed rate changes between +1.2% and +4.5%.
Source dataset: prc_hicp_manr
Air transport prices were the most volatile, reflecting travel demand and seasonality. In May 2023, prices were 18.4% higher than in May 2022. The rate dropped considerably to -5.3% by November 2023, then fluctuated throughout the following months. In November 2024, inflation for air transport increased to 10.0%, and in April 2025, it was +13.8%.
In May 2025, among EU countries, the highest annual inflation for transport services was recorded in Malta (+19.0%), Slovakia (+14.2%), and Luxembourg (+12.7%). Inflation rates for transport services declined in 7 EU countries, most notably in Cyprus (-9.4%), Ireland (-9.2%), and the Netherlands (-4.9%).
Households’ financial investment increased at broadly unchanged annual rate of 2.5% in first quarter of 2025
Non-financial corporations’ financing grew at higher annual rate of 1.3%, compared with 1.0% in previous quarter
Non-financial corporations’ gross operating surplus increased at annual rate 3.3%, while it decreased in previous quarter (-1.5%)
Chart 1
Household financing and financial and non-financial investment
(annual growth rates)
Sources: ECB and Eurostat.
Data for household financing and financial and non-financial investment (Chart 1)
Chart 2
NFC gross-operating surplus, non-financial investment and financing
(annual growth rates)
Source: ECB and Eurostat.
Data for NFC gross-operating surplus, non-financial investment and financing (Chart 2)
Households
Household gross disposable income increased at a lower annual rate of 2.9% in the first quarter of 2025 (after 4.2% in the previous quarter). Compensation of employees grew at a lower rate of 4.6% (after 4.9%). Gross operating surplus and mixed income of the self-employed as well as property income also increased at lower rates (1.5% after 3.2%, and 0.8% after 1.5% respectively). Household consumption expenditure grew at a lower rate of 2.8% (after 3.6%).
Household gross saving rate was unchanged at 15.4% in the first quarter of 2025 compared to the previous quarter.
Household gross non-financial investment (which refers mainly to housing) increased at an annual rate of 0.5% in the first quarter of 2025, after decreasing (-1.6%) in the previous quarter. Loans to households, the main component of household financing, grew at a higher rate of 1.7% (after 1.3%).
Household financial investment increased at an unchanged annual rate of 2.5% in the first quarter of 2025. Among its components, currency and deposits grew at an unchanged rate of 3.0%. Investment in debt securities increased at a lower rate of 0.7% (after 7.8%). Investment in shares and other equity grew at a higher rate of 2.3% (after 1.9%) mainly due to continued high growth of investments in investment fund shares (7.9% after 7.0%). Investment in life insurance increased at a higher rate of 1.6% (after 1.2%) and in pension schemes at a lower rate of 2.0% (after 2.2%).
Household net worth increased at an unchanged annual rate of 4.4% in the first quarter of 2025. The growth in net worth was mainly due to valuation gains in non-financial assets in addition to investments. Housing wealth, the main component of non-financial assets grew at a higher rate of 4.2% (after 3.0%). The household debt-to-income ratio decreased, to 81.7% in the first quarter of 2025 from 83.8% in the first quarter of 2024.
Non-financial corporations
Net value added by NFCs increased at a higher annual rate of 4.2% in the first quarter of 2025 (after 2.6% in the previous quarter). Gross operating surplus grew at a rate of 3.3%, after decreasing (‑1.5%) in the previous quarter, and net property income (defined in this context as property income receivable minus interest and rent payable) also increased. As a result gross entrepreneurial income (broadly equivalent to cash flow) increased at a higher rate of 4.0% (after 1.3%).[1]
NFCs’ gross non-financial investment increased at a higher annual rate of 4.6% in the first quarter of 2025 (after 1.5%).[2] Financial investment grew at higher rate of 2.0% (after 1.8%). Among its components, net purchases of debt securities and loans granted increased at higher rates (8.7% after 2.1% and 2.9% after 2.6%), and investment in shares and other equity grew at a lower rate of 0.4% (after 0.7%). Other accounts receivable, including trade credits, increased as well.
Financing of NFCs increased at a higher annual rate of 1.3% (after 1.0%). Loan financing (2.0% after 1.3%)[3], debt securities net issuance (1.6% after 1.4%) and trade credit financing (4.1% after 3.6%) all grew at higher rates. Equity financing increased at a broadly unchanged rate of 0.5%.
The NFC debt-to-GDP ratio (consolidated measure) decreased to 67.3% in the first quarter of 2025, from 68.5% in the same quarter of the previous year; the non-consolidated, wider debt measure decreased to 139.0% from 140.7%.
For queries, please use the Statistical Information Request form.
Notes
This statistical release incorporates revisions to the data since the first quarter of 2021.
The annual growth rate of non-financial transactions and of outstanding assets and liabilities (stocks) is calculated as the percentage change between the value for a given quarter and that value recorded four quarters earlier. The annual growth rates used for financial transactions refer to the total value of transactions during the year in relation to the outstanding stock a year before.
The euro area and national financial accounts data of non-financial corporations and households are available in an interactive dashboard.
Hyperlinks in the main body of the statistical release are dynamic. The data they lead to may therefore change with subsequent data releases as a result of revisions. Figures shown in annex tables are a snapshot of the data as at the time of the current release.
The ECB publishes experimental Distributional Wealth Accounts (DWA), which provide additional breakdowns for the household sector. The release of results for 2025 Q1 is planned for 29 August 2025 (tentative date).
The U.S. economy continues to send mixed signals. On Thursday, the Bureau of Labor Statistics will report job figures for June that may help clear up the picture.
Economists surveyed by The Wall Street Journal forecast that 110,000 new payrolls were added in June. That would be the fewest since February, and it would be the fourth monthly decline in the past six months. The unemployment rate, meanwhile, was expected to have climbed to 4.3%, the highest since October 2021.
Consumers and businesses are still grappling with the uncertainty caused by President Donald Trump’s policies, something further reflected in volatile data.
On one hand, the inflation rate has so far proven stable, while average earnings continue to grow at a healthy clip. Stocks have returned to all-time highs, and in testimony last week, Federal Reserve Chair Jerome Powell described overall economic conditions as “solid.”
“Look at labor force participation, look at wages, look at job creation,” Powell said. “They’re all at healthy levels now. I would say you can see perhaps a very, very slow continued cooling but nothing that’s troubling at this time.”
On the other hand, Powell’s assertions have not sat well with Trump, who has continued to harangue him to lower the federal interest rate. On Wednesday evening, the president said Powell should “resign immediately.”
Commentary from U.S. firms and various other data points paint a more worrisome portrait of the economy. The latest survey of manufacturers from the Institute for Supply Chain Management found some firms describing the business environment as “hellacious” and “too volatile” for long-term procurement decisions.
On Wednesday, the private payrolls processor ADP reported a net decline in jobs added, which hasn’t occurred since March 2023 — and before that, the depths of the Covid-19 pandemic. The May job growth figure was revised even lower, to just 29,000 jobs added, from 37,000.
“Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,” Nela Richardson, ADP’s chief economist, said in a news release published Wednesday morning.
Clarity about tariffs was supposed to have arrived by next week, with Trump having set July 9 as the deadline to negotiate new deals. While he said this week he does not plan to extend the deadline, the White House said last week that the key date was “not critical.”
Meanwhile, Trump’s tax cut and spending bill continues to be debated in Congress even as it has cleared some key hurdles.
“Companies need business visibility in taxes and policy if they are going to take the risk of hiring a new employee,” Peter Boockvar, chief investment officer of Bleakley Financial Group, wrote in a note to clients. “And tariffs, on again/off again, have just thrown mud into the gears of business activity.”
The ADP report has a mixed track record of predicting the official BLS figure, which is usually published a day or two later. Earlier in the week, the BLS reported data showing a somewhat more sound picture of the job market, with job openings having unexpectedly increased in June.
Yet, even then, the bulk of those openings were in the leisure and hospitality sector, while openings declined in manufacturing and professional and business services.
“The leisure/hospitality sector alone cannot support the labor market amidst a broader weakening,” analysts with Citi Research wrote in a note to clients.
An additional hiring report released this week by the job consultancy Challenger, Gray and Christmas showed that through June, U.S. employers have announced 82,932 planned hires, a 19% increase over the 69,920 announced at this point in 2024.
Yet that rate remains historically low, it said.
“Hiring announcements in 2025 suggest a cautious but stabilizing labor market,” firm Senior Vice President Andrew Challenger said in a release. “While companies are clearly adding workers at a higher rate than in 2024, the restraint shown relative to previous years indicates continued uncertainty around costs, automation, and the broader economic outlook. Without a strong economic driver, hiring may remain measured through the rest of the year.”
Electric vehicles are a common sight on roads across the world — but not everywhere.
In Saudi Arabia, electric vehicles (EVs) account for just over 1% of overall car sales, according to PricewaterhouseCoopers’ (PwC) “eMobility Outlook 2024: KSA Edition,” published in September 2024. Globally, about 18% of all cars sold in 2023 were electric, according to the International Energy Agency.
There are several roadblocks to the rollout of cleaner cars in the desert kingdom, but things are changing quickly.
The Electric Vehicle Infrastructure Company (EVIQ) is at the forefront of that transformation. EVIQ was founded in late 2023 as a joint venture between the country’s sovereign wealth fund — the Public Investment Fund (PIF) — and Saudi Electricity Company.
By the end of 2023, there were around 285 public charging points in the country, according to the PwC report, mostly slow chargers. In January 2024, EVIQ opened its first fastcharging station in the country’s capital, Riyadh. By 2030, it plans to have 5,000 fast chargers installed across 1,000 locations.
“Very few people are willing to buy an electric vehicle without having the comfort of seeing infrastructure being available,” EVIQ CEO Mohammad Gazzaz, told CNN. “We’re paving the way.”
Today, EVs are mostly purchased by people that “can charge at home with their private wall boxes,” said Heiko Seitz, Global eMobility Leader, PwC Middle East, and an author of the eMobility report.
A lack of charging stations isn’t the only reason for the slow uptake of EVs in Saudi. In 2024 more than 60% of models available cost more than $65,000, according to PwC’s report, while nearly 73% of gasoline-powered models cost less than that. Generous fuel subsidies mean a liter of gasoline, about a quarter of a gallon, currently costs Saudi drivers around 60 cents.
EV batteries can struggle with the temperatures typical of a Saudi summer, and the additional energy needed for cooling them can significantly impact their charging speed and range.And the country is vast — just over a fifth of the size of the US — withthe distance between its two largest cities more than 950 kilometers (almost 600 miles), longer than the average range of most EVs.
But the country has ambitious plans for reducing its dependence on oil revenues and its carbonemissions. Oil accounted for 60% of government revenue in 2024, with crude oil and natural gas accounting for more than 20% of the country’s GDP over the same period.
It wants 30% of the cars in its capital Riyadh to be electric by 2030. But Saudi isn’t just adopting EVs, it’s “building an entire industrial ecosystem” around them, said Seitz. The country is embracing “eMobility as a strategic lever to decarbonize, diversify its economy, and localize manufacturing at scale.”
That includes plans to become an EV manufacturing hub. PIF is the largest shareholder in the US-automaker Lucid, which in 2023 opened the first car manufacturing facility in the country.
CEER, a joint venture between PIF and the Taiwanese company Foxconn, plans to launch its first Saudi-produced EV by 2026. And a joint venture between PIF and Hyundai has broken ground on a manufacturing plant in the country.
Major EV producers are now selling in the country. China’s BYD opened its first showroom therein May 2024,and in April, Tesla launched in Saudi Arabia.
Seitz said the introduction of Chinese models is likely to help drive prices down. BYD’s Saudi website lists its Atto 3 model with a starting price of approximately $27,000.
More than 40% of Saudi consumers are considering purchasing an EV in the next three years, according to PwC.
Today, there are EVIQ chargers in Riyadh and Jeddah. In April, the company rolled out its first highway EV charging station. “It’s still really foundational work,” said Gazzaz.
He said that EVIQ is targeting 50 to 60 new charging sites this year, including in smaller cities like Mecca and Medina. By the end of 2026, Gazzaz anticipates that the country will have a “minimum viable network.”
“We’re not talking only tier-one, but even tier-two cities, and covering some of those main highways,” he said. “Ultimately we’re trying to cover about 70 to 80% of travel requirements across the Kingdom by 2026.”
Gazzaz declined to share how much would need to be invested to reach the targets.
Seitz said that the country’s official target of 30% electric cars in Riyadh is likely to be met, but that “an additional push” might be required to make EVs a mass product for the entire country.
A survey published in May 2024 by Saudi Arabia’s King Abdullah Petroleum Studies and Research Center, and University College London, concluded that large-scale uptake of EVs in Riyadh would likely require the government to introduce financial incentives such as VAT exemption for new vehicles, subsidized charging, and free installation of home chargers, “at least in early stages of deployment.”
The government says it has introduced some financial incentives and subsidies for EV buyers.
Better infrastructure will help push forward the country’s EV revolution, experts say.
“EV prices are falling, model options are growing, and government signals are clear — yet range anxiety remains,” said Seitz. “Public charging is the main gap, and it’s now a top priority to fix.”
