But we cannot ignore the broader challenges. The fallout of this crisis and the near-term imperative to tackle energy security issues has reduced bandwidth to address other issues. This is a good segue to my third challenge. The third challenge is that it is difficult, but essential, for real economy and financial firms to make transition-driven business decisions in the absence of complete clarity on our pathway to net zero. It is easy for me to stand here and tell you that you should be making decisions now that stretch many years into the future, to manage the risks and seize the opportunities of net zero, without full clarity on the policy path to get there. But we need to recognise that setting clear and comprehensive policy will take time, likely years. The recent Green Finance Strategy takes us forward in a significant way, but the extent of policy making is formidable. We should also not be in any doubt that the transition is already building, creating opportunities and crystallising risks, and that its speed will only accelerate. Within the UK, policies on energy efficiency in buildings are driving changes now.4 And transition policies elsewhere such as the US Inflation Reduction Act will have on-shored impacts for the UK. So firms cannot, and should not, delay taking action to better understand how transition might impact their businesses. As I mentioned earlier, the CBES revealed a significant gap in the understanding of real economy firms on what the transition to net zero means for them.
Progress on climate related disclosures Third, in 2020, the quantity and quality of climate disclosures was in its infancy. We had recognised the need for it to move from the static to the strategic, for it to be forwardlooking and for it to be comparable across firms. Now, mandatory disclosures for large corporates under the TCFD are a reality in the UK, and are driving the right conversations around board tables. Here at the Bank we are soon to publish our fourth TCFD-aligned report, overcoming challenges with each new report. And internationally the ISSB is due to build on the work of the TCFD by publishing its first global standards on climate later this year – in a fraction of the time usually taken. I have very little doubt that in the future we will look back at the ISSB's work as a fundamental building block of comparable global green markets. The growth of green finance Fourth, we have seen and continue to see growth in the green finance market. The share of green finance in total finance has steadily increased, reflecting burgeoning investor demand and the financial system's ability to innovate.3 That poses new challenges, including greenwashing, and markets regulators like the FCA are responding accordingly. But it's not only green products we need to see growth in. More fundamentally, we need to see an increase in transition finance projects that help business deliver long-term emissions reductions – greening our future economy, not just investing in the currently green.