**UK Announces £12 Million Disaster Risk Finance Initiative**
The UK government has unveiled a £12 million funding package designed to enhance disaster risk finance for countries vulnerable to climate change. This initiative is part of a broader strategy to establish the UK as a global leader in sustainable finance and green economic growth.
Foreign Secretary David Lammy announced the funding during a meeting with financial leaders in the City of London, alongside senior Cabinet ministers from the Treasury, Foreign Office, Department for Energy Security and Net Zero (DESNZ), and the Department for Environment, Food & Rural Affairs (DEFRA).
“The climate and nature crisis is the greatest global challenge we face. Failure to act will cause unprecedented environmental damage, fuelling displacement, conflict and famine,” Lammy stated. “Tackling this crisis is also a huge opportunity for people and businesses here in the UK, delivering on our Plan for Change. The green sector is worth trillions of pounds, and I’m determined that we seize the economic growth, jobs and security it offers.”
The £12 million commitment focuses on pre-arranged disaster finance and insurance, enabling rapid funding release in the event of climate incidents such as hurricanes and droughts. Utilising early warning systems and forecast triggers, this mechanism aims to reduce disaster response costs and accelerate recovery timelines.
The UK’s private financial sector supports this initiative, with Lammy highlighting that these measures will help unlock sustainable finance from the UK and other sources, ensuring developing countries can better manage climate shocks themselves.
This announcement is aligned with the UK’s broader efforts to position London as a leading centre for sustainable finance. Global climate investment reached $2.1 trillion last year, and with London ranked as the top global centre for sustainable finance, UK officials are keen to capitalise on this momentum.
In the previous year, the UK’s green economy expanded three times faster than the overall economy, attracting £43 billion in private investment. The government views emerging markets—projected to drive 65% of global growth by 2035—as a crucial area for scaling climate finance and green industry.
Complementing the disaster finance commitment, Lammy also announced a partnership between the UK’s Financial Services Centre of Expertise and financial regulators across ASEAN. Supported by the Financial Conduct Authority, this collaboration aims to promote regulatory alignment and green growth opportunities for UK investors in Southeast Asia.
This follows a UK-led global coalition launched recently to scale pre-arranged disaster finance tenfold by 2035. Minister for Development Baroness Chapman announced this at the 4th International Conference on Financing for Development in Sevilla, which included a commitment to increase developing market investment through public channels.
Through coordinated public and private efforts, the UK aims to mitigate global climate risks and unlock long-term domestic economic gains, reinforcing the City of London’s leadership in green finance.
