Net Zero Needs a Budget

The climate emergency is no longer a distant policy concern. It is a present fiscal reality. 

For local authorities, the question is no longer whether to act on climate. It is how to embed climate action into the financial decisions that shape services, infrastructure, procurement, estates and long-term investment. 

That is where climate budgeting comes in. 

Climate budgeting stops net zero being treated as a parallel sustainability workstream. Instead, it brings climate into the core budget process, giving it the same institutional weight as the costs, revenues and financial risks. 

In simple terms, it helps local authorities answer four critical questions: 

What does climate action cost?

• What does it save?
• What risks does it avoid?
• And what happens if we do nothing? 

For London, this matters now more than ever. 

London’s climate challenge is distinctive in scale and complexity, shaped by ageing infrastructure, a large and diverse public estate, rising heat and flood risks, entrenched fuel poverty, and heightened scrutiny over the use of public money. 

Many London boroughs have committed to net zero by 2030. The challenge now is to build the financial architecture that turns ambition into deliverable, investable programmes. 

Climate budgeting turns that ambition into something that can be planned, costed, tracked and delivered. It gives elected members and officers a clearer line of sight between spending decisions and climate outcomes. When funding is allocated to retrofit, fleet transition, low-carbon heat or new infrastructure, the carbon impact is not estimated afterwards. It is part of the decision from the start. It also strengthens financial planning. 

Climate risks carry real costs: flooding, overheating, disruption to services, rising insurance exposure and emergency repairs. Climate budgeting helps authorities anticipate those costs rather than absorb them later as unplanned pressure. 

It can also support access to green finance. Lenders and investors increasingly want to see credible, climate-aligned financial frameworks. A well-structured climate budget is not just good governance. It can help open the door to external financing and other public sector financing tools. 

But perhaps the most powerful benefit is cultural. Climate action has long suffered from a translation problem. Sustainability teams speak in carbon, finance teams speak in pounds, policy teams speak in outcomes, elected members speak to residents. 

Too often, those conversations happen in parallel, and the gap between them is where ambition quietly dies. Climate budgeting gives everyone in the room a shared language. When carbon has a cost, when emissions reductions are linked to budget lines, and when climate risk is expressed as financial exposure, climate action stops being the exclusive language of specialists. 

The facilities manager can explain LED lighting in terms a CFO recognises. The procurement officer can assess suppliers through a climate and value-for-money lens. The elected councillor can explain to residents not just what the authority is doing, but what it costs, what it saves and why it matters. 

That is when net zero moves from a leadership commitment to an organisational behaviour. 

And this is already happening across London. Through the London Councils and GLA climate budgeting working group, hosted by London Treasury Limited on behalf of the GLA, boroughs have been turning climate ambition into practical financial planning. 

One borough used its climate budget to map the cost of decarbonising its estate for the first time. Corporate buildings, schools, leisure centres, fleet and streetlighting were brought into a single financial picture, with estimated costs of over £220 million, a costed three-year delivery budget and carbon savings tracked alongside it. 

Another authority introduced a simple but powerful governance tool: every new savings proposal is assessed for its net zero impact, from ‘Very Positive’ to ‘Very Negative’. Not complex, not burdensome, but enough to make sure climate is in the room when financial decisions are made. 

A third borough used climate budgeting to strengthen its emissions forecasts by categorising projects according to funding certainty: fully funded commitments, scoped but unfunded projects, and longer-term opportunities. 

That creates a more honest conversation about risk, affordability and ambition. 

These are not theoretical exercises. They are real authorities making better decisions because climate and finance are finally speaking the same language. 

At London Treasury Limited, we have been at the centre of this work.

For the past four years, we have supported the GLA Group’s consolidated Climate Budget, covering the group’s expenditure; the most significant climate-integrated public finance exercises of its kind in the UK. We have also worked with seven London boroughs to publish their own climate budgets, helping finance and sustainability teams embed climate into core financial planning. 

Now, during London Climate Action Week 2026, we are opening up that experience to local authorities ready to get started, strengthen their approach, or bring finance and sustainability teams closer together. 

Join Us at London Climate Action Week

Mobilising Capital for Net Zero: Climate Budgeting Across London Boroughs

Time: Tuesday 23 June, 3 PM – 4 PM BST

This practical session is for local authority finance teams, sustainability leads, policy officers and senior decision-makers who want to move from ambition to action. We will explore what climate budgeting is, why it matters, and how your authority can begin embedding it into real-world financial planning. 

Register your interest here and join us as we continue to make a difference in London.

London Treasury Limited is a specialist public sector treasury and financial advisory firm. We have proudly supported the GLA Group’s consolidated Climate Budget for four consecutive years, and worked with seven London boroughs to publish their own — setting the standard for climate-integrated public financial management in London. 

Get your free ticket here.

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