Investors call on the UK Government to uphold its net-zero commitments
We recently co-signed three letters to the Prime Minister, highlighting the need for a clearer policy landscape to deliver on net-zero ambitions, as well as opposing recent announcements that signal a weakening of key climate policies. In this piece, Castlefield Partner Ita McMahon summarises the different approaches.
During August and September, we co-signed a number of letters to Prime Minister Rishi Sunak on the need for the government to uphold its existing net-zero commitments.
The August letter was co-ordinated by the UK Sustainable Investment Forum (UKSIF), a trade association for sustainable and responsible finance in the UK. Signed by 36 financial institutions representing £1.5 trillion assets under management, it expressed concern about signals from government that a weakening of key climate policies was under consideration.
The letter stressed that investors need to have clarity and certainty on climate policy in order to have the confidence to make the large-scale investments that are needed to transition to a low carbon economy.
In September, there was extensive press speculation on an imminent announcement from the government on key climate pledges, including on the dates for phasing out new petrol and diesel cars.
Against this backdrop, a climate think tank called E3G hastily co-ordinated an open letter condemning any policy rollback. We were one of over 400 signatories to the letter, with other supporters including household company names such as IKEA and EON, as well as charities such as WWF and Greenpeace.
Undeterred by the widespread pushback, the government confirmed its intention to delay the ban on petrol and diesel car sales, weaken its target on the installation of new gas boilers and cancel requirements on landlords vis-à-vis energy efficiency.
In response, the CEOs of UKSIF, Institutional Investors Group on Climate Change (IIGCC) and Principles of Responsible Investment (PRI) drafted a letter welcoming some aspects of the announcement – such as increased grid connectivity for renewable energy generation – but also highlighting the damaging impact of the delays, both economically and environmentally. We were co-signatories to that letter too, along with 31 other investors and financial institutions.
While the letters did not achieve their desired outcome, they may deter any further weakening of green policies in the future. Moreover, with an election on the horizon, this type of co-ordinated communication also sends a strong message to future political leaders.
Reflecting on the recent announcements, it’s clear that sustainable investors have a role to play – now more than ever in fact - in engaging companies on the need for urgent action on climate and net-zero planning.
Even if the regulatory imperative has weakened, investors are well-placed to frame the discussion in terms of the financial risks and opportunities for their business.
Written by Ita McMahon
Note: This article was originally published in our Sustainable Funds Quarterly Q3 2023 (page.9)