Last month we held our fourth symposium to discuss what “Net Zero” really means and what’s required to achieve it, regardless of the success or otherwise of the 26th UN Climate Change Conference of the Parties (COP26) taking place in Glasgow later this year.
Given the pandemic this was the first time the symposium had been staged as a virtual event, however it was the most successful to date, with a record number of clients and friends of the company attending from across the UK.
Following a warm welcome from John Alexander, Partner and Head of Client Engagement, our keynote speaker was introduced.
The keynote speaker for the evening was Matthew Bell OBE, Director and cofounder of Frontier Economics, former chair of the UK Executive Committee on Climate Change and an expert in using economic analysis to drive effective policies on climate change.
You can watch the 2021 Symposium event on demand by clicking below:
Intro to COP26
Focusing mainly on the actions of government on climate change, Matthew reminded us that COP26 is preceded by 25 other similar meetings organised. Although none of these meetings have been entirely successful in tackling the issue of climate change, some of them made significant steps forward. He said that COP26 will be a cop-out if we expect it to solve issues that have built up over 200 years or more by itself.
Nationally, the UK has a legal commitment to achieve net zero by 2050 and Matthew’s presentation explained the Government’s goals, pathways, toolkit and monitoring framework to help us achieve this target.
With humans being the cause of climate change, as confirmed in the latest report issued by Intergovernmental Panel on Climate Change , part of the problem is relying on humans to bring about a solution.
How do we judge the success of COP26?
Globally, there are a few tests by which we can judge the success of COP26: national commitments to reduce emissions, the funding of lower income countries to make a low carbon transition, actions that allow development of key technologies (such as carbon capturing storage), and the use of checks and balances to hold governments accountable to their commitments.
Bearing in mind the changes that have happened in the last 100 years, Matthew concluded his presentation by reminding us that all is not doom and gloom, as change happens quickly if we can combine innovation, finance, government, and individual actions.
Will COP26 be a cop-out - Panel discussion
Following the presentation, Olivia Bowen, Partner and Financial Adviser at Castlefield, chaired the subsequent panel discussion featuring a line-up of expert guest speakers. Alongside Matthew Bell, other expert panellists were:
- Julia Creasey – Group Sustainability Director (Croda International)
- Teni Ekundare – Head of Investor Outreach (FAIRR)
- Ita McMahon - Responsible Investment Analyst at Castlefield Investment Partners (Castlefield)
- Professor Jonatan Pinkse – Professor of Strategy, Innovation and Entrepreneurship (Alliance Business School, Manchester University)
- Peter Uhlenbruch – Head of Investor Standards (ShareAction)
Actions needed to achieve net zero
The panel discussion highlighted key areas where action will be needed to help achieve the desired result: transformation, accountability, and interconnectedness.
Matthew started off by clarifying that ‘Net Zero’ is a legal requirement needed to be reached by 2050 and it is being monitored by the Committee on Climate Change. Currently, we don’t have the means to eliminate all the greenhouse gases that we are emitting from the atmosphere. More needs to be done in bringing our emissions down and the use of trees, soil, other natural means and technology can be explored.
In terms of the corporate response to embracing radical changes towards Net Zero, Jonatan emphasised the need for organisations to move away from a “what they’re going to do” mindset and instead start focusing on “what they can do now”.
Olivia quoted an article by ShareAction which says that over 95% of manufactured products rely on chemicals and consequently the sector is responsible for over 5.8% of global emissions. This report is also shared by the International Council of Chemical Associations  which then suggests that the chemical sector have a significant power to influence how we achieve Net Zero.
Engagement with supply chains
Julia shared some of the current actions investee firm Croda is doing to achieve their target. Chemical company Croda aim to halve emissions by 2030 for their top 10 manufacturing sites (which cover 90% of their operational emissions). She explained that Croda are going beyond simply looking at ways to reduce carbon within their own business. They are engaging with their supply chain and encouraging those companies to set and work towards their own carbon emission targets.
Assessment of fund holdings
Ita explained the assessments being carried out on all Castlefield investments to establish what proportion of fund holdings have Net Zero targets. Over 50% of weighted holding within our CFP Castlefield B.E.S.T Sustainable European fund and 60% of weighted holdings in our CFP Castlefield B.E.S.T Sustainable Income fund have signed up to Net Zero targets. Whilst acknowledging the challenges faced by smaller companies in setting their targets, Ita also reinforced that government legislation is necessary to help companies get on board and do what is needed.
Credible reporting, policies and targets
Teni emphasised the need for details and credibility for the Net Zero pledges being made by companies. She talked about how helping the food industry to start shifting their consumer preferences in relation to diets can play an important role in achieving their Net Zero target. Teni also highlighted the need for companies to keep evolving to stay relevant and profitable as the effects of climate change will equally impact their operations and finances.
Peter raised that aligning companies’ corporate governance with their Net Zero strategy will be key in incentivising everybody in the company to be on the same page with respect to decarbonisation. Ita mentioned that in her experience, although executive directors are starting to incorporate environmental and social factors into some parts of their renumeration policies, more stringent targets need to be seen in this area. One significant change that could be made is introducing legislation that allows voting on climate and other sustainability plans at AGMs as there is currently none. She is hopeful this will change within the next few years so investors can have greater input.
Castlefield’s ambition is to accurately disclose the carbon footprint of companies it invests in; however, a key challenge is the need for companies to provide data on their carbon footprint in a consistent format. Ita and the team at Castlefield look to encourage further disclosure on the plans companies are putting in place now to handle the impacts of climate change more effectively.
We can no longer deny the effects of climate change. In the words of Desmond Tutu, Former Archbishop of Cape Town,
“Twenty-five years ago people could be excused for not knowing much, or doing much, about climate change. Today we have no excuse.“
If we treat the ‘house’ that shelters us as a jungle, we can’t expect it to be good to us. We all have an active role to play in making our planet a better place for us to live in. This powerful quote by Dr Jane Goodall, Scientist & Activist is a great food for thought.
“What you do makes a difference, and you have to decide what kind of difference you want to make.”
Written by Efua Uke
All information quoted is obtained from sources which we believe to be accurate at the time of publication, but may be subject to change. We therefore cannot be held responsible for the implications of relying on this information.