Is Sunak set to backtrack on UK’s Climate and Net Zero plans? Reaction

by | Sep 20, 2023

With a BBC report this week highlighting that the UK Government is looking to backtrack on some of its environmental targets, PM Rishi Sunak alluded to such measures in a speech last night but gave no detail. It was expected that the Government’s revised plans would be announced as part of a major speech on Friday, however it now transpires that the PM will be making his announcement today from Downing Street, at around 4.30pm.

Any backtracking of the Government’s Net Zero and climate change plans has already been met with disappointment in many circles as follows:

Gemma Woodward, head of responsible investment at Quilter Cheviot, has shared her thoughts on these plans with us as follows: “Today’s news that the government is going to significantly downgrade its climate change commitment means the burden is falling squarely on private industry. This lack of ambition and clarity is clearly leaving some very frustrated, and for investment companies it leaves the impression that it is their problem to solve, rather than working together with government.

“For some time, many UK companies have been reporting in line with the four pillars of Task Force on Climate-Related Financial Disclosures, namely: governance, strategy, risk management, and metrics and targets. Whilst the government is finally rolling this out across the public sector, it has subsequently decided that much of the action can wait.

“Without clear government policy and commitment to a climate transition, the ambition and trajectory of change within the UK will be severely diminished. From a responsible and sustainable investment perspective it has to be business as usual, however this calls into the question the future decision making of investors and allocators of capital when there is no clear impetus from government. Business investment is increasingly turning to transition projects, and with the US and EU unveiling huge incentives, the UK risks being further left behind from a capital markets perspective and present itself as a place that is not open for business.”

Lewis Johnston, ShareAction’s Director of Policy, said: “The Prime Minister has said he wants the City of London to be the world’s first net zero financial centre. Yet this apparent backtracking on agreed policies sends the opposite signal to the finance community and will be discouraging to investors.

To enable investors to play their part in supporting the UK’s transition to net zero, the government needs to demonstrate unambiguous, consistent commitment to climate action that is aligned with credible timeframes to prevent the worst impacts of climate breakdown.”

Kate Elliot, Head of ethical, sustainable and impact research at Greenbank, said: “Climate change is an existential threat that poses systemic risks for societies, the environment and the global economy. For well over a decade, the message from investors to governments on climate change has been clear: long-term policies that support the low carbon transition are key to unlocking the flow of private capital to support net zero goals. Already this year, we have seen concerns that the UK is falling behind the US and EU in terms of policy response to capture opportunities arising from the low carbon transition and any new roll-back in commitments would further threaten the UK’s position as a leader on environmental issues. The Prime Minister’s plan to row back its ban on the sale of new petrol and diesel vehicles, among other policies, represents a major change of tack.

“It is clear that the discourse around climate change needs to be reset so it is not seen as a zero-sum game between social and environmental priorities. Many policies that are badged as climate-related, such as improving the energy efficiency of housing stock, also deliver social benefits by reducing energy costs and improving living conditions for residents. The UK’s legally binding climate commitments also mean that a roll-back of commitments in one area will simply necessitate greater action in another to meet the overall carbon budget.

“Reaching net zero emissions will undoubtedly involve major changes across all areas of the global economy and governments play a critical role in determining how orderly that transition will be. Long term thinking and consistency in policy help companies and investors plan and adapt their business models over time, but uncertainty or delayed action increases the risk of a disorderly transition and the likely greater negative impacts and risks for the financial system that go along with it.”

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