Green finance leaders urge Sunak to rethink net-zero U-turns

Dozens of investors and financial institutions have sent a letter to Prime Minister Rishi Sunak urging “certainty, consistency, clarity and continuity” for the sector on the road to net-zero.

Green finance leaders urge Sunak to rethink net-zero U-turns

The letter has been orchestrated by the Principles for Responsible Investment (PRI), UK Sustainable Investment and Finance Association (UKSIF) and the Institutional Investors Group on Climate Change (IIGCC).

Supporting organisations include the Brunel Pension Partnership, National Trust, Gresham House, Robeco and the Universities Superannuation Scheme (USS).

The letter states that signatories are “deeply concerned” by the measures announced earlier this month, including a delay to the ban on new petrol and diesel car and van sales and a weakening of several targets relating to low-carbon heat and building energy efficiency.

Sunak said he was making these changes to avoid burdening households with costs at this time and stated that he will not scrap the UK’s long-term, legally binding commitment to reach net-zero by 2050.

The letter states: “Long-term ambitions to reach net zero are a necessary starting point. But without a coherent, whole-of-government approach to the economic transition, underpinned by detailed policies to deliver on these ambitions, they are simply not achievable.”

Indeed, the UK Government’s climate advisors stated this May that credible policies exist only in regards to 25% of the emissions reductions needed through to 2050. They have warned that recent announcements may have decreased this proportion.

The letter continues: “To meet the UK’s legally binding climate commitments, we need to catalyse an additional £50-60bn of capital each year.

“Private finance will make up the bulk of this capital, and investors stand ready to support. But to create the conditions to accelerate net zero investment, we need government to uphold the ‘four Cs’ that underpin effective policymaking – certainty, consistency, clarity, and continuity.

“In the absence of strong policy incentives from Government, there is a significant risk that investment will flow to the regions and nations that are taking a more consistent, long-term approach.”

The letter implores Sunak to reconsider the announcements he has made so far and, in any case, not to backslide on any other policies relating to the UK’s low-carbon transition.

A vote-winner?

The Government has, so far, remained steadfast in arguing that the changes relating to vehicles, heating and energy efficiency were the right thing to do.

Since Sunak gave his speech, the Government has additionally delayed the implementation of biodiversity net-gain requirements on housing developers and has given the green light to the North Sea’s biggest undeveloped oil and gas field, Rosebank.

Ministers are clearly trying to build new Conservative Party rhetoric about the cost of net-zero ahead of the upcoming general election. But they have repeatedly been warned that Conservative voters and swing voters are looking to support a political party with strong environmental leadership credentials.

Right-wing think-tank Onward is the latest organisation to issue this warning. It has revealed the results of a poll of 4,010 people who voted Tory in 2019, with 57% saying they would deem the Government “incompetent” if it scrapped the 2050 net-zero target.

Those polled rank climate change as the most serious issue facing the world and within the top five most serious issues facing the UK.

Looking at the recent policy changes specifically, six in ten of those polled would support higher energy efficiency standards for new homes, while fewer than one in ten would oppose them.

Half of those polled back tax incentives to persuade landlords to make rental properties more energy efficient, while just one in ten oppose.

The survey also found strong support for a diesel scrappage scheme for low-income households and small businesses, as well as reduced VAT on public EV chargers, to help ease the transition.

Onward’s deputy director Adam Hawksbee said: “There’s no political reward from pausing net-zero, and the Prime Minister was right to reject those siren calls in his speech. But he needs to back up his approach with popular policies to help people insulate draughty homes, move to renewable energy and afford electric vehicles.”

In related news, the Energy Security and Net-Zero Committee has written to Sunak stating that: “We would like to understand how the timing of this statement, just prior to political party conferences, and the lack of engagement with
other party political leaders or elected representatives of the devolved assemblies, drives a consensus rather than potentially allowing climate to become a party political football with all of the detriment that this might entail.”

This letter adds: “We recognise the issues raised by the Prime Minister on pushing government spending on net zero when the country faces challenges on costs of living. We fail
to understand, however, how the announced delays will actually make anything cheaper for the average person.”

The Committee is chaired by Angus MacNeil, independent MP for Na h-Eileanan an Iar. There are also a further six Tory MPs and four Labour MPs on the Committee.

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