Why low-carbon cities need high-value skills

To mark London Climate Action Week (LCAW), Rob Doepel, EY UK&I Managing Partner for Sustainability, looks at the net-zero challenges facing cities across the UK.

Why low-carbon cities need high-value skills

London is committed to transitioning to net-zero by 2030 in a way that includes and benefits all as equally as possible. However, like all cities across the UK, it must first overcome a lack of ‘green skills’.

The skills challenge

Without rapid reskilling, not only will the energy transition be delayed because there won’t be enough boots on the ground to make it happen, but local people will miss out on new green jobs. This is an area where I have personal experience, albeit in a different sector, as EY is currently working with energy skills body OPITO to set up a Skills Passport that will help oil and gas workers transition to the renewable sector. Developed in conjunction with the industry, trade unions and Scottish Government, the scheme will ultimately help 70,000 oil and gas sector workers to find future careers in the renewables energy sector, not only enabling the sector to grow faster but also positively impacting UK GDP.

UK cities are in need of something similar. According to the Climate Change Committee’s Skills and Net Zero report, published in May 2023, up to 725,000 new UK jobs could be created by the end of the decade in low-carbon sectors such as buildings retrofit, renewable energy generation and the manufacture of electric vehicles. The transition is also likely to create new supporting roles in everything from environmental compliance and assurance to sustainable procurement and ecosystem management. While the challenge of having these skills in place fast enough is a significant one, so are the benefits, which can extend to all city dwellers. The Skills and Net Zero report expects these to include improved health and wellbeing as a result of reduced air pollution, more comfortable homes and more active travel, as well as substantial benefits to biodiversity.

A capital for green capital – and skills

Although all UK cities face similar energy transition challenges and opportunities, one important aspect sets London apart. Its long-established status as a world-leading financial centre provides it with a unique chance to become the globe’s sustainable finance capital. There is evidence that it is already succeeding. In 2023, London topped the Global Green Finance Index for the third consecutive year. As outlined in its 2023 Green Finance Strategy publication, the UK Government has a continuing commitment to further develop the UK’s leadership in green finance. This is supported by the UK Government’s willingness to launch and sign up for new initiatives such as the Transition Plan Taskforce and Global Biodiversity Framework. This commitment to innovation can put London ahead of the world in terms of attracting green finance. As a capital for green capital, it can also help other UK cities to access the funding needed to transition to net zero.

Yet, once again, skills will be key. The UK’s Green Finance Strategy 2023 identifies a number of actions that are designed to reform international financial architecture and unlock private capital. Although London’s financial services sector is already adapting to this changing landscape, progress will need to accelerate. Skillsets must rapidly evolve: from measuring, reporting and assuring financial performance to doing the same for non-financials; from funding carbon-intensive industries to becoming a centre for green investment; and from helping companies to meet financial regulations to helping them deliver on environmental compliance and transition plans.

Here again, there is a skills gap. EY recently surveyed sustainability leaders in over 500 businesses and found that in the UK:

  • 35% of sustainability leaders expressed difficulties in hiring talent with climate change skills.
  • 33% say that a lack of board-level climate expertise represents a barrier to reaching net zero targets.

This skills shortage is perhaps one reason that, in separate research, only 5% of FTSE 100 companies have disclosed ‘credible’ and sufficiently detailed transition plans to become net zero by 2050. The barrier is not so much the companies’ intentions and plans but rather the lack of expert skills to measure and provide assurance that they are deliverable.

Closing the skills gap

In many areas, particularly financial services, the onus is rightly on private sector employers to identify skills gaps and put in place the required training. In the broader workplace, many smaller companies and individuals will not have the resources to retrain and upskill on their own. Here, sector-based initiatives, government-supported transition funding and clear signposting of initiatives will be key. There is also a need to bring schools, business and young people together through initiatives which support inclusive climate education.

The Climate Change Committee’s Skills and Net Zero report reveals that a lot of activity is already underway, from mainstreaming climate education in schools, colleges and universities to employer-led net zero training programmes and enhanced competency frameworks and professional standards. But the report also identifies areas in which government can do more to support the skills system in a way that serves national, local and individual needs in the transition to net zero.

Looking ahead

Like other UK cities, London has many challenges to meet on the road to net zero transition, but a concerted and coordinated effort on upskilling can help it to get there.

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie