We were eased into July this year with a bout of warm summer weather, but the sun wasn’t the only thing to lift spirits. Just two days into the month, the Government laid out a Green finance Strategy that will seek to increase investment in sustainable projects and infrastructure and according to its proponents ensure the UK becomes a global hub for green investment. Closely following the announcement of the net zero by 2050 target which makes the UK the first country in the G7 to adopt the emissions target, the strategy seeks to further cement the UK position as an international leader in decarbonisation. Many observers acknowledge the pivotal role the financial sector will need to play in the establishment of a sustainable economy, more so than any other sector according to Economic Secretary to the Treasury and City Minister, John Glen.
It is hoped that increased transparency and climate-related financial exposure will drive businesses to consider the environmental impact of their operations and assets, part of the Government plan to position the UK at the forefront of green financial innovation, data and analytics. Yet as much as the availability of information will encourage businesses and investors to take accountability for the environment, this is only the start. The success of the Green Financial Strategy will not be measured by reporting but by viable projects that gain finance and move past the planning stage into execution.
A need to progress
With so many low-carbon projects still stuck in the drawing board due to lack of funding and support, there is a real need to progress but already there are doubts that the financial sector will be willing or able to fill the investment gap. Climate change is rising up the political agenda and ‘Impact Investing’’ is also a hot topic but the scale of the challenge is immense.
The latest progress report on UK decarbonisation has been published by the Committee on Climate Change and it makes sober reading. The CCC notes that current policies are insufficient for the achievement of the fourth and fifth carbon budgets (2023-27 and 2028-32). Furthermore of 27 indicators showing underlying progress, just 7 were on track. All the while, the required annual run rate for emissions reduction for net zero is now 50% higher than under the UK’s previous 2050 target.
So it appears we are witnessing an widening gap in Westminster and Whitehall as long-term commitments are expanded whilst real short-term delivery stalls. There is some risk that politicians see the commitments they are making as enough to take the heat off whilst those who prefer not to believe that change is coming can point to just how far off (in years, and ambition) that 2050 net zero target is. It will be hugely interesting over the next 12 months to see whether the UK political system is able to come to its senses generally over BREXIT and other issues and begin to take concerted action (rather than signing up to long-term targets) on energy and climate policy.
Article published by Ecuity Partner, James Higgins, originally published in the August edition of H&V News Magazine