Stockholm (NordSIP) – On June 21, 2022 the CEOs of the Institutional Investors Group on Climate Change (IIGCC), Principles for Responsible Investment (PRI) and UK Sustainable Investment and Finance Association (UKSIF) co-signed a letter addressed to UK Prime Minister Boris Johnson and copied to three of his senior Ministers.
While acknowledging the UK’s ambitious decarbonisation targets and high-level statements as acting president of COP26, the letter raises urgent concerns about the inclusion of natural gas within the UK’s sustainable finance taxonomy. The latter is being developed by the UK authorities following the country’s departure from the EU, where a similar debate on the “greening” of gas and nuclear is also taking place. The crux of the three organisations’ arguments is that “short-term considerations on energy security must not be conflated with the taxonomy.” They advocate for a purely science-based taxonomy that excludes fossil fuels as “the scientific evidence is clear that there is no remaining carbon budget for new investments in this area.”
At the time of writing, it is safe to presume that the UKSIF/PRI/IIGCC letter may have been overshadowed by the more than fifty letters of resignation received by the Prime Minister in the interim, culminating in Johnson’s own resignation on July 7th. It is too early to predict whether the forthcoming change in administration will lead to a change of course on the taxonomy, as desired by the three NGOs. As the country considers the legacy of Johnson’s short tenure as Prime Minister, one key question is whether his environmental policies have matched his stated claims of making the UK a so-called climate leader.
The UK was one of the first countries to legally commit to a 2050 net-zero target, and domestic emissions have been falling over the last 30 years, thanks in part to the elimination of coal-fired power plants and the growth in renewables. However much of this happened before Johnson’s premiership, and his administration’s current policies have come in for significant criticism. The insulation of homes and buildings, for instance, is generally considered an “easy win” in terms of carbon emissions reduction. Indeed, Johnson’s election manifesto promised a GBP 9 billion investment in energy efficiency, but initiatives such as the Green Homes Grant were prematurely shut down having only helped less than 10% of the targeted dwellings to improve their insulation. Not only was this a significant failure in moving towards long-term net-zero targets, but the knock-on effects were acutely felt by the many independent contractors whose business models depended on the premises of the original scheme. A thriving green economy can only really grow under solid, predictable and properly communicated government policy.
The issue of home insulation is just one example of the UK government’s recent actions failing to match up with its high-level stated ambitions. Some high profile cases include the potential approval of a new coal mine and recently announced tax breaks for new fossil fuel projects. The discrepancy between the UK’s published net-zero strategy and the evidence on the ground has so alarmed certain environmental groups that they have felt compelled to take the government to court. ClientEarth, an environmental law charity, has teamed up with Friends of the Earth and the Good Law Project to bring a case to the UK High Court charging that the government’s failings in this area mean that it has effectively breached its legal duties under the country’s 2008 Climate Change Act.
The collapse of the UK government underlines the multifaceted difficulties the world faces in its efforts to mitigate the climate crisis. The machinations of national politics join the Covid-19 pandemic, war in Ukraine and other global factors in putting a “spanner in the works” of urgent international efforts to transition towards a low-carbon global economy. Despite a self-confessed climate change denier no longer inhabiting the White House, his legacy was felt when the United States’ Supreme Court decided on June 30th, 2022 to significantly curb the powers of the US Environmental Protection Agency to regulate carbon emission. The institutional investor groups behind the letter to the soon-to-be ex-Prime Minister and the litigating environmental groups will be hoping to swiftly see evidence of positive action from the incoming administration that measures up to the UK government’s stated net-zero targets.