Investors call on UK government to uphold net-zero ambition
New UK prime minister is under pressure to maintain focus on net zero and climate policy.
The CEOs of three institutional investor-focused organisations have called on the UK’s prime minister to uphold and accelerate the delivery of the country’s net-zero commitment.
In an open letter to Liz Truss, the leaders of the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI) and the UK Sustainable Investment and Finance Association (UKSIF) said that it was “vital” for the UK’s national and economic interest to maintain its “prominent global status” on tackling climate change.
“We are writing to you to emphasise the need to uphold the UK’s net-zero commitment and to accelerate near-term delivery against this commitment,” they wrote.
The leaders highlighted that for the mid-to long-term, the solutions required to address the ongoing energy security and cost-of-living crisis in the UK are the same solutions needed to achieve longer-term net-zero objectives.
They also pointed out that the net-zero transition could attract £10bn per year of investment into the UK and create 600,000 green, “decent” jobs by 2030.
Net-zero policy vision
Stephanie Pfeifer, IIGCC CEO, said that significant private sector investment in climate solutions was required, along with a shift in capital allocation to assets that support the transition.
“To facilitate this, I urge the new prime minister to uphold net-zero ambition and set a clear policy vision underpinned by near-term actions and milestones,” she added.
David Atkin, PRI CEO, said: “In the long term, and if approached correctly, the move to net zero will help secure the UK’s clean energy supply for generations, turbocharge economic growth by creating new jobs and business opportunities, and firmly place the UK among world-leading nations on this issue.”
However, the investors warned that if the UK does not deliver on its net-zero commitment, the total cost of climate change damages could increase from 1.1% of gross domestic product to 3.3% by 2050 and 7.4% by 2100.
Cost of inaction
“Fundamentally, the cost of inaction – economically, socially and environmentally – brought about by delays or abrupt changes in policy are profound and far higher than if the UK stays the course on net zero,” the letter stated.
The leaders called for the UK government to set out a clear delivery plan for the transition of the real economy and financial services, “with credible sectoral roadmaps underpinned by the near-term policies, actions and milestones needed to shift financial flows towards net zero.”
James Alexander, UKSIF CEO, said: “A key part of this will be maintaining ambitious climate policies and building the right regulatory environment to support this. We disagree with the view that UK investors favour a ‘light-touch’ regulatory approach in response to the economic headwinds the country faces.”
The letter is also supported by eight investors: Aviva plc, Brunel Pensions Partnership, BT Pension Scheme Management, Cardano Investment, Hymans Robertson, Impax Asset Management Group, Federated Hermes Limited and Phoenix Group.