Request Free Trial
September 20, 2023

Editor’s note: UK shenanigans, plus how insurers are dealing with SFDR

Rishi Sunak outside 10 Downing Street
UK prime minister Rishi Sunak’s apparent musings about how best to slow down the country’s net zero efforts have caused uproar (Photo: Peter Nicholls/Getty Images)

The latest edition of our Sustainable Views newsletter

Dear reader,

UK prime minister Rishi Sunak knows how to pick his moments. While his climate minister Graham Stuart is in New York to attend today’s UN Climate Ambition Summit, where the UN secretary-general António Guterres will doubtless give the world another rhetorical kick up the proverbial for its failure to get to grips with climate change, Sunak is apparently musing about how best to slow down policies aimed at getting the UK to net zero emissions by 2050.

The leaked plan, though the details of what he will announce are still not clear, has caused uproar. The anti-net zero Conservatives are obviously ecstatic, but many members of Sunak’s party are not happy and businesses and investors have warned against rolling back deadlines.

And, however much Sunak wants to play to the anti-net zero crowd, under the country’s Climate Law, the government is required to set legally binding carbon budgets in line with net zero by 2050. Any weakening of emissions-reducing pledges could end up with the government in legal hot water.

“I mean, he can try, but there’s very little wriggle room in carbon budgets five and six as it stands, and unless there’s some magic technology waiting in the wings this is straight to judicial review,” commented Adam Bell, former head of energy strategy at the Department for Business, Energy and Industrial Strategy, on X (formerly Twitter). 

“Stepping back from net zero targets is bad economics, bad politics, and legally questionable, too,” said Laura Clarke, chief executive of non-profit ClientEarth. “We will be paying close attention to any announcements to assess whether they comply with the UK’s legal obligations.”

Sustainable Views will also be keeping a beady eye on what happens next. Do get in touch if you have any strong views about the impacts of watering down net zero policies

Clean energy for all

Meanwhile, across the pond, European Investment Bank president Werner Hoyer told a panel at Climate Week NYC that when supporting green energy in developing economies, “we must understand what’s in it for whom”.

Silvia tells us he gave the example of developing solar energy infrastructure in Africa and said it should be considered how much of that energy production would benefit Africa as opposed to being exported elsewhere.

The European Commission insists, for example, that its ambitious plans to import large amounts of green hydrogen, much of it potentially produced from African solar power, would be mutually beneficial. Yet many agree that ensuring the renewable energy gold rush benefits everyone will be challenging, especially in places like sub-Saharan Africa, where more than 50 per cent of the population lives without electricity.

While the UK government dithers, the US Treasury underlined its commitment to net zero yesterday by publishing a set of principles aimed at helping financial institutions advance towards climate neutrality. 

Treasury secretary Janet Yellen also gave a strong speech at Climate Week NYC, warning of the risks to the economy from climate change and the huge opportunities the energy transition can offer US companies. Are you listening, Sunak?

Temperature forecasts

In other news, Alex takes a look at how insurers are fairing under the demands of the EU’s Sustainable Finance Disclosure Regulation, and we examine a report from the City of London Corporation about how the UK can, and should, develop nature credits to help finance the protection and restoration of biodiversity. 

Finally, the Inevitable Policy Response forecasts that average global temperatures will breach 1.5C – the lower limit in the Paris Agreement – increasing systemic risks for investors, but that the ever more visible impacts of climate change will drive policies and investments that will keep warming well below the temperature rise set out in other forecasts. 

Until tomorrow,

Philippa

Philippa Nuttall is EU correspondent at Sustainable Views

 

A service from the Financial Times