“Should we all just move to France?”
I messaged Hargreaves Lansdown’s ESG analysis team this week with a mixture of jest and desperation as French President Emmanual Macron doubled down on his commitment to net zero, following a series of rollbacks on this side of the Channel.
Macron has recognized that in addition to improvements in air quality and the wider environment, investing in the transition – including electric vehicle infrastructure, rare metal mining and the supply of alternative energy – also has economic and business benefits. Ending dependence on other countries for energy supplies, which has come into sharp focus over the past eighteen months and which costs the nation €120 billion a year.
In addition to cutting carbon emissions, the president also announced that the administration would investigate carbon capture – both necessary to combat global warming, and potentially a major undertaking as some companies and countries depend will be compensated to achieve their net profit. -zero goals.
Here in Britain, the past month has painted a very different picture, as several policies have been scrapped or relaxed, resulting in a weakened commitment to our interim emissions targets. People will now be able to buy and sell petrol and diesel cars five years later, until 2035. The heat pumps have been set back ten years and we have abolished carpooling, plans have been made for diets and meat taxes, flight taxes, and increased recycling. We have also granted controversial new permits to start extracting oil and gas in the North Sea.
See also: – Warning letter to Rishi Sunak: Britain risks losing lead in sustainable finance
Of course, emigrating (via a hybrid moving van, of course) can change the mood around you, but it is not really the solution. Achieving our global emissions goals will take more than just one passionate leader. It will take a concerted effort from consumers, businesses and countries around the world.
So before we abandon all hope, it’s worth noting that Britain’s legal obligation to reach net zero by 2050 transcends the ebb and flow of policies – and political parties.
And many with power and influence have recommitted to their “green goals” in recent weeks, despite the policy change.
The Climate Change Committee, which advises the government on its net zero plan, has released a response criticizing the government’s policy change, saying Britain has gone “backwards”.
This response was echoed in an open letter from the Institutional Investors Group on Climate Change, the UN-backed Principles for Responsible Investment and the UK Sustainable Investment and Finance Association. Asset managers including Aviva Investors, Jupiter Asset Management, Ninety One, CCLA Investment Management, Gresham House, Troy Asset Management, Nordea and Redwheel, signed the letter expressing “deep concern” about the “misguided” “backtrack”.
See also: – Chris Skidmore: We need to depoliticize net zero
Many of these investors stated that they remained committed to their net zero targets, even if the government was not. Regulations such as TCFD are still mandatory, so companies and asset managers are required to assess the risks and opportunities of climate change and to conduct detailed analyzes of the risks and opportunities presented by climate change. emissions reduction plan.
And other companies are sticking to their net-zero commitments. For example, look at the backlash from the auto industry, where companies like Ford and BMW Mini have released statements affirming their commitment to decarbonization.
Private investors are also committed. A survey of HL customers found that 70% of investors consider climate change extremely or very important when making investment decisions, and the top concern among our customers was deforestation. And while market-wide statistics show that some investors have sold their investments in recent months, responsible funds have grown 74% since 2020.
So what’s next?
This month marks the launch of the Taskforce for Nature-related Financial Disclosures (TNFD) framework, and while it is not yet clear when this will become mandatory for UK companies and asset managers, the Environmental Audit Committee will discuss making TNFD mandatory in their upcoming research on ‘The role of natural capital in the green economy’.
Like many other financial firms, we had anticipated the release of the TNFD framework and have been building on our approach to the biodiversity challenge for some time. We recognize biodiversity loss as a systemic risk to the financial sector and are building our capabilities to monitor and mitigate risk across our portfolio in line with our fiduciary duty, recognizing our influence as the largest retail investment platform in the UK.
We are not alone: many companies are already collecting data on their direct and indirect impacts on the identified areas, including climate change, land, freshwater and ocean use, pollution and the introduction of invasive alien species. The data is not yet as available or accurate as that for CO2 emissions, but it is only a matter of time.
We are part of the Make My Money Matter and the Global Canopy Deforestation Free Pensions working group, which is working to define standards in the pension sector to tackle deforestation and associated biodiversity loss. We also support the Investor Policy Dialogue on Deforestation (IPDD), a joint investor initiative designed to tackle the issue of deforestation.
The regulatory, legal and social imperatives to achieve net zero create both investment risks and opportunities. It’s a systemic shift.
As the asset management stated in an open letter to the government this week, the transition to net zero is not only essential to combat global warming, but “one of the greatest economic opportunities of the 21st century”.
One month of push-me-pull policy, you won’t change that.