London Climate Action Week (LCAW) from 1-8 July 2019 gave the platform for a plethora of events staged by a spectrum of different actors and stakeholders. This provided an opportunity to reflect on the UK and the global landscape: on where we are right now in terms of tackling the climate emergency; and, just as importantly, what more needs to be done.
The existence of the first ever LCAW was in itself a statement. It probably represented, at least in part, a view that it is essential to speed up the British and international response to climate change, against the backdrop of the growing anxiety about what the science and multiple extreme weather events around the world are telling us. Society – epitomized by the school strikes and Extinction Rebellion’s radicalism – is responding in ever-increasing waves. The extraordinary explosion in the growth of renewable energy over the last decade has provided hope for a cleaner, low-carbon future. The adoption of a “climate emergency” and the 2050 net-zero goal by the UK Parliament is also a substantial policy response in this country. This accelerates the UK’s current target of cutting emissions by 80% in 2050 compared to 1990 levels, a goal enshrined in the 2008 Climate Change Act. The UK’s new target is “net-zero” by 2050. But a feeling at the start of LCAW that policymakers, investors and companies are still not acting with the due urgency and ambition has not gone away, despite the collective commitment, energy and creativity that LCAW inspired.
Taking stock, it seems to us that the waves of societal actions are now making fundamental demands of governments and the private sector (or, in shorthand, the “market”).One of the landmark events for the UK Government during LCAW was the launch of the Green Finance Strategy. This strategy has been more than 12 months in the making, following the report from the Green Finance Taskforce in April 2018. Looking at the strategy’s contents, there are some welcome measures, viz the establishment of the Green Finance Institute and mobilising green finance for home energy efficiency. But the threat to regulate on the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD) by 2022 feels too much like a compromise between those who want action now and those who still feel uneasy about regulating in this area. More generally, while the introduction does convey the necessary sense of urgency, the overall package of measures feels underwhelming and a bit “last year”.
This leads on to a wider point we picked up at various LCAW gatherings: the need for government across the board to be consistent in its policymaking if it really is serious about acting on the climate emergency. This requires those responsible in differing government departments – especially climate and finance – and regulatory positions to be co-ordinated and not create gaps or vacuums which leave business and investment uncertain about the direction of travel. Whitehall seems, for example, relatively joined-up on green finance: can the same be said about its approach towards carbon pricing?
However, the market must not be given a free pass either. A key reflection from LCAW is that UK government has already put in place frameworks that should encourage investors to step up and seize the opportunities that the transition is offering. There is more than enough evidence available right now on the economic tipping points for renewables (positively) and for coal (negatively), but many investors are still proceeding overly cautiously.
All that said, we should note that it was a successful week for the divestment movement: witness announcements from organisations such as the Royal Society of Arts, the Royal College of Emergency Medicine and the National Trust that they will divest from all fossil fuels in their portfolios. In other notable news during LCAW which may be a sign of things to come, the London Stock Exchange announced – in a move designed to distinguish between carbon-intensive companies and greener producers – that they are reclassifying oil and gas companies into a non-renewable energy category
In conclusion, we believe there are some over-riding lessons that need to be applied:
- for policymakers and regulators: they should not allow finance and investment to cite policy gaps or mixed messages as an excuse not to act now on climate and sustainability;
- for the market: they cannot leave it all to governments. There is competitive advantage to getting out ahead on this agenda. Yes, the politics are difficult (Trump, Saudi Arabia, Brazil, Brexit, etc.). But the science is uncontestable, and leaving behind the niche domain of environmental periodicals for the BBC news headline and FT financial analysis. Furthermore, the evidence that low-carbon will be the growth story of the 21stcentury is accumulating; and
- finally, investors who are not yet comprehensively addressing climate-related risks and opportunities in their portfolios, and are inadequately preparing for the transition, are going to be in for a surprise when they wake up one day and find that the world has become a very different place – it’s called the Future.