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Amid the cacophony of commentary that greeted Boris Johnson’s resignation early this month, it was a pair of tweets from junior environment minister Zac Goldsmith that caught my attention.
The UK leader’s imminent departure “is likely very bad news” for the environment, Goldsmith wrote. “Most of the likely contenders [to succeed Johnson] are people who, on the whole, couldn’t give a shit about climate and nature.”
Those contenders have now been whittled down to two: foreign secretary Liz Truss, and Rishi Sunak, who recently quit after two years as Johnson’s chancellor.
For today’s edition, I dig into the candidates’ stance on climate and energy issues. Is Goldsmith right to question their interest in the environment, and how will this leadership change affect the landscape for green investment?
Meanwhile, concerns about green backsliding are very real in the private sector too: see Patrick’s item on signs that corporate investment in sustainability is set for painful cuts, as budgets come under pressure. (Simon Mundy)
Will green advocates miss Johnson when he’s gone?
US climate envoy John Kerry attracted attention — and some criticism — for his veiled warning last week to the UK’s prime ministerial candidates, urging against any dilution of commitment to national net zero emissions goals. “I will say very pointedly and adamantly — we are behind,” Kerry told the BBC. “We do not have the luxury of jiggering with the 2050 [climate targets] right now.”
Others have been more open about their worries that Britain’s next leader could retreat from Boris Johnson’s relatively enthusiastic stance on climate action. Unlike some right-of-centre leaders elsewhere, Johnson put energy transition high on his public agenda. In contrast, both Rishi Sunak and Liz Truss — the two remaining in the race to succeed him — are widely seen as tepid in their support for the net zero push.
Both candidates have been light on detail about their respective climate plans. Monday’s televised BBC debate shed little additional light. Instead of asking the candidates for policy plans on climate change, the host asked them for thoughts on what households should do to help — prompting anodyne remarks on recycling (Sunak) and memories of teenage eco-enthusiasm (Truss).
“The level of discussion from both of them is deeply inadequate,” said Chris Venables, head of politics at Green Alliance, a think-tank. “We’re not seeing anything like the level of detail needed.”
Still, many UK environmental experts reject the characterisation of Johnson as a climate champion. “Boris was a hell of a lot better at getting green headlines than getting good green outcomes,” said Tom Burke, chair of environmental consultancy E3G.
In June, the independent Climate Change Committee reported “scant evidence of delivery” against the country’s goal of reaching net zero emissions by 2050. Last week, a court found that the government’s latest net zero action plan was unlawful because it provided insufficient detail on how the goal would be achieved.
While the Johnson government’s net zero strategy was “not good enough”, it was still far ahead of most peers, Venables said, highlighting measures such as a ban on new petrol and diesel car sales from 2030.
As chancellor, Sunak gained a reputation for pushing back on some green measures, notably the expansion of government borrowing to fund the net zero agenda. But it would be hasty to infer that he is resistant to the broader goals, said Sam Hall, director of the Conservative Environment Network, a forum that seeks to rally Conservative politicians behind climate action.
“He absolutely believes in the goal of net zero, but he wants to see the private sector doing most of the financing,” Hall said. “As chancellor your role is to scrutinise new requests for public spending.”
Sunak attracted notice during last year’s COP26 in Glasgow by voicing plans to make London a leading hub for green finance. As chancellor he oversaw the introduction of new climate rules for big companies: notably, requiring them to report under the Taskforce for Climate-related Financial Disclosures framework, and to publish detailed plans for moving towards net zero emissions.
As prime minister, Sunak would introduce legislation requiring national energy independence by 2045, which suggests a dramatic expansion of renewable energy. Yet he has dismayed many green experts by promising to keep tough restrictions for onshore wind farms, which are unpopular among the 160,000 Conservative party members who will select the next leader of the party and, therefore, the country.
Even if Truss and Sunak have ambitious green policies, it might be sensible to keep quiet about them while they are competing for the affections of the Conservative party membership.
Mostly aged over 50, and 97 per cent white, Conservative members are much less keen on climate action than the country as a whole. Well over a third of them think that the government has been overreacting to climate change, according to a poll by Opinium, against just 18 per cent of the wider public.
And while most Britons prefer Sunak to Truss, the latter is firmly ahead in the polls among Conservative members, putting her seemingly on track to become the country’s third female prime minister. This is worrying for those who have been concerned about her climate credentials since her stint as environment secretary from 2014 to 2016, when she condemned large solar farms as a “blight” on the British landscape.
But Truss, like Sunak, has clearly declared her commitment to the 2050 net zero goal (the only candidate not to do so, Kemi Badenoch, was eliminated early in the contest). And while Truss has promised to eliminate “green levies” applied to household fuel bills, analysts say this need not be a setback for green energy projects, provided the Treasury makes up for any funding shortfall — as it will be legally required to do, in many cases.
Despite the continuing loud dissent of some members of parliament, Hall argues, there is now an overwhelming consensus among most Conservative politicians — as among the UK public — of the need for serious climate action. “It was in the last election manifesto, and you’ve got a strong caucus of MPs that are supporters,” he said. “I take heart from the fact that it’s not really a contentious issue.” (Simon Mundy)
Corporate bosses prepare to cut ESG spending
With talk of a global recession in the air, companies are starting to announce hiring freezes and job losses.
Shopify on Tuesday announced it would trim 10 per cent of its workforce. Already, Meta and Uber have slowed hiring while Twitter and Coinbase have pulled job offers.
Earlier this year, a battle raged for sustainable investing talent, pushing up salaries. But now there is evidence that corporate belt-tightening will not spare environmental, social and governance (ESG) specialists.
More than one-third of chief financial officers and chief executives surveyed by Gartner said they would cut sustainability spending if forced to reduce costs, the consultancy said in a report published Monday.
Sustainability was the budget item that had the second-most mentions for cuts, following mergers and acquisitions spending, said Gartner, which polled about 130 finance chiefs and chief executives in May and June.
People in corporate sustainability or ESG roles are vulnerable to the pink slip, said Cheryl D’Cruz-Young, a senior client partner at recruitment company Korn Ferry.
“Those [companies] who are only paying lip service will likely cut [ESG staff],” she said. “Companies at the start of their journey might slow their hiring.”
Beyond staffing, however, scant evidence has emerged that companies are eager to gut their sustainability spending. For example, corporate spending on energy-saving equipment continues to be a tailwind for Siemens, analysts at Morningstar said this month.
Index provider MSCI yesterday said its sales of ESG and climate subscriptions totalled $231mn, up 41 per cent from a year ago. Companies, as well as hedge funds, banks and insurance providers, helped drive the ESG and climate growth, MSCI said.
If a recession kicks in later this year, corporate sustainability spending will inevitably be reconsidered. But rather than pursuing a full-on ESG cull, companies are likely to “do more with less” to maintain their commitments while cutting costs. (Patrick Temple-West)
Smart read
In May, we reported on BlackRock’s statement that it would support fewer climate-related shareholder proposals in this year’s proxy voting season. The results are now in: our colleague Brooke Masters reveals that the asset management giant’s rate of support for proposals on environmental and social issues has fallen by nearly half, to 24 per cent — a much bigger drop than was seen among investors in general. BlackRock said many proposals in this space had become too restrictive of companies.
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