Rishi Sunak brings a special green ministerial box to Cop26 as he faces business fears his eco plan for the City could drive firms away from the UK
- The Chancellor arrived in Glasgow with ex-Bank of England boss Mark Carney
- Sunak unveiled plans to force hundreds of Britain’s biggest firms to go green
- Assets worth trillions redirected away from carbon-intensive sectors like coal, oil
Rishi Sunak showed off a special green Cop26 ministerial box as he addressed the climate conference today – as businesses questioned his environmental plans for the City.
The Chancellor arrived in Glasgow with former Bank of England governor Mark Carney ahead of a speech to delegates this morning.
He unveiled plans to force hundreds of Britain’s biggest firms to go green to tackle climate change, with wide-ranging proposals to ‘rewire’ the economy towards reducing global warming.
The package will see trillions of pounds of assets controlled by the City of London redirected away from carbon-intensive sectors like coal and oil towards initiatives such as electric car batteries.
But it will also impose requirements on all UK-listed companies to set out proposals to ‘transition’ towards net zero in the coming decades, with firms assessed annually against their published plans.
Those that fail to make enough progress, or whose plans are deemed too weak, could face sanctions including fines or even removal from the stock exchange.
Critics of Mr Sunak’s plans fear they could lead to firms quitting the City of London to avoid the red tape unless the approach is consistent globally.
The Confederation of British Industry gave the idea a cautious welcome last night, saying that business was already ‘upping its game’. But the trade body warned it was vital ministers work with colleagues abroad to produce ‘globally consistent’ rules to prevent British-based firms being penalised.
He told the conference more public investment is needed to fight climate change, but that governments also need help from the private sector.
Rishi Sunak unveiled wide-ranging proposals to ‘rewire’ the economy towards reducing global warming
The Chancellor arrived in Glasgow with former Bank of England governor Mark Carney ahead of a speech to delegates this morning.
He told the conference more public investment is needed to fight climate change, but that governments also need help from the private sector.
‘Public investment alone isn’t enough, so our second action is to mobilise private finance,’ he said as the conference’s finance day kicked off.
He announced that financial institutions controlling 40 per cent of global assets will align themselves to the Paris Agreement’s 1.5C limit for global warming.
‘Six years ago Paris set the ambition. Today in Glasgow we’re providing the investment we need to deliver that ambition,’ he said.
The move comes after years of uncertainty for the financial centre in the wake of Brexit and the upheaval caused by Covid-19, which among other factors has seen millions of employees working from home rather than the heart of the City.
Ministers hope the scheme will lead to a rapid shift away from investment in polluting industries and help drive progress towards the Government’s target of making the UK carbon neutral by 2050.
The Treasury said the plan would make the City ‘the world’s first net zero-aligned financial centre’.
But the compulsion is likely to prove controversial with some, and could have big consequences for firms in sectors such as oil, gas and mining – BP, Shell and mining giants Rio Tinto and Glencore are among those listed in London.
City veteran Alasdair Haynes, chief executive of stock exchange Aquis, said it was ‘good that climate disclosures are put into companies’ reports and accounts’, but warned: ‘You have to have proportionality. A lot of fast-growing companies are facing high costs to complete their reporting, especially when you look at the detail of what’s needed.’
Mr Sunak will unveil the plans today at the Cop26 climate summit in Glasgow. He will say that as one of the world’s biggest financial centres, the UK has a ‘responsibility to lead the way’ on the issue. A deal with 450 of the world’s biggest banks, pension funds and insurance firms will see almost £100billion worth of assets begin to ‘transition’ to lower carbon sectors.
The Chancellor has faced criticism from green groups over his approach to climate change, with Greta Thunberg insisting his Budget decision to cut taxes on domestic flights showed that the issue was ‘not his main priority’.
At present, firms are under no obligation to go green. A recent assessment found that barely half of all companies on the FTSE 100 have so far made any commitment to move to net zero.
The package will see trillions of pounds of assets controlled by the City of London redirected away from carbon-intensive sectors like coal and oil towards initiatives such as electric car batteries (stock image)
Under the new arrangement, a ‘transition plan taskforce’. composed of industry and academic leaders and regulators. will draw up standards that the plans must meet. Sources said the quango is designed to prevent firms ‘greenwashing’ their records by adopting meaningless pledges. The rules will be introduced in 2023 following consultation with business.
Rain Newton-Smith, CBI chief economist, said the moves were ‘steps in the right direction’ but that it was critical they did not apply only in the UK.
‘These need to be followed up with further action from policy makers to develop globally consistent climate and sustainability disclosure standards,’ she said.
Sam Alvis, of the Green Alliance, said ‘trillions of dollars are still flowing to fossil fuels every day and voluntary measures have not got us far enough’. He added that the new system would have to have ‘strict criteria with legal bite’.
The arrangement, known as the Glasgow Financial Alliance for Net Zero, will see firms responsible for 40 per cent of all global investment sign up to net zero goals.
Source: Read Full Article
