Purpose on Payday

By Andrew Adie

April can be summarised in one word: ‘scrutiny’. Boris Johnson has felt the full force of governance scrutiny around the refurbishment of the flat above No 11 Downing Street, igniting a political storm that may or may not have much cut-through on doorsteps in the run up to May’s local elections and the elections in Scotland and Wales.

The questions of whether he followed parliamentary rules look set to continue rumbling on regardless of whether it impacts outside the Westminster village.

In business, scrutiny has also been intense. This week HM Treasury published a report, initially focused on financial services, calling for action to stop ‘greenwashing’. It recommends the Financial Conduct Authority has greater teeth to prevent greenwashing and states it will launch a consultation with the FCA on whether climate impact labelling should be mandatory for financial products offered to consumers, including on pensions and mortgages.

Politicians and business have also been reminded of the scrutiny facing them from consumers, activists and media as Earth Day on 22nd April was marked with President Biden’s climate summit that sought to secure greater carbon reduction commitments from countries taking part. The results were mixed as only Canada, Japan, South Korea and the US made new pledges (although the UK had previously pledged to cut carbon emissions by 78% compared to 1990 levels by 2035).

Boris Johnson also found himself facing scrutiny at this event when he informed world leaders that tackling climate change was ‘not bunny-hugging’. Prompting Greta Thunberg to change her Twitter biog to ‘bunny hugger’.

The Government has also kicked-off the next stage in its plan to get the entire UK economy to report to TCFD standards by 2025 (with large cap companies and pension schemes already required to report to these standards by 2022).

Next Wednesday (5th May) the Government consultation on how mid and small cap companies, larger private companies and LLPs should report to TCFD (Taskforce for Climate Related Financial Disclosure) standards closes. In reality the ship has sailed on TCFD so businesses objecting to having to report to these standards are unlikely to find much in the way of sympathy.

The UK has also found itself facing scrutiny from world leaders and green campaigns over its chairing of COP 26. A number are reported to have expressed concern that the UK’s internal political announcements are out of alignment with the stated objectives of COP26 (notably cutting overseas aid, scrapping the Green Homes Grant and giving new licences for oil and gas exploration in the North Sea).

In addition, the Public Accounts Committee (PAC) has published a report (28 April) on net zero delivery which accuses the Government of failing to have a credible plan to deliver its climate targets. The PAC recommends that reform of the tax system should be a key part of that plan, with carbon intensive industries and activities facing higher taxes and sustainable activities getting tax reductions and incentives.

Research from Green Alliance in April also highlighted its findings that 60% of the public support green taxes to make environmentally damaging behaviours more expensive.

Scrutiny also continues to mount from activist shareholders to drive strategic change in a number of UK businesses, with ESG levers often used to put pressure on management teams.

April 2021 has been the coldest and frostiest for 60 years, and that’s before we start talking about the weather. Many will hope the chill of scrutiny starts to thaw. They will likely be disappointed.