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Purpose on Payday: SEC Newgate's view

29 July 2022

By Amelia Beale

While the UK faced record-breaking temperatures last week, the Conservative leadership race was also heating up, ensuring the UK simmered in July on multiple fronts.

With the temperature reaching historic highs of 40 degrees in the UK, the heatwave served as a stark reminder of the need to act now by offering a small glimpse into what our planet may look – or rather, feel – like if we do not. With this timing particularly pertinent, it would make sense for climate policy to be at the forefront of the Conservative leadership discussions… Sadly, this was not the case.

Despite experts warning that heatwaves are expected to become more frequent and more intense, the lack of discussion on the environment in the recent leadership debates was significant.

Finalists Rishi Sunak and Liz Truss focused on economic policy – namely tax cuts – and defence spending. There is also little evidence of a push from Conservative party members. In a recent YouGov survey of Conservative party members, achieving net zero came bottom of a list of 10 priorities, with only four per cent of respondents agreeing that saving the planet was in their top three priorities for the next prime minister.

So, what is their stance on green policy?

Both Truss and Sunak signed up to the Conservative Environment Network’s (CEN) environment pledge. Truss and Sunak elaborated on how they want to implement this pledge in Monday’s televised leadership debate.

Truss stated that while she backed the UK’s net zero 2050 target, she called for ways to achieve it while protecting households. Truss also reiterated her focus on energy security and has pledged that she will put a moratorium on green levies and instead increase gas extraction in the North Sea. Truss has previously also been criticised for introducing controversial cuts to subsidies for solar farms during her time as Environment Secretary, and for claiming at the time that solar farms hindered food production.

Like Truss, Sunak has also supported the national net zero goal, pushing the narrative that net zero would allow the UK to invest in the economy of tomorrow. He has announced that he will introduce policies to move towards a self-sufficient energy network by 2045. However, he has pledged to uphold the ban on new onshore wind farms in England, which would mark a departure from Boris Johnson’s plans to consider relaxing the planning rules for onshore wind in England, in areas where it has local support. Sunak has also announced that he would consider introducing new energy efficiency schemes for housing. However, some critics have noted that during his time as Chancellor, there were reports of clashes between Sunak and Johnson over green policies, and Sunak is believed by some to have delayed the release of the government’s Heat and Buildings Strategy.

Ultimately, neither Truss or Sunak has demonstrated the same level of enthusiasm for green policies and Net Zero as Boris Johnson has during his time as PM. While both have managed to secure the backing of influential Conservative MPs who are committed to keeping the UK on a 2050 Net Zero trajectory (Net Zero Support Group Chair Chris Skidmore MP is backing Sunak, and BEIS Secretary Kwasi Kwarteng has thrown his support behind Truss) it remains to be seen how much these voices will influence the direction of either’s campaign – or premiership.

Another development in July does, however, look set to push the environment up the agenda for the incoming PM: The high court has declared that the UK government has failed to meet its obligations under Climate Change Act (CCA) 2008 and it has ordered the government to outline exactly how its net zero policies will achieve the UK’s target. This legal action was led by green activists, Friends of the Earth, ClientEarth and the Good Law Project. Sam Hunter Jones, senior lawyer at ClientEarth, hailed the ruling as a “breakthrough moment in the fight against climate delay and inaction”.

Beyond politics, retrofitting has been a sustainability topic in the spotlight this month. As the energy crisis continues, the Government is increasingly being called upon to roll out a new national retrofit programme to meet sustainable energy performance in homes. The Energy Institute’s newly published report calls for all homes to be retrofitted to meet an energy performance certificate (EPC) rating C or lower. While the government’s target for this is 2035, the Climate Change Committee questions its policies to do so. Retrofitting is expected to remain a core topic in the green building sector given the opportunity to confront three key challenges - high energy bills, the UKs energy demand, and the climate.

Meanwhile, ESG continues to come under fire this month. Voices are getting louder about inconsistencies and misleading use of ESG ratings. In a special report on ESG investing this month, the Economist voiced just that – with Henry Tricks calling for an overhaul of the ESG approach to investing to become “streamlined and stripped of sanctimoniousness”. During the Finance for Impact conference this month, newly appointed City minister, Richard Fuller, also warned that without strict standards for sustainable investing, greenwashing will continue to rise. Fuller shared that “open, honest and impartial information” was needed, but stated that current data is often still “inconsistent or inaccurate”.