Responding to Rishi Sunak's commitment to make the City of London the world's first "net zero finance centre" the IPPR think tank welcomes the ambition, but warns that without legal targets and adequate public investment to drive the transition, a climate-void' remains in the government's net zero strategy.
Luke Murphy, head of IPPR's Environmental Justice Commission said:
"The Chancellor's green finance ambitions should be praised, but delivery and implementation are another matter. Targets are welcome, but they are only meaningful if they're backed by a credible plan to deliver them.
"Mandating the UK's financial institutions and listed companies to publish transition plans is a step forward and is a policy that IPPR's Environmental Justice Commission has called for. But, to succeed, these transition plans must be truly grounded in the science. This will be a key test as to whether they are meaningful.
Worryingly, the Chancellor's plans also fail to require the setting of legal targets. We also need to see plans and targets extended beyond just emissions to include nature-based targets and for the creation of a public league table so the public can compare company performance.
"Finally, while commitments on private finance are welcome, it is no substitute for the vital public investment needed to drive the transition and, in that regard, there remains a climate-void at the heart of the UK government's net zero strategy."
Luke Murphy is available for interview
CONTACT
Robin Harvey, Senior Digital and Media Officer: 07779 204798 r.harvey@ippr.org
NOTES TO EDITORS
- The IPPR Environmental Justice Commission set out a comprehensive plan for reaching net zero in its final report published in July. Available here: https://www.ippr.org/research/publications/fairness-and-opportunity
- IPPR's Environmental Justice Commission recommended:
- The adoption of fair transition plans across every sector of the economy. With each containing the targets, timelines, proposals, and commitments.
- UK financial institutions should be legally required to set targets, including interim targets, to align their investments with net zero, the Paris Agreement, the wider environmental targets, and the principles of a fair transition.
- Doing so will require a move towards focussing on indicators that are most useful and introduce a degree of comparability. Science-based targets at the heart of assessing firms' climate performance bear the most promise in terms of being impactful and comparable. The promise of this approach is reflected by the recent adoption of a similar approach by global financial regulators (NGFS 2020). Though more nascent, the inclusion of science-based targets for nature should also be considered once similar robust targets have been more fully developed.
- Financial institutions should be obliged to report on their progress against these targets and where they are not being met, to set out the perceived barriers, reasons for not meeting such targets and a future pathway for meeting them. The Financial Conduct Authority should provide an impartial assessment of firms' performance against green indicators and a public league table should be introduced so that the public can compare company performance. In time, these targets for financial institutions should be mirrored by a requirement for all large UK non-financial firms to also set and report on their progress against such targets (forming part of the fair transition plans argued for below). https://www.ippr.org/files/publications/EJC%20final%20report%20July%2021/fairness-and-opportunity-part2.pdf
3. IPPR is the UK's pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain's only national think tank with a truly national presence. www.ippr.org
Chancellor: UK will be the world's first net zero financial centre