As the mercury rises and 2023 claims the dubious title of the hottest year on record, some segments of the UK business community have emerged as unexpected leaders in the battle against climate change. Against the backdrop of this environmental crisis and on the eve of COP28, where global efforts to combat climate change will be in focus, the World Bank’s projection of 130 million people slipping into poverty within a decade due to climate change underscores the urgency. The collapse of ecosystems could result in a decline in global GDP of $2.7 trillion annually by 2030, triggering sovereign credit downgrades for nations and adding to the global financial threat.
As the world gears up for COP28, the finance sector’s pivotal role in reshaping investments towards sustainability is poised to once again claim the spotlight. Notably, some players in the business community are stepping up where governmental initiatives falter.
On September 18, 2023, a coalition of 11 UK professional organisations, including the London Institute of Banking & Finance (a provider of asset finance accreditation), sent an open letter to Prime Minister Rishi Sunak, starkly emphasising the harsh reality that the world is far from meeting Sustainable Development Goals (SDGs). The letter said a recent UN SDG Progress Report sounded a dire warning, revealing that only 12% of the SDG targets are on track to be met by 2030, with weak progress on over 50% and 30% either stalled or regressing. “These include critical global targets on poverty, hunger, and climate. In the UK, we are on course to meet only 17% of our targets, but it is developing countries that are bearing the brunt of our collective failure,” the letter said.
A subsequent open letter, signed by 1,800 business leaders, including Dr Bevis Watts, CEO of Triodos Bank, urged Prime Minister Sunak to enhance renewable investments, protect nature, and cease new fossil fuel developments in the UK. These letters came in the wake of Sunak’s climate policy rollback and the controversial approval of the Rosebank oil and gas project in the North Sea.
Shifting the focus to the automotive sector, Ford, a key player in the UK automotive industry, called on the government to steadfastly adhere to its automotive strategy, specifically the phase-out of new Internal Combustion Engine (ICE) vehicle sales by 2030. Despite the UK government’s leadership in the transition to net-zero emissions, it later extended the electrification deadline by five years, causing concern among car manufacturers who must now navigate a more extended period of producing both ICE and Electric Vehicles (EVs).
Other industry players echoed similar concerns. Paul Hollick, chair of the Association of Fleet Operators, which represents businesses with company car and van schemes, said any major change to the EV deadline would reflect poorly on how sincerely the government takes both the needs of business and the environment.
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Behind-the-scenes: climate change
Simultaneously, the UK asset finance sector is taking a leadership role through behind-the-scenes lobbying efforts.
Addressing challenges posed by conflicting Environmental, Social, and Governance (ESG) reporting frameworks, asset finance providers are urging the government to streamline green reporting requirements. The Finance & Leasing Association (FLA), leveraging its lobbying influence, has advocated for a standardised National ESG Reporting Framework. This unified approach, aligned with global standards, aims to simplify guidelines, reduce reporting burdens, and enhance transparency, solidifying the UK’s position as a sustainable finance hub.
In the current landscape, the business community is emerging as a driving force in the battle against climate change. As governments grapple with challenges, businesses are becoming vocal advocates, demanding the commitment and action necessary for a sustainable future.Don’t miss our coverage of COP28! Subscribe here for exclusive insights & analysis.
At this juncture, segments of the business community are speaking with conviction, with certain leaders willing to critique the government’s deviations from net-zero goals and calling for consistent targets. The interplay between businesses and government policies is likely to continue to shape the trajectory of the UK’s sustainable future.