Investment managers, asset owners, banks and other financial institutions managing £1.5trn in assets have called on UK prime minister Rishi Sunak to provide long-term policy certainty to ensure sustainability objectives can be achieved.
In a letter to Sunak, signatories from the financial sector expressed concern at the government’s recent public statements and policy signals, saying that they risk undermining the UK’s leadership in the clarity, certainty and confidence of policymaking toward meeting the UK’s commitment to net zero.
Signatories added that this shift “blurs” regulatory visibility for investors and risks the ability of the finance sector to make the large-scale, transformative investment required to accelerate net zero delivery and unlock growth in the UK.
The letter detailed the recent public debates casting doubt around the UK’s 2030 phase-out of new petrol and diesel cars and 2035 phase-out of gas boilers and added that the reforms to the UK’s carbon markets, energy efficiency standards for the private rented sector, and plans to issue new oil and gas licences in the North Sea all cast uncertainty on government’s commitment to the UK’s near and longer-term climate targets.
It said: “As investors and financial institutions, we need confidence in the government’s long-term commitment to this agenda to allow us and our investee companies to make multi-billion-pound investments in the UK’s sustainable economy of the future.
“We have concerns that recent events and signals risk eroding this trust, potentially delaying net zero-related investment.”
The letter pointed out that chancellor of the exchequer Jeremy Hunt set out in his Mansion House speech that the UK “must strive to be the best place to start, grow and scale new enterprise, including in cleantech” adding that leadership in sustainable finance can ensure “we have the capital needed to make this a reality”.
To meet this objective, the government was urged to provide long-term policy, making clear that important policy pillars driving investment – like predictable carbon pricing mechanisms, the transition to zero emissions vehicles, and improved energy efficiency standards for the private rented sector and across the country’s housing stock – “will not be changed abruptly”.
James Alexander, chief executive officer at UK Sustainable Investment and Finance Association (UKSIF), said: “The global competition to capture billions of pounds of private investment in the clean industries of the future is intense. Ministers’ recent remarks are undermining investor confidence and putting the UK’s net zero head start at risk.”
He added that the major financial players are deciding where to invest, and the UK needs to look both attractive and consistent as a leading destination for sustainable investment.
Otto Thoresen, chair of the BT Pension Scheme, said: “We call on the UK government to uphold its net zero ambition and take meaningful action over the coming years to demonstrate its commitment. Long-term and consistent policy will help drive real investment into the UK economy.”
He added that holding sustainability considerations at the core of this goal will lead to a “more prosperous economy, increased growth and job creation” which in turn will help secure the pensions of the scheme’s members.
The letter was signed by 36 financial institutions that are members of the UKSIF, including Aegon Asset Management, Brunel Pension Partnership, Cardano, Jupiter Asset Management, LGPS Central, People’s Partnership, Railpen, Royal London, and Scottish Widows.