In a letter to the UK’s prime minister Rishi Sunak, 32 signatories – including the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI) and The UK Sustainable Investment and Finance Association (UKSIF) – expressed concern with the recent government proposals to “backtrack on vital policy measures that support the UK’s transition to net zero”.
The letter focused on the importance of an “enabling policy environment” to create conditions for investors to be able to make long-term investment and asset allocation decisions.
It argued that delaying key targets and lowering the ambition of existing government policies would be “misguided”.
The letter acknowledged that while the government announcement included some positive policies, like the commitments to provide a greater level of financial support under the Boiler Upgrade Scheme and plans to speed up and enhance grid connectively, overall the delay to key targets and lowering of ambition on existing policies risk the UK missing out on investment to other regions and nations that are taking a more consistent, long-term approach.
Stephanie Pfeifer, chief executive officer of IIGCC, said: “Investor confidence is crucial to the UK being able to enjoy the economic opportunities presented by the net zero transition, including investment and the jobs that brings.”
Pfeifer added that by backtracking on climate commitments, or taking steps that put into question whether the UK will deliver on its legislative long-term commitment to net zero, the government’s announcement last week risks undermining this confidence.
David Atkin, CEO of PRI, added that the entire global economy – including the UK, its workers and communities – stands to benefit tremendously from a continued and accelerating transition to net zero.
He added: “Analysis by the CBI from earlier this year indicated an up to £57bn boost to UK economic growth by 2030 if the government accelerates progress on net zero.”
Atkin said that to secure these benefits, the UK government must not abandon its ambition on this vitally important topic. Investors remain committed to action on net zero and clearly recognise the benefits of doing so.
“It is now incumbent on the UK government to mirror this ambition and to take steps to deliver the benefits of a net zero economy to the investment community and the country at large,” he added.
James Alexander, CEO of UKSIF, said that with his background in financial services, the prime minister knows how important it is that investors get clarity and consistency from government if they are to choose to invest at scale in this country.
He said: “The UK is already at risk of falling behind other countries, who are forging ahead with huge incentives to accelerate net-zero investment, and the PM’s speech last week may only make matters worse.”
Alexander urged the prime minister to reconsider his recent “watering down” of a a number of climate change commitments, including the pushing back of the electric vehicle target, so that the UK does not miss out on the transformative investments needed to get to net zero by 2050.
The signatories to the letter include: Aviva Investors, Border to Coast Pensions Partnership, Brunel Pension Partnership, Cardano, Castlefield Investment Partners, CCLA Investment Managemene, Church Commissioners for England Church of England Pensions Board, ECO Advisors, Generation Investment Management LLP, Greenbank, Gresham House, Impax, Jupiter Asset Management, Local Authority Pension Fund Forum, Local Pensions Partnership Investments Ltd, London Pensions Fund Authority, McInroy & Wood, Mirova, National Trust, NILGSOC, Ninety One, Nordea Asset Management, P1 Investment Management, Redwheel, Robeco, SAUL Trustee Company, Stafford Capital Partners, The People’s Pension, Troy Asset Management, Universities Superannuation Scheme (USS) and WHEB Group.