When the history of 2021 is written, it’s unlikely people will think of it as having been a quiet year. The fallout from COVID-19 will feature prominently, as may England’s campaign for European Championship glory. But in the long-run it may be action against climate change and the pursuit of Net Zero which really grabs people’s attention.
To discuss this history-making agenda, Hanover recently welcomed Nick Mabey, founding Chief Executive of climate change thinktank E3G, for a discussion on the run-up to COP26 in November and what role businesses can play in the fight against climate change.
The message was clear – participation in the climate debate is no longer enough. Whilst the Paris climate conference in 2015 saw attendees praised for turning up, expectations are now far higher, particularly for younger members of society fed up with a perceived greenwashing by corporates and increasingly concerned by the fate of the planet.
If your net zero commitment by 2050 is compliance, don’t expect anyone to applaud you for that. Leadership is producing the products and services that help other people get to net zero by 2050 or before.
Whilst there are plenty of reasons to be optimistic about the progress being made and our ability to meet Net Zero, businesses cannot afford to lessen the pace if they want to be rewarded for their commitment to the green transition. Rather than setting out their own plans for Net Zero by 2050, companies wanting to show leadership must help others reach that goal, setting even more ambitious targets for themselves, such as Net Zero by 2030.
Young people may be cynical – good at diagnosing the problems in the world but less sure of how to fix them – but businesses can help to bridge that gap. Being clear about your green offer can help secure the brightest young talent, helping those entering the workforce to channel their passions. Governments all over the world provide skills funding, but delivering the training and expertise needed for the green transition will rely on businesses, cities and education providers coming together to direct this support, pooling resources to best effect.
There remains plenty of work for government too. Solving climate change will rely on having the best technology and investment moving round the world as fast as possible. Closed systems would be very damaging to this – the UK is not going to win a battle on subsidies with the EU, US and China.
A careful balance needs to be struck – between the level playing field necessary to promote competition, and the protections needed to maintain security of supply. With the recent publication of the Subsidy Control Bill in the UK and the EU Commission likely to publish proposals for carbon border adjustments on 14 July, governments are showing they intend to act.
Governments also need to get the politics of transition right. So far, the UK has managed to be the best of the G7 at decarbonising without incurring any real pain. But with no more coal power stations to turn off, a problem looms. While the question 30 years ago may have been “what is the pathway of least cost?”, now it must be: “what is the pathway of least political cost?”.
A social contract for transition must be built, with the costs falling the right way, at the right time on the right people. Long-running disputes on the funding of social care highlight how hard to square such a circle can be. Using the Government’s balance sheet to help spread these costs over a longer period of time will be vital for a just solution, but this is no silver bullet and will require cooperation and a wide base of political support.
Ultimately, it may be that business can play a higher purpose in all of this. Talking up confidence in the direction of travel can help build the necessary public support. And when a degree of pain will be necessary from everyone, business can lead by promoting an investment-based recovery, not a consumption based one.
For further information on COP26, please contact Larry Smith, Head of Energy: firstname.lastname@example.org.