08 November 2023 - Beverley Cornaby, Director of the UK Corporate Leaders Group, responds to the first King's Speech held at yesterday's state opening of parliament.
It’s clear that the government appears to be increasingly at odds with business over its approach to net zero, which is a concern, given the need for public and private sector co-operation to deliver it.
Time is running out to tackle the climate crisis and achieve the Paris Agreement ambition to keep temperature rises to 1.5C. With every year that passes the challenge becomes greater as the scale and pace of change needed increases.
In the past the UK has led the pack, signing net zero into law, reducing emissions and with many UK businesses committed to ambitious climate targets. But much of the hard work of the transition to net zero remains to be done - a huge technological, economic and political challenge. The challenge is also an opportunity for business – and we should be in no doubt that it is the private sector that will be doing much of the heavy lifting when it comes to net zero.
In this context, business needs leadership and clarity from government. Recent interventions from the Prime Minister on net zero have failed to provide this. Having tried this tactic and not seen any movement in opinion polling (perhaps because 70% of the public still support action on net zero), it is disappointing to see the government continue down this path in the King’s Speech.
Setting out the programme for government for the year ahead is a chance to reiterate UK leadership on climate change ahead of COP28. If speculation is accurate that there will be more focus on fossil fuels and support for motorists that does not contribute to lowering emissions, this is cause for concern. Although, the direct impact of these announcements on the UK’s net zero goals may be limited, it will influence the mood music for climate politics and the signals to consumers and businesses, who are looking for reassurance. This push for a more ‘pragmatic’ approach may inadvertently lead to hesitancy at the board level, slow down decision making and delay their transition plans.
Net zero has benefited from cross-party support and is popular with the public and businesses. This provides the foundation for a long term, consensus-based approach, working through the difficult details together. A well-managed transition is the best hope for achieving a net zero that benefits the economy and is fair to consumers.
Painting climate action as a political dividing line undermines this approach. For business in particular, the planning and investment time needed for significant changes to their operations requires certainty about the direction regulation and policy are going in. Over 45 businesses and business organisations have written this week to the Chancellor to underline this point, ahead of the Autumn Statement later this month. These companies highlight the economic opportunity from net zero – the innovation, growth and job creation that it can bring to the UK. But realising this opportunity requires leadership and commitment from government. This has been seen in other parts of the world, notably the US and EU, who are investing in the low carbon economy and in turn attracting investment into those areas.
Sustainable economic growth in the coming decades will depend on the growth of the green economy. Businesses have shown that there are obvious benefits to the net zero transition – in the form of improved efficiency, reduced costs, a more circular approach, and access to new markets. With over 90% of global GDP covered by net zero targets, markets for low carbon technologies, materials and products are likely to grow rapidly –and the advantages of being a first mover could be huge.
The costs of delay are also high – to both businesses and consumers. Evidence repeatedly shows that investment and action now in the low carbon transition will avoid higher costs later – both costs created by an increasingly unpredictable climate, but also risking a rushed transition later on that is less predictable, less equitable and more expensive.
With a long to-do list in order to move from net zero ambition to delivering emissions reductions on the ground, now is not the time for the government to be unpicking policies or casting doubt on the overall goal, now is the time for strong and clear leadership.
Read more about the letter sent to the Chancellor here.
