Letter from UKSIF: Finance industry warns Rishi Sunak of consequences of climate wavering
Investment managers, banks, asset owners and other financial institutions representing £1.5 trillion in Assets Under Management have warned that the government’s recent rhetoric risks stopping the finance sector from making the transformative investments needed to reach net zero and grow the economy.
The industry has warned that without long-term clarity from government, the £50-60bn per year of investment needed to reach net zero won’t happen.
The warning comes in a letter sent to the Prime Minister, signed by 36 financial institutions that are members of the UK Sustainable Investment and Finance Association including Jupiter Asset Management, Scottish Widows, Aegon, and Royal London.
The finance sector is urging the government to provide long-term policy certainty to ensure the UK is a world leader in sustainable finance, by making clear that important policy pillars driving investment, like predictable carbon pricing mechanisms, the transition to EVs, and improved energy efficiency standards for housing, will not be changed abruptly.
When the Government looks committed on climate change, investors follow and can channel private capital into new technologies and projects that will decarbonise the country.
James Alexander, Chief Executive, UK Sustainable Investment and Finance Association 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.
“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.
“Holding sustainability considerations at the core of this will lead to a more prosperous economy, increased growth and job creation which in turn will help secure our members’ pensions.”
Full text of the letter
To: Rt Hon Rishi Sunak MP, Prime Minister
Dear Prime Minister,
As investment managers, banks, asset owners and other financial institutions managing £1.5 trillion in assets under management, we are writing to express concern at government’s recent public statements and policy signals, which risk undermining the UK’s leadership in the clarity, certainty, and confidence of policymaking toward meeting the UK’s commitment to net zero. This shift blurs regulatory visibility for investors and risks the ability of the finance sector to make the large-scale, transformative investments required to accelerate net-zero delivery and unlock growth in the UK.
Recent public debates have cast doubt on the UK’s 2030 phase-out of new petrol and diesel cars and 2035 phase-out of gas boilers, while 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. 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 UK could and should lead the world in sustainable finance, driving capital towards innovative British companies and creating jobs and skills across the country. As the Chancellor set out in his Mansion House speech, the UK must strive to be the best place to start, grow and scale new enterprise, including in cleantech, and leadership in sustainable finance can ensure we have the capital needed to make this a reality.
We urge the government to provide long-term policy certainty to ensure this objective can be achieved, by 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. This is essential so that our sector can help drive capital towards innovative British companies and infrastructure, and deliver prosperity across the UK, improving productivity, pay and creating 1.7 million ‘green collar’ jobs.
Building on the UK’s position as the world’s largest net exporter of financial services, sustainable finance is a major growth industry in the UK. Purposeful and predictable policy at home can position the UK financial services sector as a global leader in green investment, driving further prosperity and growth, including in emerging financial services centres outside London.
We urge you to ensure that the UK remains at the forefront of the global transition to net-zero, and to take full advantage of the short and long-term economic benefits that this will bring. We would be happy to meet with you and your colleagues in government to discuss further.
Yours sincerely,
- Aegon UK
- Aegon Asset Management
- Arabesque
- Atom Bank
- Barrow Cadbury Trust
- Bedford Row Capital
- Brunel Pension Partnership
- BT Pension Scheme (BTPS)
- Camden Council Pension Scheme
- Cardano
- Castlefield
- CCLA
- Downing LLP
- Ecology Building Society
- EdenTree Investment Management
- EMK Capital
- First Sentier Investors
- Foresight Group
- Green Investment Partners
- Gresham House
- Guinness Global Investors
- Guy’s and St Thomas’ Foundation
- HydrogenOne
- Jupiter Asset Management
- Local Government Pension Scheme Central (LGPS Central)
- Montanaro Asset Management
- P1 Investment Services
- People’s Partnership
- Railpen
- Royal London
- Scottish Widows
- Thrive Renewables
- Tide
- TPT Retirement Solutions
- Triodos Bank
- Universities Superannuation Scheme (USS)
- WHEB