With a leadership contest underway, fears grow that Johnson’s successor could stall the major commitments that his administration made. Alok Sharma, President for COP26, described Conservative leadership candidates who want to delay or ditch the pledge as “economically illiterate”. The shakeup in Westminster has brought about many uncertainties, not least what any weakening of climate commitment would mean for businesses. Companies have been preparing their business for several years according to current green policy for a transition to net zero, and the uncertainty of whether those policies will survive under this new leadership is a big concern.
After the rivals were eliminated, Rishi Sunak and Liz Truss are left battling to become the next Prime Minister. Former Chancellor Sunak showed limited interest on any climate policies, with the Treasury’s Net Zero Review failing to push any new polices. Furthermore, Sunak ruled out a windfall tax on gas and oil companies in his 2022 Spring statement – before introducing a “temporary, targeted energy profits levy” in May, though this was designed to help with the cost of living crisis.
Truss, the Foreign Secretary, has almost always voted against measures to address climate change and has already vowed to halt green levies on energy bills which help pay for investment in renewables. Neither candidate has been especially vocal about climate change, but this might be the nature of the Tory leadership campaign than a sign of wavering commitment to reaching net zero by 2050.
The argument from some Tories against further green commitments is that climate change policy is thwarting economic growth. One-time leadership contender and favourite of the Tory right, Suella Braverman stated she wanted to “suspend the all-consuming desire” to reach the UK’s binding commitment to be net zero by 2050 as green measures risk “zero growth”.
The economic picture is of course challenging, with a cost of living crisis and fears of a recession looming. The conflict in Ukraine also means many businesses are facing higher energy costs across the supply chain, so government adding to these costs through green levies may not be palatable currently. Green levy costs could also simply get passed on to consumers, exacerbating the cost of living crisis for struggling families.
However, many economists state that it would be economically efficient to invest now, rather than wait five, ten years where it would be even more costly to transition to net zero. The Office for Budget Responsibility warned “the greater fiscal risk would come if future governments were to choose not to significantly expand and increase carbon taxes.”
Furthermore, pursuing green policies can in fact stimulate growth by creating new openings in the job market. Most recently, Joe Biden announced plans to advance offshore wind power in the Gulf of Mexico as a way of confronting the climate crisis all while creating economic opportunities and new jobs, by shifting to green technology and renewable energy sources.
Last week saw record high temperatures, causing fires and disruptions across the UK. As Alok Sharma states, “no one should be in any doubt about how much worse this could get if we do not have a clear plan and continue to press for action during this critical decade.” Even if some politicians are talking about stalling our net zero commitments, businesses will struggle to ignore it given their stakeholders and consumers are backing action to tackle climate change.
Even if the government does row back on green targets, there is an opportunity for businesses here. Three-quarters of adults in Great Britain have stated they are worried about the impact of climate change, according to the Office of National Statistics (2021). This presents a clear opportunity for businesses to take action on environmental issues. As consumers become more involved in social issues, they expect businesses to follow. Businesses must harness this moment by taking a stance and showing climate leadership by joining the transition to net zero.
While facing intense short-term economic pressure, businesses have an opportunity to deliver on their green ambitions, and communicate their stance to customers, suppliers, and policy makers. Brands hold the power towards the future of our planet. They must be honest with their stakeholders on their progress against commitments. Doing so would sustain the green momentum, no matter who’s in Downing Street.
Written by Letitia Venchard, Corporate & Purpose.