Rishi Sunak has been hounded by eco-zealots at COP26 as they slammed him over the government’s stance on fossil fuels.
The Chancellor was heckled by two campaigners as he walked through the SEC in Glasgow on ‘Finance Day’ of the UN summit.
Mr Sunak, who was wearing a mask, engaged with them briefly before posing in front of cameramen with his special green ministerial box.
They challenged him over reports in August HMRC had given millions of pounds of public cash to ExxonMobil, Shell and BP.
It comes after economists warned his bid to force Britain’s biggest businesses into eco-friendly industries will benefit foreign firms.
They said his shift to make London-listed companies ditch polluting sectors will initially be a boost for ventures based abroad.
Professor of Economics at Birmingham University John Bryson told MailOnline other countries could do well initially as they plug the gap left by the UK.
Businesses also warned Mr Sunak his plan to force 450 companies to go green risk driving them abroad.
The Chancellor, who showed off a green ministerial box at COP26 today, unveiled his proposals in more detail this morning.
The move will impose requirements on all UK-listed companies to set out maps to ‘transition’ to net zero in the coming decades, with firms assessed annually.
Meanwhile bankers were told they need to hit ‘green targets’ in future to get their bonuses.
Natwest boss Alison Rose revealed the ‘Big Four’ group would make remunerations for senior executives based on environmental work.
Rishi Sunak unveiled wide-ranging proposals to ‘rewire’ the economy towards reducing global warming
Red tape that could see businesses flee Britain: What does Mr Sunak’s plan force firms to do?
Hundreds of Britain’s biggest firms will be forced to go green under plans to tackle climate change. Rishi Sunak unveiled wide-ranging proposals to ‘rewire’ the economy towards reducing global warming.
The package will see trillions of pounds of assets controlled by the City of London redirected away from carbon-intensive sectors like coal and oil towards initiatives such as electric car batteries. But it will also impose requirements on all UK-listed companies to set out proposals to ‘transition’ towards net zero in the coming decades, with firms assessed annually against their published plans.
Those that fail to make enough progress, or whose plans are deemed too weak, could face sanctions including fines or even removal from the stock exchange. Ministers hope the scheme will lead to a rapid shift away from investment in polluting industries and help drive progress towards the Government’s target of making the UK carbon neutral by 2050.
The Treasury said the plan would make the City ‘the world’s first net zero-aligned financial centre’.
But the compulsion is likely to prove controversial with some, and could have big consequences for firms in sectors such as oil, gas and mining – BP, Shell and mining giants Rio Tinto and Glencore are among those listed in London. The deal with 450 of the world’s biggest banks, pension funds and insurance firms will see almost £100billion worth of assets begin to ‘transition’ to lower carbon sectors.
At present, firms are under no obligation to go green. A recent assessment found that barely half of all companies on the FTSE 100 have so far made any commitment to move to net zero.
Footage emerged this afternoon of Mr Sunak being ambushed by the two young campaigners earlier in the day.
One of the girls asked: ‘Hi Rishi, why are you giving tax breaks to fossil fuel companies?’
But they were forced to leave him as his security stopped them from ruining his photoshoot with his ministerial green box.
Yet they still heckled him from the sideline, shouting: ‘There’s not much in that suitcase is there. ‘Where’s the climate finance, Rishi?’
Fatima-Zahra Ibrahim of the Green New Deal Rising group later explained the hounding on social media.
She wrote: ‘We just challenged Rishi on why he is subsidising fossil fuel companies.
‘Not only did he refuse to answer us, he then banned us – the only young people in the room – from his talk.
‘Is he that scared of young people asking him questions?’
Earlier today economists warned Mr Sunak’s plan to force businesses to shift to green industries would boost firms abroad.
Prof Bryson said: ‘There will be a timing issue here. The shift away from carbon-intensive industries is on-going and will accelerate in response to government policies and alterations in consumer behaviour.
‘The switch away from the internal combustion engine to electric vehicles, for example, will increasingly alter the market for petrochemicals and one outcome will be increased volatility in the petrochemical industry and eventually reductions in margins.
‘Thus, initially the market for non-eco industries will continue, but it will change as demand shifts towards more eco-friendly alternatives. Thus, initially other countries may benefit from the gaps left as UK firms focus on eco-sectors, but ultimately the primary markets are going to be based around eco-friendly industries.
‘There will be significant first or early mover advantages for firms that will come with medium to longer-term benefits. There are direct and indirect drivers behind this.
‘Direct reflect consumers who favour more eco-friendly goods and services combined with policy alterations encouraging or driving supply-side alterations.
‘Indirect would include pension funds removing non-eco activities from their portfolios. In some sectors, there is race between companies to develop product/service differentiation based on the application of circular economy approaches. This type of eco-focussed competition will become much more common.
‘There are many examples of firms benefiting from transitioning before they are forced to change. For example, one UK manufacturing firm shifted from a dependence on virgin metals as a core production input sourced from South America to using recycled metal. They set up their own refining plant based on reprocessing metal obtained from a 100 mile radius around the plant.
‘The outcome is that this company avoided both price escalation in containers and delays at UK ports. Other companies invested in enhancing energy efficiency and initially this enhanced profits, and more recently has enabled these firms to continue to produce whilst their more energy-intensive competitors have experienced significant energy cost problems. The non-eco friendly activities will increasingly come with additional costs as the shift towards more carbon-light living intensifies.’
Associate Professor in Political Economy at Birmingham University Dr Huw Macartney said it was a ‘possibility’ firms from abroad could profit from the move.
He added: ‘But there is so much pressure on investors – all around the world – to shift towards green-er strategies, and for (all) industries themselves to re-think their ‘eco’ policies, that the risk of greater competition from non-UK firms is, in my view, negligible in the long-run.’
Boris Johnson clashes with Labour’s Angela Rayner over climate change at PMQs
Boris Johnson today clashed with Angela Rayner over climate change.
The PM brushed aside the Labour deputy leader’s claim he was failing to persuade world leaders of the importance of COP26.
He said she was ‘completely in ignorance of the basic facts’ and added the UK has cut its emissions by 40 per cent since 1990.
But he did welcome the ‘broad thrust’ of her comments, adding: ‘There is a lot more to do, and there she is right.’
Earlier Ms Rayner said Mr Johnson’s party was ‘failing to make up its minds’ on coal mines in Britain.
Meanwhile Liberal Democrat leader Sir Ed Davey asked the PM to confirm Britain’s negotiation team were ‘seriously concerned’ about China’s emissions targets not going ‘fast enough or far enough’.
Mr Johnson hit back: ‘What is happening with China is very important, but it’s a mixed picture. It’s important not to be too negative at present. He’s right about the domestic Chinese coal fire production and we’re hoping for progress there.
‘What is interesting is that when China made the commitment to stop the overseas financing on coal, that had an instant impact of many of China’s friends and partners.’
Meanwhile City veteran Alasdair Haynes, chief executive of stock exchange Aquis, said it was ‘good climate disclosures are put into companies’ reports and accounts’.
But he warned there needs to be ‘proportionality’ because fast-growing firms ‘face high costs to complete their reporting’.
Planet Mark CEO Steve Malkin said: ‘The Chancellor is absolutely right to say it’s essential for the UK’s largest firms and financial institutions to go net zero, and that their efforts should be scrutinised.
‘However, the government must also look to provide more practical support to all businesses, especially SMEs, so they can not only start reducing emissions but consistently do so, ideally getting every company to net zero by at least 2050 or sooner.
‘Over the last three months leading to COP, thousands of businesses right across the UK have told us during our Zero Carbon Tour, supported by BEIS, that they want to play their part in the fight against climate change.
‘They are being asked to respond to corporate and government demands for their own net zero commitments but many do not know where to start or understand the practical steps they must undertake to reduce, measure and report their emissions.
‘There is an urgent need to provide more guidance and support on how all businesses across the UK, not just the largest corporates, can decarbonise to benefit the environment and society, especially hard pressed SMEs who doing so much for our economy and are here to support out zero carbon transition.’
Vice Chair of Metals and Mining at WoodMac Julian Kettle said: ‘I’ve previously highlighted the implausibility of carbon emission reduction by 2030 that is consistent with achieving net zero by 2050.
‘The deck is very much stacked against mining companies, who are aware of the challenges of developing supply, yet investors, policy-makers and wider society are seemingly unwilling to assist in enabling faster development.
‘Greater recycling will undoubtedly be part of the solution, but primary extraction will carry the lion’s share of the load.
‘Even if all these stars were to align, the sheer number of projects that would need to be developed concurrently presents a new problem: it would stretch the capacity of every function required to deliver them.
‘A perfect storm of demand for all disciplines, from mining engineers to regulatory and permitting departments, suppliers and contractors, would make the challenge insurmountable.’
And Director of the Oxford Sustainable Finance Programme Ben Caldecott added: ‘[It’s] exciting to see the sheer quantity of new net zero commitments from banks and investors.
‘$130 trillion of assets with net zero targets is a 25-fold increase since the UK took on the COP26 Presidency in 2019.
‘But we urgently need to focus on the quality and integrity of these promises, not simply their quantity.
‘And we need to ensure that commitments actually support the real economy transition.
‘The @antonioguterres’s announcement to convene a group to examine these issues is timely.
‘I do urge some perspective on #GFANZ $130trn. Almost none of the assets are net zero today. $130trn hasn’t been promised for deployment into climate solutions.
‘These assets are not fossil fuel free and new fossil infra is still being financed. We have lots more to do together!’
Mr Sunak promised to turn the UK into what he said will be the world’s first net-zero aligned financial centre.
He said listed companies in the UK will need to publish a transition plan that sets out their path to green their businesses.
Those that fail to make enough progress, or whose plans are deemed too weak, could face sanctions including fines or even removal from the stock exchange.
Critics of Mr Sunak’s plans fear they could lead to firms quitting the City of London to avoid the red tape.
The Chancellor arrived in Glasgow with former Bank of England governor Mark Carney ahead of a speech to delegates this morning.
Ninety One Plc, a global investment manager based in London and Cape Town, warned a slow transition to tackle climate change was needed.
CEO Hendrik du Toit told Bloomberg: ‘If we stop all financing of what I would call dirty assets, then other forms of finance will come in, own them and not transition at all. That is the real risk.’
Gunther Thallinger, the chair of the Net Zero Asset Owners Alliance, said: ‘The transformation way from fossil energy is driven by [these] science-based pathways.
‘Such an approach allows for not only a viable, but also a just transition. A simple ‘no investment in fossil energy – especially oil and gas’ would create social and economic inequities, and thus would ultimately slow down the crucial transition into renewable energy.’
He added: ‘Alliance members are already changing their investment decision-making, enabling them to work effectively with others on the transformation at the beginning of this decisive decade.
‘With science-based short-term targets for portfolio emission reductions; sector emission intensity reductions; company engagement; and financing the transition, plus neutral target-monitoring established in the form of a UN-led secretariat, we have made robust first steps.’
Director of Sustainable Capital PLC Professor Kevin Haines said there was a risk smaller firms would not be able to make the leap as easily as large ones.
He said: ‘While big corporations can dedicate whole teams to meeting net zero targets and complying with regulations, smaller businesses don’t have the capacity to process this.
‘The issue is that we have a web of regulations and goals at present that are challenging for businesses and investors to understand.
‘If it is difficult for large companies to comply, it is virtually impossible for those with fewer staff and resources to do so.
‘There are 5.5 million small businesses in the UK, accounting for three-fifths of employment and around half of the turnover in the UK private sector.
‘We need to drive down the cost of technologies such as electric vehicles and heat pumps; small businesses have a crucial part to play in doing so due to their ability to be highly innovative and agile.
‘Their capacity for innovation will be critical in producing the renewable technologies required to meet net zero targets.
‘It is therefore vital that we place small businesses at the heart of the conversations around mobilising finance.’
Global Witness warned the system needed regulation and called for the pledges to be monitored so it was not ‘doomed to fail’.
Head of forests policy and advocacy Veronica Oakeshott said: ‘Banks and financiers are the lifeblood of the fossil fuel companies and destructive agribusinesses fuelling the climate crisis – so it’s right that focus should be on them at COP26.
‘However, today’s announcement by banks risks amounting to more greenwashing if it’s not legally binding.’
Senior economist at Positive Money David Barmes companies were still ‘pouring billions into environmentally harmful projects’.
Meanwhile founder of Carbon Tracker Initiative Mark Campanale called for more details of the plans.
He said: ‘None of the financial assets announced are currently aligned with net-zero and no group of companies can say they are meeting the Paris target by continuing to invest in fossil fuels, so that needs to change considerably before London can be lauded as the world’s first net-zero financial centre and a model for the world.’
Shaun Spiers, executive director of environmental think tank Green Alliance, said: ‘Private sector investment is vital, but it will be much easier to achieve on the back of serious investment by the chancellor.’
Earlier chief executive of Natwest Alison Rose told the BBC they had started measuring emissions on a balance sheet.
She said it was working with oil and gas firms ‘to develop credible transition plans so we can track progress and work with our customers’.
But she said its main aim was to help small firms where there were ‘real business opportunities’ in ‘adopting sustainable supply chain [and] sustainable business practices’.
Mr Sunak’s move comes after years of uncertainty for the financial centre after Brexit and Covid, which among other factors has seen millions of employees working from home rather than the heart of the City.
Ministers hope the scheme will lead to a rapid shift away from investment in polluting industries and help drive progress towards the Government’s target of making the UK carbon neutral by 2050.
The Treasury said the plan would make the City ‘the world’s first net zero-aligned financial centre’.
But the compulsion is likely to prove controversial with some, and could have big consequences for firms in sectors such as oil, gas and mining – BP, Shell and mining giants Rio Tinto and Glencore are among those listed in London.
The Confederation of British Industry gave the idea a cautious welcome last night, saying business was already ‘upping its game’.
But the trade body warned it was vital ministers work with colleagues abroad to produce ‘globally consistent’ rules to prevent British-based firms being penalised.
Rain Newton-Smith, CBI chief economist, said the moves were ‘steps in the right direction’ but that it was critical they did not apply only in the UK.
‘These need to be followed up with further action from policy makers to develop globally consistent climate and sustainability disclosure standards,’ she said.
Sam Alvis, of the Green Alliance, said ‘trillions of dollars are still flowing to fossil fuels every day and voluntary measures have not got us far enough’.
He added the new system would have to have ‘strict criteria with legal bite’.
He told the conference more public investment is needed to fight climate change, but that governments also need help from the private sector.
City veteran Alasdair Haynes, chief executive of stock exchange Aquis, said it was ‘good that climate disclosures are put into companies’ reports and accounts’.
But he warned: ‘You have to have proportionality. A lot of fast-growing companies are facing high costs to complete their reporting, especially when you look at the detail of what’s needed.’
The arrangement, known as the Glasgow Financial Alliance for Net Zero, will see firms responsible for 40 per cent of all global investment sign up to net zero goals.
Mr Sunak’s deal with 450 of the world’s biggest banks, pension funds and insurance firms will see the assets begin to ‘transition’ to lower carbon sectors.
At present, firms are under no obligation to go green. A recent assessment found barely half of all on the FTSE 100 have made any commitment to move to net zero.
Under the new arrangement, a ‘transition plan taskforce’, composed of industry and academic leaders and regulators, will draw up standards that the plans must meet.
Sources said the quango is designed to prevent firms ‘greenwashing’ their records by adopting meaningless pledges. The rules will be introduced in 2023 following consultation with business.
The package will see trillions of pounds of assets controlled by the City of London redirected away from carbon-intensive sectors like coal and oil towards initiatives such as electric car batteries (stock image)
Mr Sunak also told the world this morning that more public money was needed to fund the global fight against climate change but the private sector needs to step up.
The Chancellor said developed governments are going to meet their six-year-old promise to send $100billion to developing countries in 2023.
He said: ‘While we know we are not yet meeting it soon enough, we will work closely with developing countries to do more and to reach the target soon.’
But he added: ‘Public investment alone isn’t enough, so our second action is to mobilise private finance.’
The Chancellor announced financial institutions controlling 40 per cent of global assets will align themselves to the Paris Agreement’s 1.5C limit for global warming.
He said: ‘Six years ago Paris set the ambition. Today in Glasgow we’re providing the investment we need to deliver that ambition.’
Mr Sunak was speaking ahead of Janet Yellen, the US Treasury Secretary, who said climate change is a huge opportunity for businesses.
She said: ‘The old notions of why the private sector should decarbonise because the planet must be put before profit are no longer universally true.
‘Green technologies have cost curves that continue to plunge, in many cases it is simply cost effective to go green.’
She added: ‘Addressing climate change is the greatest economic opportunity of our time.’