Labour calls on government to mandate 1.5C-aligned transition plans for financial institutions and major companies (re-sent with speech included)

• Labour calls on government to mandate 1.5C-aligned transition plans for financial institutions and major companies to turbocharge the global shift to net zero and make the UK the green finance capital of the world ahead of COP26

In a major speech today ahead of COP26 in Glasgow, Shadow Business Secretary Ed Miliband set out Labour’s five demands of the Government to ‘Keep 1.5C Alive.’ Warning that the Government are miles from where they need to be to secure the necessary emission reductions to tackle the climate crisis, Miliband has set out a bold new policy to mobilise the City behind climate action, turbocharge the global shift to net zero, and make the UK the green finance capital of the world. 

Labour’s five demands of the Government to “Keep 1.5C Alive” include:

• Leading by example, with climate action at home, by investing £28bn every year until 2030 to tackle the climate crisis, and creating secure jobs in the UK; 

• Support for developing countries through reversing the overseas aid cut, delivering and surpassing the $100 billion pledge for countries to cut emissions and adapt to climate change and vaccinating the world's poorest; 

• Pressuring the big emitting nations, phasing out fossil fuels, and ensuring a just transition for workers; 

• Protecting nature with a robust Net-Zero and Nature Test for all government spending;

• Mobilising private finance behind climate action by requiring financial institutions and FTSE100 companies to publish their carbon footprint and adopt credible 1.5C-aligned transition plans.

Labour believes this fifth demand would be a game-changer. They argue the Government should mandate UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers - and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement across their portfolios by 2023.

As a major global financial centre, one of the largest impacts the UK could have on global emissions would be to mobilise the trillions of pounds of private finance in pursuit of the ambitions of the Paris Agreement and establish the UK as the green finance capital of the world.

The investments of companies and financial institutions based in The City of London account for approximately 15% of global emissions. The portfolios of the 15 largest banks and 10 largest asset managers headquartered in the UK emitted almost double the UK’s entire annual domestic emissions.

Labour is pushing for regulation to ensure companies are not just reporting on compliance with the Paris Agreement but acting on it too. This would underscore the opportunities that the green transition promises, while ensuring an orderly transition that does not leave people and communities behind.

Many companies and financial institutions are already taking a lead. Just this week, major UK companies and financial institutions collectively responsible for over £4.5 trillion in assets, including BT, Tesco, Aviva, and Legal & General Investment Management wrote to the government calling for net zero transition plans to be a mandatory requirement for large firms.These calls sit alongside plans recently announced by Shadow Chancellor Rachel Reeves to be the country’s first ‘Green Chancellor’ with a pledge to invest an additional £28 billion every year between now and 2030 to accelerate the transition to net zero. Under a Labour Government, public and private finance would be pulling in the same direction to tackle the climate crisis and unleash the opportunities that the green transition promises to every region of this country.

Ed Miliband MP, Labour’s Shadow Business Secretary, commenting on this new policy, said:

“Many of our leading financial institutions and businesses have been ahead of government when it comes to climate action. But we need all to meet the standards of the best.“That’s why we’re demanding government mandate financial institutions and our FTSE100 companies to have their own climate transition plan, consistent with 1.5 degrees, by 2023.

“Furthermore, we should be asking in Glasgow that all other major economies follow suit. This proposal would be a game-changer in the fight against climate breakdown, setting a global standard and making the UK the green finance capital of the world. It would offer huge opportunities for our companies and investors and ensure that we manage the transition properly and act in this decisive decade."

Ends

Notes to editors

• Labour’s five demands of the Government to “Keep 1.5C Alive” include: 

1) Leading by example. Climate action ​must start at home. ​By investing £28bn every year until 2030 to tackle the climate crisis, we can protect the planet and create secure jobs in the UK.

2) Supporting the most vulnerable. By reversing the overseas aid cut, delivering and surpassing the $100 billion pledge to help developing countries cut emissions and adapt to climate change, and vaccinating the world's poorest.

3) Pressuring the big polluters. By calling for 1.5C-aligned targets from the big emitting countries, phasing out fossil fuels, and ensuring a just transition for workers.

4) Protecting nature. By ending deforestation and ensuring all emissions reduction protects and promotes nature. We also need a robust Net-Zero and Nature Test for all government spending.

5) Mobilising private finance behind climate action. By requiring financial institutions and FTSE100 companies to publish their carbon footprint and adopt credible 1.5C-aligned transition plans.

• Labour is pushing for regulation to ensure companies are not just reporting on compliance with the Paris Agreement but acting on it too. The requirements, which would be developed by regulators in consultation with firms, would relate to Scope 1, 2, and 3 emissions, but would not ​initially apply to the smallest financial institutions.

• Transition plans will be crucial to a managed shift to net zero. They will help to reduce cliff-edge risks of stranded assets and fire sales in the future, and the macroprudential threat that poses to the financial system, in addition to the threat from the physical impacts of climate change. At the same time, they offer clarity for investors and businesses and highlight the opportunities that the green transition promises, while ensuring an orderly transition that does not leave people and communities behind.

• Other jurisdictions are already beginning to shift in this direction too. In April the EU published proposals which will require large companies to publish 1.5C-aligned transition plans from January 2023. Similarly, transition plans have emerged as a core component of the guidance of the Taskforce on Climate-Related Financial Disclosures (TCFD). Labour is calling on the Government to use its role in the G7, G20 and other multilateral organisations to encourage other major economies and finance capitals to follow our lead.

• Aviva and WWF have called for the government to mandate UK regulated financial institutions to develop credible transition plans that align with Net Zero and the 1.5°C goal of the Paris Agreement from 2023. - Aviva
  

• Letter from UK firms urging government to make net-zero transition plans mandatory. -Bloomberg
  

• Research by Greenpeace and WWF has found that in 2019 the portfolios of the 15 largest banks and 10 largest asset managers headquartered in the UK emitted almost double the UK’s entire annual emissions. Their estimated carbon emissions amounted to 805 million tonnes CO2e, based on year-end disclosures from 2019. This is almost 1.8 times the UK’s domestically produced emissions, and larger than Germany’s (776 million tonnes CO2e) and Canada’s domestic emissions (763 million tonnes CO2e). - Greenpeace

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  Speech by Ed Miliband MP

  Shadow Secretary of State for Business, Energy and Industrial Strategy

  13th October 2021

  Green Alliance – COP26: Time to Deliver

   

  Can I start by expressing my thanks to Green Alliance for hosting this event. You are a great organisation with brilliant leadership from Shaun Spiers, informed and informative, intelligent and committed.

  I am here today to talk about COP26, the most consequential summit that has ever taken place about the most consequential issue facing our world, which will open in Glasgow in barely a fortnight’s time.

  This summit comes amidst an energy crisis here at home. We must learn the lesson from this crisis that we need to plan ahead, we cannot neglect our resilience as the government has and the best route to energy security is to go further and faster on the green transition at home.

  COP26 matters because it will profoundly affect the world our children and grandchildren grow up in. It matters because it is a profound test of our solidarity, our ability to come together and to recognise each other’s interests. It matters because it is a chance for the world to come together and not just prevent climate breakdown but build something better. But, for such a profoundly important event, there is little public clarity about what COP26 is seeking to achieve, how we should judge its success and what we should do afterwards.

  Today I want to help rectify that. My argument is this - first, the task of COP is a matter of maths far more than people realise and if we are to understand the stakes, we need to understand the maths.

  Second, behind the maths lies geopolitics and in particular the relationship, and degree of trust, between the developing and developed world. In this context, I want to try and learn lessons for Glasgow from the Copenhagen summit, which I attended as UK Climate Change Secretary, and the successful Paris Summit of 2015.

  Third, we are still miles away from where we need to be for Glasgow partly because, despite the best efforts of Alok Sharma, the rest of government has not stepped up in the way it should.

  Fourth, the cause is not hopeless, we have to do everything we can in the remaining days but it requires all the focus, attention, and strategic thinking the government can muster.

  Fifth, given where we are, the road-map out of Glasgow matters as much as what happens at the summit. The right way now to think about Glasgow is as the start of a process not the end of it; the summit must lay out a roadmap for further progress during the rest of this decade.

  Let me start with the maths. I’m a self-confessed nerd and maybe being a climate nerd has something going for it.

  “What is the COP about?” is a question I get asked a lot. It is about whether we preserve species or destroy them, make our planet inhabitable or uninhabitable, protect the most vulnerable here and around the world from climate breakdown or not. But which of these paths we take depends on the maths.

  The Paris Agreement set out a clear and agreed aim for the world: “Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C”. But individual pledges made by countries in Paris added up not to 1.5 or 2 degrees of global warming but something around 2.7 degrees.

  In that gap is written global catastrophe. That is why the authors of the Paris Agreement rightly and wisely wrote in a five year review mechanism to try to close the gap between ambition and reality.

  This is the purpose of Glasgow: To seek to close the gap between the aggregated country by country targets and the high level aims of Paris. We know what that must eventually mean.

  This is the crucial point: The world on the basis of Paris commitments was on course for 53 gigatonnes of emissions in 2030. To have a fighting chance of keeping global warming to two degrees, we need to be at 41 gigatonnes of emissions in 2030 and for 1.5 degrees, we need to be at 25 gigatonnes.

  In other words, reductions of 12 gigatonnes from business as usual for a 2 degree world and 28 gigatonnes for a 1.5 degree world.

  This is the undeniable and frightening maths of Glasgow.

  To ‘keep 1.5 alive’ in the slogan of this summit, greenhouse gas emissions, rising for more than two centuries and set to rise again post Covid, must be cut in half in the next 9 years.

  Being a climate nerd, I have had these numbers on my whiteboard in my House of Commons office for more than two years. I wish the same had been true for government ministers.

  The maths shows why this decade has rightly been called the decisive one in the fight against climate change. That’s why net zero targets for the middle of this century – on which there has indeed been significant progress – are necessary but simply not sufficient. It’s the legally-binding Nationally Determined Contributions for this decade that will tell Glasgow’s real story.

  Now beneath the maths lie deeply complex geopolitical currents. Where should these cuts in emissions come from? Eighty percent of global greenhouse gas emissions come from G20 countries.

  China alone is responsible for 28% of the world’s greenhouse gas emissions, the US 14%, the EU 9%, India 7%. Of course, if we looked at these numbers historically the story would be very different.

  The UK may today be 1% of global emissions, but we are the 8^th largest emitter over the period since the industrial revolution.

  I draw two conclusions from these numbers:

  First, that every country needs to be in: developed, emerging, and developing, if we are to succeed. And second, that developed countries have a particular responsibility to support those countries which are still developing not to pursue our carbon-dependent model as they do so, and to take instead the zero-carbon path.

  This is where my reflection on Copenhagen and Paris comes in.

  Copenhagen ended in acrimony for a whole range of reasons, but partly it was the result of a breakdown in trust between developing and vulnerable countries on one hand and developed countries on the other. Paris was very different because the hosts learned the central lesson of Copenhagen.

  The French presidency, alongside a number of countries including the UK, understood the need to build a ‘high ambition coalition’ of vulnerable countries and developed countries committed to the climate cause. That powerful axis moved the world forward, pressuring all countries to support an agreement, one which included the commitment to 1.5 degrees.

  This is, once again, the coalition that can unlock success in Glasgow. Because only with this coalition can the big emitters and the low-ambition countries be put under real pressure to do more. No-one wants to look like they are derailing progress on climate action; but many are reluctant to act. This coalition shuts down the avenues for them to get away with it.

  So where are we?

  In some respects the last few years have been marked by real progress. Since Paris, he economics has moved on, with the price of renewables across the globe crashing below the fossil fuels they must replace, and pulling global markets in the direction of clean technologies. The politics has moved on with global pressure to tackle this issue in a way there just wasn’t more than a decade ago and the science has moved on, most notably in the IPCC’s landmark 2018 report about the importance of 1.5C.

  Unfortunately though, and I say this with deep regret, we are still a long way off where we need to be – both in the maths and the coalition building.

  We have to tell the truth about where we are.

  The best estimates are that while we need reductions of 12 gigatonnes by 2030 for a 2 degree world, and 28 gigatonnes for a 1.5 degree world, we currently stand at about 4 gigatonnes of emissions reductions on the basis of the pledges made ahead of Glasgow.

  This is not to diminish important steps forward by the United States, the EU, the UK and others in their targets, or the work being done in the private sector and civil society. But it is striking that the respected Climate Action Tracker concludes no country, apart from The Gambia, is 1.5 degree compliant in both targets and delivery.

  Not one of the G20 countries is doing enough.

  As serious in my view, the high ambition coalition has not been built. Developing countries are facing an appalling triple crisis of Covid, debt and climate breakdown. Yet the $100 billion of climate finance by 2020 for developing countries promised at Copenhagen more than a decade ago and again in Paris, has still not been delivered.

  The issue of loss and damage from climate catastrophe which will hit developing countries hardest, has still not been addressed and most appallingly of all in many ways, vaccine nationalism is leaving just 2% of the population of developing countries vaccinated.

  This is an appalling act of moral shame and also an act of self-harm on behalf of the developed world.

  The risk of deadly variants coming from the virus spreading through the developing world is something we should rightly fear. And yet we are making it all the more likely in our actions.

  The COP requires unanimity. We are asking the world’s poorest countries to focus on the climate crisis and reach a global agreement when we are leaving them on their own to face the ravages of Covid.

  It would not be fair to attribute all the failings we see to the UK Government. They cannot be held responsible for all the failings of the developed world, nor for the US-China relationship, which is far worse than it was at the time of Paris. The President of the Cop Alok Sharma deserves credit for his seriousness, his integrity and commitment.

  But the problem is that, having volunteered for the sacred responsibility of the presidency of this critical COP, the rest of the government have been at best bystanders and at worst, contributors to this global inaction.

  Above all, they have undermined our moral standing with a series of actions which cut right against climate integrity. When trust between developing and developed countries is the key to success, and we need to persuade others to step up on climate finance, the UK took the disastrous decision to cut the aid budget, the only G7 country to do so. When we are telling every major emitter they must act, the UK has done a trade deal with Australia allowing them to delete Paris temperature commitments from the text. When we have rightly made powering past coal a focus of our Presidency, at the very same time the government has flirted with a new coal mine in Cumbria. When we know moving past fossil fuels is an essential part of keeping global warming to 1.5 degrees, the UK governmet, aided and abetted by the Scottish government has chosen this moment to back the Cambo oil field. And when the UNEP emissions gap report tells us that a global green recovery could close a quarter of the emissions gap on its own, this government brought forward just a fraction of the new green spending required for the next decade.

  These things matter not simply because of what the Government has done wrong but because they indicate how they need to act in the remaining short weeks.  At this late stage, I want to constructively suggest where the government should be focusing its efforts.

  The starting point is that we should be crystal clear about the goal. The equivocation between 1.5C and 2C from Paris is now out of date: global warming must be limited to 1.5C. The G20 should set the standard here with an explicit commitment to 1.5C, and that should be endorsed by all parties at Glasgow too.

  Then to keep 1.5 alive, here is what we need to do and what we would be doing in government.

  First, there is no route to success without reassembling the high ambition coalition. So we need to deliver and exceed the $100 billion of finance promised at Copenhagen, with a 50:50 split between mitigation and adaptation.

  We need to recognise the need for additional funding in the future for loss and damage since it is developing countries who will be hit hardest by climate breakdown and crucially we need to deliver on the promise Boris Johnson himself made at the G7 summit to vaccinate the world by the end of 2022.

  We must drive these things forward before we get to Glasgow, including at the G20.

  If the Government was really serious about changing the atmosphere, as we so obviously need to do, to restore some of our standing, they could and should reinstate our overseas aid commitment to 0.7% of GDP.

  Second, we need to demand every big emitter delivers on 1.5 degree compliant targets. We should not at one and the same time be celebrating a trade deal with Australia – which still has no commitment to net zero, and has not updated its 2030 target from Paris – while they are so catastrophically failing to deliver.

  It’s time to say to every country loud and clear that we will not turn a blind eye to failure.

  The news from China today around its domestic coal use is deeply concerning. Their announcement at the UN General Assembly that they would stop financing overseas coal investment was welcome, but we need to see this matched by action at home. And we also need an ambitious target from China in this decade, peaking emissions by 2025 and declining.

  Being part of the club of nations means acting on climate. On fossil fuels, the government is right to say that we need to transition away from coal. But it is also past time to broaden that debate to include oil and gas as well. Central to that conversation must be provisions for a fair transition for workers and communities. Third, we need to mobilise every major business and financial centre behind Paris compliance.

  London is one of the world’s financial centres. The UK may be 1% of global emissions but according to Carbon Tracker, the investments of companies and financial institutions based in the City of London account for approximately 15% of global emissions.

  Many of our leading financial institutions and businesses have been ahead of government, pushing the debate forward in very welcome ways. I praise them for their actions and their forward-thinking approach. But we need all to meet the standards of the best.

  The biggest single decision we can make as a country is to mobilise our world-leading global financial centre behind climate action equal to the scale of the emergency. So government should ask all financial institutions not just to report on climate risks, as they plan to, but to bring forward by 2023 credible transition plans that are consistent with a 1.5 degree pathway. This would make a profound difference in the flow of finance out of fossil fuels and into green energy.

  We should ask all our FTSE100 companies to do the same and have their own climate transition plans, consistent with 1.5 degrees, by 2023. And furthermore, we should be asking in Glasgow that all major economies follow suit.

  We need to match billions of investment from government in climate action with trillions in private sector finance. This proposal would be a game-changer in the fight against climate breakdown. It would set the global standard and make the UK the green finance capital of the world. And it would offer huge opportunities for our companies and investors and ensure that we manage the transition properly and act in this decisive decade.

  Fourth, nature is essential to both quality of life, our responsibility to future generations and cutting emissions.

  As we take action to prevent climate breakdown, we can and must build a better world. Protecting nature and biodiversity is absolutely essential to this. If we really want to engage individuals and communities in the fight against the climate crisis, the nature agenda must be absolutely central. That is why we should be protecting nature by ending deforestation and ensuring that all climate mitigation and adaptation is nature positive. And we would have a net zero and nature test for every policy.

  Finally, the power of example really matters. What we do at home is crucial to these negotiations.

  I remember a conversation with my Chinese counterpart Xie Zhenhua at Copenhagen where he remarked on the UK’s domestic record, in particular the recently passed Climate Change Act, as giving us standing in the negotiations. Why is the UK not rated as Paris compliant by Climate Action Tracker? Because we are simply not delivering on our targets

  We are sending a signal that setting targets is the important part, delivery is secondary – and other countries are following suit.

  The next fortnight presents the ideal opportunity to change this.

  We are going to see lots of strategies and plans from government but the key test for what they propose is whether they are willing to back their plans with the scale of investment required to make this green transition fair, prosperous and successful for the UK.

  Transforming our homes can’t be done without significant government support. Supporting our industries to transition can’t be done without public investment alongside private investment. Winning the race for the new industries of the future can’t be done without leadership and investment from government.

  
  Labour’s Shadow Chancellor Rachel Reeves, a green Chancellor in waiting, has set out what needs to be done with great imagination and boldness.

  A long term climate commitment to invest - alongside the private sector - £28bn extra each and every year between now and the end of the decade.

  If you want to understand why there is a chasm between government intentions and delivery, it is the failure to invest. And not investing is the reckless, irresponsible choice as the Office of Budget Responsibility has made clear.

  Delivering our climate targets a decade late doubles the cost. The right choice is to invest for jobs and our industries. The right choice is to invest for fairness The right choice is to invest to set an example to the world.

  In sum, then, Labour is calling on the Government to do five things in order to keep 1.5C alive: support the most vulnerable; pressure the big emitters; mobilise major businesses and financial institutions behind climate action; protect nature, and lead by example at home.

  Above all, finally, at the eleventh hour, the Prime Minister must treat this summit with the seriousness which it deserves.”

  We cannot let COP26 be the greenwash summit. It’s time for the Prime Minister to get off his sun lounger, be a statesman, put away the easel and make Glasgow the success we need it to be. This summit must succeed. It still can. But we need a step-change in action from our government and governments across the world.

  Finally, let me turn to the road-map out of Glasgow.

  Particularly in the light of where we are, we need to address what happens afterwards. The fallout from the Copenhagen COP blighted the last decade. We cannot allow it to happen this decade.

  Currently the world is not due to return to negotiations around the NDCs until 2025, and only then to set targets for 2035 or 2040. That won’t do. It would be business as usual in the face of impending catastrophe.

  The vulnerable countries forum has said that we must have ambition-raising every year in this decade. They are right. Every year matters.

  Glasgow must not be the end of the story of this decade but the beginning. That is an essential part of what the UK needs to deliver as hosts. That we return to these issues year on year on year with pressure applied to countries not stepping up.

  Let me say this in conclusion, some people will wonder what the point of these summits is. In truth, they are a forcing mechanism to put world leaders on the spot. That is our collective task. The task of civil society. To be truth tellers about the maths, about what is and isn’t being achieved. To support progress, and to call out where governments fall short.

  Whatever outcome we get at Glasgow, we need to up the pace of change and it is civil society that will make the difference – holding governments around the world to the pledges they make and pushing them to make better ones.

  We are about to begin the most important few weeks of this nation’s history in the fight against the climate crisis. We are not where we need to be. But we should not give up hope.

  Every gigatonne we stop going into the atmosphere will amount to lives saved, species preserved, and a better world for our children and theirs.

  What is more, if we truly rise to the climate challenge, we know there is a vision of a better world at the end of it. Good jobs at decent wages, cleaner air, lifting people out of poverty here and around the world.

  There is a nightmare we must avoid and a dream we must build.

  This is a cause that we all must fight for in the coming weeks.