Summer Economic Update

EIC explores Rishi Sunak’s Summer Economic Update and what it means for businesses looking to gain a head start in the green revolution in the UK’s future.

A brave new world

The build back better campaign received a large, public endorsement from Chancellor of the Exchequer Rishi Sunak this week, who pledged in the Summer Economic Update that £3bn would be committed to the new green economy. While this is only a drop in the proverbial bucket of the £160bn Covid-19 recovery package, it has been met with great enthusiasm from both business leaders and the public.

An E.on survey conducted earlier this year, polling 500 UK-based business leaders, demonstrated that 72% felt that the pandemic has given them cause to re-evaluate their organisations priorities regarding the environment.

During the announcement, the Chancellor revealed the two major fields of improvement to be energy efficiency in public structures and a £2bn Green Homes Grant for those not in social housing. The remaining £1bn will be invested in improving the carbon usage and profile of public sector buildings through measures including double or triple glazing and smart energy meters.

“Improving the energy efficiency of buildings is crucial for reducing our emissions…. this announcement of £3bn is a welcome first step… This funding needs to be part of a comprehensive plan to improve the whole of the UK’s building stock, creating tens of thousands of jobs for the long term, not here-today-gone-tomorrow.”

UKGBC chief executive Julie Hirigoyen

Sunak also announced that £50m worth of funding would be used to support trials into early-stage energy efficiency and flexibility technology for the UK’s least efficient sectors.

The majority of respondents to E.on’s survey believe that the primary responsibility for the UK’s green revolution lies with business leaders, and the UK public, it seems, agrees.

Dancing in the dark

One of the unforeseen gifts of the pandemic has been a heightened awareness both of our potential effects on each other within our society but also the affect that our species is having on the planet. It is no secret that human behaviour is partially responsible for large-scale disease outbreaks and as a result, consumers are becoming ever more cautious about which companies to whom they declare allegiance.

The Capgemini Research Institute has also conducted a recent survey that showed almost 70% of respondents are concerned the effect that their spending habits are having on the natural world. The institute also reports that 80% have altered spending habits in the last year in response to social and environmental issues.

However, while there is clearly a market trend developing in favour of sustainable business practices, ‘greenwashing’ and a lack of transparency threaten to shake consumer trust on a mass scale. Six in ten business leaders consider their clients to be well informed of their sustainability efforts but over half of consumers have stated difficulty in confirming corporate sustainability claims.

“…when baked into an organization’s mission and purpose, sustainability has the potential to entirely change an organization’s relationship with its customers and partners… As businesses focus on transformation in the wake of the pandemic, they should put sustainability at the heart of their efforts.”

Capgemini’s VP for consumer goods and retail Kees Jacobs said.

Getting a head start

Legislation will be one of the major lynchpins in the UK’s approach to a green economic recovery, however clearly signposted legislation could also help to bolster consumer trust.

SECR stands as not only an ethical benchmark for firms that are invested in a cleaner economy, but also a declaration of intent to consumers. Compliance to such legislation demonstrates to consumers that emissions reductions is a company-wide objective and therefore representative of your brand as a whole.

The palatability of SECR is also a major benefit, while it is a complex piece of legislation; the objective is simple and easily explained to non-energy professionals. Employment of the strategies necessary to ensure compliance, be they energy efficiency measures, supply chain reorganisation or on-site generation raises a green flag to would-be clients.

Fortunately, each of these listed strategies is covered under EIC’s carbon management team, who are able to utilise over four decades of experience to create a bespoke carbon strategy for your firm. The EIC services page contains full details of its compliance offering.

 

 

 

A road map for change: UK climate goals post COVID-19

EIC outlines the call to action the UK government has received from the Committee on Climate Change (CCC) to ensure that the road map for economic recovery post COVID-19 aligns with existing environmental targets.

Forging a path

Yesterday, Prime Minister Boris Johnson announced proposed easing on several lockdown measures and made it clear that an exit strategy from COVID-19 was being developed to prevent further infection and revive the UK economy.

While the lion’s share of Johnson’s speech was devoted to these adjustments, he reiterated that maintaining social distancing would be critical in ensuring their success.

The next steps, beyond decreased restrictions on travel and exercise, will be in allowing non-key workers to return to work if their role was site-restricted but to remain working at home if possible. Thus the first sparks of economic resurrection appeared.

COVID-19 has ushered in one of the greatest economic cooling periods in modern history, in combination with geo-political tensions it has brought the oil industry to its knees and exposed many of the frailties in existing energy infrastructure.

In his speech, Johnson expressed the gravity of COVID-19, describing it as follows:

 

“The most vicious threat this country has faced in my lifetime…. [of a] kind we’ve seen never before in peace or war.”

 

However fears are now circulating that we will see a retreat away from renewable energy sources as both governments and investors move to revitalise that sector, perhaps at the cost of UK climate targets.

 

An opportunity in disguise

The CCC, among others, have stated that there is no reason that the economic recovery plan cannot be inclusive of UK climate goals. 

 

“Recovery means investing in new jobs, cleaner air and improved health. The actions needed to tackle climate change are central to rebuilding our economy. The government must prioritise actions that reduce climate risks and avoid measures that lock-in higher emissions.”

Lord Deben, CCC Chairman

 

Historically, Lord Deben is correct, perhaps the most dramatic green energy success story in recent history is that of the United States. Immediately after the 2008 financial crisis, the U.S. prioritised funding for clean energy which generated 900,000 jobs in a five-year period.

According to a recent insight from the International Renewable Energy Agency (IRENA), in excess of 17m jobs could be generated globally by 2030 through similar investment now-effectively doubling that work force.

Additionally, IRENA have calculated that this model could yield a global GDP gain of approximately $98tn by 2050, returning in the range of $3 to $8 on every dollar spent.

 

“Things have changed markedly since the last global economic downturn a decade ago – renewables are now cheaper than the alternatives” 

Richard Black, director of the Energy and Climate Intelligence Unit

 

The global picture shows many benefits to leveraging COVID-19 for the purposes of green transition however these gains are logistical as well as financial. As Fatih Birol, head of the IEA, implied, renewables have also proven far more resilient during this crisis:

 

“Only renewables are holding up during the previously unheard-of slump in electricity use…”

Fatih Birol, head of the IEA

 

Upon this rock

The responsibility now falls to the UK government to create and enact policies that reflect its commitment to carbon neutral and to an economy for the future instead of simply offering life support to fossil fuels.

Despite not presenting a comprehensive strategy, the prime minister did comment on the UK’s green trajectory while responding to questions after the announcement. Johnson declared the UK’s resolve in meeting net zero by 2050, pandemic or not, saying “…we know we can do it”.

 

 

Although COP26, this year’s proposed Glasgow climate talks, are unlikely to go ahead, the UK is still considered a global leader in the fight against climate change, however actions taken now will dictate the fortitude of both our economy and reputation in years to come:

 

“The UK now finds itself in a unique position to ramp-up climate action at home and supercharge the international response to climate change abroad…” 

Baroness Brown of Cambridge,CCC Adaptation Committee chair 

 

Thankfully, while the costs of climate inaction are all too apparent, the benefits of a green transition are more and more becoming a matter of consensus, as Richard George of Greenpeace UK states:

“…200 top economists told us that transitioning to a low-carbon economy was the most effective form of economic stimulus… Now the UK government’s climate advisors have reinforced that message… the debate is over.”

The question then becomes how individuals and businesses can contribute to, and take advantage of, this new green trajectory?

No doubt new legislation will be introduced to further incentivise greener business practices, and the Energy Transitions Commission (ETC) has made suggestions along those lines in a strategic document. 

One such suggestion is that the second wave of financial support to UK businesses be conditional on their commitment to climate-friendly policy and practices. 

Leveraging the pandemic in order to pressure businesses into adopting sustainable practices may seem extreme however it is in order to prevent a much greater catastrophe and as such might be viewed as both timely and reasonable.

That being said, legislation and compliance will likely become the government’s major tools in achieving carbon neutral within the industrial and commercial sectors. As such, the value of compliance becomes even more pronounced, particularly given the need to reduce costs during and after a period of low income.

Carbon management then, becomes a vital priority as businesses and management professionals try to anticipate and navigate this possible transition. Not unlike the lockdown itself, social responsibility and personal accountability are at the heart of Carbon management and EIC will develop a bespoke plan for your business that reflects that. 

Combined with in-house compliance and IoT empowered facility management services, EIC can integrate many of the elements of your carbon strategy into a single cohesive framework for the benefit of your shareholders, team members and clients.