With COP26 just around the corner, there’s a pessimistic outlook among many UK financial services business leaders about hitting targets, with more than one in four believing the sector won’t hit Net Zero by 2050.
Over a third of this group say there is simply insufficient global support to make the UK financial service sector Net Zero, according to a new study shared exclusively with City A.M. this morning.
Closer to home, just under a third of business leaders who don’t think the goal is achievable pointed to insufficient UK government support, communications agency Teamspirit found after speaking to 250 UK finance leaders.
What is perhaps most worrying is that over half of finance business leaders simply do not think that Net Zero is embedded as a core feature in the UK’s financial sector at the present time.
Nearly two in five believe that while it isn’t currently, progress is being made, while 14 per cent say it doesn’t feature in decision making or policy creation and 5 per cent don’t think it will ever be a core feature.
While it’s clear the route to Net Zero remains an uphill battle, there is dedication to the cause.
Nearly three quarters of financial services business leaders believe the challenge to reach Net Zero remains vast and urgent, and the majority (81 per cent) view the next decade as critical to making change.
Moreover, the vast majority (77 per cent) of business leaders believe the UK should be the first in the world to commit to a Net Zero financial sector.
Unsurprisingly, the pandemic has created a significant bump in the road to Net Zero. Just under half (41 per cent) of FS business leaders state that Covid-19 is the biggest barrier to achieving a Net Zero financial services system, with the pandemic removing focus and shifting business priorities away from the fight against climate change.
Other barriers include a lack of global consensus and momentum on Net Zero financial systems (32 per cent), 31 per cent believe the funding needed to build a Net Zero infrastructure isn’t there and 31 per cent see delays in policy as the biggest barrier.
A cultural change in the sector (31 per cent) and the failure to include Net Zero in monetary policy (28 per cent) are also seen as significant hurdles.
“There is a real concern in the fight against climate change. The pandemic has undoubtedly diverted attention, it had to, but now it’s crucial that as the country builds back better, Net Zero is instilled at the very core of everything we do,” said Kirsty Maxey, CEO of Teamspirit and chair of the IOD Financial Services Special Interest Group.
The findings aren’t all doom and gloom.
It remains that 72 per cent of FS business leaders think meeting Net Zero by 2050 is achievable. And for those that don’t there are some clear steps that can be actioned to further progress towards Net Zero goals.
37 per cent of financial services leaders think there must be greater incentives to encourage change from within businesses, 30 per cent want to see more collaboration between businesses and 30% want Government commitment to help companies change.
“The incentive should be about being a good corporate citizen and ‘doing your bit’ rather than incentives driven per se,” said Chris Gardner, co-founder of Atelier, a property finance provider which has set a target for Net Zero across its operations and lending by 2030.
Gardner told City A.M.: “Companies with good sustainable credentials will win more business in the long run. Those who don’t will die. I would however invert this, and suggest there should be disincentives aimed at those not making the change.”
“Collaboration and sharing are essential. This is a big problem to fix that requires cross-industry collaboration. Nobody is an expert with all the answers so working with others is the only way,” he added.