Many of the investment decisions for Britain’s green targets were made years ago, Sunak’s pivot will force firms to scramble to make sense of the government’s commitment to net zero, writes Ethan Spibey
Late Tuesday night, Rishi Sunak was springboarded into making a decision to water down multiple net zero commitments. The full scope of the policy, which had been rumoured to be in the offing since the Uxbridge by-election, demonstrates the delicate balancing act, and the current faultline, between politics and business all over the world. At the crux of this existential question for how we combat the climate crisis is the cost of green policies for everyday Brits.
The government isn’t saying that climate change isn’t a problem, they’re just saying it’s not a problem we can deal with all at once, right at this moment. Suella Braverman was sent out to soften the blow, saying “we won’t save the planet by bankrupting the British public”.
Since Theresa May started setting out laws to reach net zero by 2050, the government’s public climate commitments have been backed up with significant capital and R&D investment. Environmental, social, and corporate governance considerations for many businesses have a seat at the top table when decisions are made. Assured by previously-held long term commitments from government, sustainability has not just been put at the forefront of day-to-day business offerings but leveraged as a differentiator and competitive advantage from an increasingly eco-conscious audience. From operations and infrastructure to entire product shifts as we have seen in EV car manufacturing, the pivot from Sunak is at odds with the decisions boardrooms have been making for many years already.
Politics can operate at warp speed, whereas businesses make investment plans years, if not decades ahead.
UK businesses thrive when clarity and certainty are the order of business. Regulatory reporting underpinned by good corporate governance is a prerequisite for business’ licence to operate. Indeed, a long-term regulatory environment in which strategic decisions can be made with confidence sits in stark contrast to the political expedience of five Prime Ministers in the last six years. At the very least, what has transcended different governments since 2019, has been a commitment to green targets.
Environmental innovation can unlock a clean, green industrious revolution in all corners of the country. We know this. This is why Mini committed to continuing to build their fleet of cars in Britain, on the basis they were transitioning towards manufacturing – and selling – more electric models. It is also why Jaguar Land Rover promised to build a gigafactory in Somerset to create thousands of jobs in a growing sector of developing electric batteries. Business can lead the way in cutting-edge, sustainable products and services, but only alongside a reliable partner in government.
Sunaks speech yesterday seemed to reflect the “Ulez-effect” as the Conservatives clung onto a key constituency by acknowledging the cost pressures of some net zero commitments. It’s a lesson in politics versus business. What is savvy and even expedient at the ballot box can dent the efforts of firms which rely on certainty. Many innovative, high-growth businesses are, like one of the Prime Minister’s famous predecessor’s, not for turning. But whether they invest all of their efforts on UK soil will be up for grabs.