A new scale of climate ambition for the UK

As Prime Minister Keir Starmer said: “There are two paths ahead. One, the path of inaction and delay leading to further decline and vulnerability […] Or second, the path we walk, eyes wide open not just to the challenges of today but also fixed firmly on the opportunities of tomorrow.”

The UK Government’s COP29 announcement not only tackles the energy trilemma – how to achieve green, secure and affordable energy – but it also reinforces the UK as a location for investment in both technology and people that will drive the transition.

The 81% target is part of the UK’s Nationally Determined Contribution (the UK’s commitment to reduce greenhouse gas emissions) and is aimed at achieving 1.5°C and alignment with the UK’s sixth carbon budget.

What is more, the announcement at the G20 summit that the UK will lead an international effort to slash carbon emissions from power generation and build a clean power alliance to triple renewable capacity by 2030, pushes this leadership further.

Let’s not forget that the UK is an innovation economy and a global financial centre. We are expert in renewables, carbon capture and hydrogen. We know how to finance them. And we have excellent track record at foreign direct investment.  

Boards have a huge role to play

NEDs clearly have a huge role to play in answering the question as to how far climate and sustainability are part of core business strategy, and how this will influence decision-making, especially with regards to capital allocation.

Both COP29 and G20 make us all think globally, across value chains, jurisdictions, ecosystems and territories. They remind NEDs that individual companies are part of a complex matrix of people and organisations that drive global business and impact the planet for better or worse. This is played out in transition planning which asks for the impact of the entity on all stakeholder groups, communities and the economy.

COPs demonstrate the cascading effect of international regulation…without them the sense of progress through standards, frameworks and regulation would be harder to spot. But we need to see those efforts around meeting standards replicated in embedding climate action into business strategy. That is why the role of boards is so crucial.

Against a backdrop of the US elections

All of this comes hot on the heels of the US election and the expectation of a low regulation, low-scrutiny US corporate environment for the term ahead.

International commitments on climate may take a back seat under the new US regime – they may even go by the wayside. Clearly, as the world’s second biggest emitter (after China) and the world’s biggest economy, less action from the US will put huge pressure on the rest of the world to deal with any resultant gap.

But the US has always been a keen competitor – especially in new markets. There is so much economic benefit to be had in being inventor, manufacturer and financier of climate solutions. And the renewables map of the US is much less partisan than you would think – Texas is both big in oil and big in renewable energy. Hopefully the size of the prize is too big to dismiss.

It will be interesting to watch what trade tariffs come into play, how they impact the prevalence of green technologies in the US – especially around electric vehicles – and the impact on geopolitics and climate investment.

A crucial decade for climate

COP29 – the finance COP – is largely considered the gateway to COP30 which takes place at the mid-point of this crucial decade for climate. Any signs of US retrenchment on international commitments will be keenly noted in COPs to come.

After all, a collective international approach to climate action has always been the difference-maker. We have already seen how important cross-jurisdictional regulation has become in driving climate policy, together, across nations.

But the roles of Chairs and non-executive directors cannot be underestimated. It is for them to guide the companies on whose boards they sit towards a net positive future, harness investment opportunities, make the right decisions beyond company boundaries, regardless of geopolitics, for the benefit of all stakeholders.