22 May 2024

UK Climate Policy Briefing - May 2024

Our UK policy briefing aims to highlight the latest developments in UK climate policy directly relevant to NEDs.

Since our last briefing, there has been a range of analysis published on the state of the UK’s climate transition, much of which suggests a slowing down of net zero progress. This slowing down is at odds with developments in other regions, particularly the EU with a number of new rules being brought in, including the ratification of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), the release of corporate sustainability reporting guidelines for public consultation by China’s three major stock exchanges, and the Securities and Exchange Commission (SEC) in the US also introduced a climate reporting requirement, before being forced to put it on hold as a result of litigation. These reflect the ‘legislative overdrive’ other regions are experiencing in terms of incentivising climate investment and formalising sustainability disclosure rules. As the UK moves towards its general election, focus is increasingly on taking stock of where the Government is falling short of its green transition commitments, with the updates below looking to provide an overview of the current state of play.

Key takeaways for non-executive directors

  • HM Treasury’s Spring Budget in March has been deemed another missed opportunity for the Government to put forward the policy needed to deliver its decarbonisation targets. Although National Insurance tax cuts and a £120 million boost for the Green Industries Growth Accelerator were announced, analysis suggests “these initiatives are unlikely to move the dial on UK productivity”. Significant barriers to decarbonisation and adaptation investment remain, including mixed sustainability policy signals.
  • Recent months have seen the release of several reports showing that the UK is not on track to meet a range of climate targets, particularly regarding energy security. Organisations including SBTI are promoting businesses’ ability to forge ahead with climate strategy delivery, through Beyond Value Chain Mitigation (BVCM) efforts. Such efforts seek to go above and beyond existing science-based targets to fill gaps left by policy stagnation.
  • The Transition Planning Taskforce (TPT) published its final transition planning resources in April, including sector-specific guidance on how to undertake a transition planning cycle and research from TPT Working Groups, and a paper on the opportunities and challenges in emerging markets. HM Treasury has extended the TPT’s mandate until at least July 2024, and the FCA, which is expected to consult on policy around ISSB standards in the first half of 2024, has announced that this will also include consultation on the guidance around expectations for listed companies’ transition plans.
  • The Transition Finance Market Review (TFMR), a market-led review to explore how the UK can raise capital, invest and obtain financial services to facilitate a transition to a net zero future is expected in Summer 2024. In March, the TFMR launched a call for evidence to inform the forthcoming report.

Key developments in the UK policy landscape that NEDs need to know about

UK 2024 Election Watch

Net Zero in Key Electoral Battlegrounds

Decarbonisation Timeframes

  • Think tank, Policy Exchange, released a report in March that identified that the Labour Party’s power sector decarbonisation plans for 2030 are “infeasible in the timeframe”. The report states that this is due to the lack of skilled workforce, planning reform, and supply chain challenges. Findings do suggest that reaching the current Government’s target of a net zero power grid by 2035 “could potentially still be achieved”.

Policy Wishlist for the Next Government

  • In April, the Aldersgate Group released a ‘Programme for Government’, outlining priorities for the next UK Government, across power, industry, built environment, green finance, transport, nature, circular economy, and skills. The critical policy interventions mapped out in the report are backed by a coalition of businesses, academic institutions, and non-profit organisations.

Get Involved

Please take part in the UK Net Zero Business Census. The UK Net Zero Business Census is the largest national research initiative of its kind. The census results will provide invaluable insights into the nation’s net zero journey for policy makers, investors and business leaders.

Coming Up

On 22 May 2024, Prime Minister Rish Sunak called an early UK general election for Thursday 4 July 2024. The general election will be a pivotal moment for the UK's climate policy and business landscape. Depending on the election results, businesses may need to prepare for a shift towards more sustainable practices and potentially significant changes in environmental regulations. Those that can adapt quickly and innovate in green technologies could find new opportunities in a more climate-conscious market environment.

Looking ahead

  • In our next issue, we hope to offer analysis of the TPT’s Transition Finance Market Review (TFMR) report expected in summer 2024.
  • We also hope to report on the Government’s finalised Green Taxonomy, which was expected to be released early in 2024 but has not yet been published. The taxonomy will provide clarity on activities eligible for labelling as ‘green’ or ‘transition’ finance.

This content has been created by the Centre for Climate Engagement in collaboration with Chapter Zero.

Related Content

Collaboration with Centre for Climate Engagement
Explainer | 20 Feb 2024

UK Climate Policy Briefing - February 2024

Our UK policy briefings aim to highlight the latest developments in UK climate policy directly relevant to NEDs.

News | 18 Dec 2023

COP28 outcomes: implications for board directors

Looking ahead after the COP28 climate conference, what are the key takeaways for NEDs?

Collaboration with Centre for Climate Engagement
Explainer | 17 Nov 2023

UK Climate Policy Briefing - November 2023

Our UK policy briefing aims to highlight the latest developments in UK climate policy directly relevant to NEDs.