The Brexit debate remains hotly contested on both sides; the same can be said for how the economy is run. This election result promises to have deep seated and long lasting ramifications for the losing sides in both debates.
There is already one theoretical winner though, and that’s the battle to hold back climate change. While many have grown weary of politicians failing to turn words into deeds, the 2019 manifestos of Britain’s main political parties show green policies are no longer a sideshow – they’re centre stage and mainstream.
That was predictable enough, you might think. After a year in which we have seen a sharp rise in support for green parties in EU elections, thought provoking speeches by Greta Thunberg and Extinction Rebellion protests worldwide, climate change was always going to be a hard issue to downplay.
That’s just as well, because the world is probably still changing even faster than political opinion. Already, we can imagine what the UK might look like a couple of full-term parliaments from now, and it’s unlikely many would argue it won’t look greener.
Who, for instance, in a year when an entire street of 105 council houses in Norwich built mainly from cork blocks won the coveted Stirling architecture prize, would say there won’t be more houses built from alternative materials, electric cars and car sharing, plant-based meals, wind turbines or solar parks?
How many of us would be surprised if there weren’t fewer single-use plastics, instances of wasteful air travel, meat-based meals or new concrete buildings?
Notwithstanding the fact that a pre-election promise can quite easily turn into a post-election aspiration or a watered down version of itself, pledges this election by the main political parties to build a greener Britain are impressively far-reaching.
Labour wins in the green headline stakes by placing its climate change policies right at the top of its manifesto agenda. Eye-catching aspects to its “Green Industrial Revolution” include the creation of a million green industry jobs, de-listings for FTSE 100 companies that fail to address the climate emergency and a promise to generate nearly 90% of Britain’s electricity and 50% of its heat from renewable and low-carbon sources by 2030.
Labour’s green spending plans are breathtaking, some would say, unaffordable. All spending carried out by a £400 billion National Transformation Fund would be tested against Labour’s climate and environmental targets. Of this, £250 billion is earmarked expressly for green energy and transport, and restoration of the environment.
There is also a pledge to upgrade almost all of the UK’s 27 million homes to the highest energy-efficiency standards, and introduce a zero-carbon homes standard for all new homes.
Those hoping for plans to cut down on aviation emissions may be disappointed though. There is no proposal from Labour to impose a frequent flyer tax and neither is there a commitment to halt airport expansions.
A windfall tax on oil companies would hurt investors with holdings in BP and Shell in their portfolios, of which there are many, and despite the steps both companies have taken over recent years to back alternative energy sources.
The Conservatives headline with a pledge to achieve net zero greenhouse gas emissions by 2050 through investment in clean energy and green infrastructure – although you do have to read to page 55 of the manifesto to find out about it.
The prescribed route for getting there depends heavily on investment in new technologies as opposed to disincentives to polluters, including £800 million for a carbon capture storage cluster and £500 million to help energy intensive industries reduce their carbon footprints.
The largest earmarked investment though – £9.2 billion, still a fraction of what Labour is “setting aside” – is planned for improving the energy efficiency of homes, schools and hospitals. As under Labour plans, that’s a potential win for companies able to deliver environmental solutions, perhaps in the areas of heating and cooling systems, insulation materials and control systems.
The Conservatives now say they will not support fracking unless the science shows categorically it can be performed safely. That represents an important change in policy to the detriment of oil and gas companies, but the best they can now expect given proposals for outright bans from the Liberal Democrats and Labour.
The Liberal Democrats – who may lay claim to being first among the UK’s major political parties to have emphasised green policies – have maintained a clear-cut agenda. The party pledges net zero carbon emissions by 2045, 80% of Britain’s energy to come from renewables in 2030, insulating all low income homes by 2025 and ensuring all new cars are electric by 2030³.
So this election could, indeed, prove a shot in the arm for environmental investing. Not only should it turn out favourably for companies with environmental solutions, it is also likely to press home the need for companies not directly involved in the environmental business to further improve their own green credentials.
That has implications for investors aiming to access sustainable returns over the longer term, without the threat of reputational damage, sanctions or punitive taxes befalling their target companies. Slowly, perhaps, but surely all the same, the way we will invest in the future is being remapped.
More on the election
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