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The ESG Interview: Make Way for a New Generation

Ellie Gold, Editor of ClientEarth’s ‘Navigating Net-Zero’ report, argues for a new generation of climate laws to achieve governments’ net zero ambitions by 2050.

The UK government’s hopes of pushing its Environment Bill through parliament before COP26 in November are looking remote after the legislation was delayed for a fourth time last week.

It is significant blow for the hosts of the Glasgow summit, who have variously described the bill as momentous and “a lodestar by which we will guide our country towards a cleaner and greener future”, while pledging completion by the time COP26 takes place.

The setback will also be a major frustration for those that consider the UK a leader in climate change law, including Ellie Gold, Legal Researcher at ClientEarth and Editor of its recent ‘Navigating Net-Zero’ report, who tells ESG Investor that her biggest concern for success at the summit is a lack of resolve to move legislation forward.

“The major anxiety about COP26 has got to be the issue of urgency. The question is whether governments will take the action necessary within the time we have left, which as we all know is shrinking fast,” Gold says.

But it is not just the need for speed that has caught ClientEarth’s attention. The charitable organisation, which specialises in using existing laws to protect the environment, has identified numerous failings in the legislative framework governing nations’ efforts to tackle climate change.

The Navigating Net-Zero report explores six jurisdictions – the UK, France, Mexico, Australia, Sweden and Finland –  and their climate change legal frameworks. Much of the research applauds these countries’ pioneering efforts and notes that there have been numerous successes in managing emissions. However, there is no escaping that these ‘first generation’ laws, as ClientEarth calls them, fall short.

In France for example, binding targets extend to municipalities and large private businesses, imposing requirements on investors to disclose the climate impact of their portfolios. But ClientEarth flags concerns that gaps and ambiguities in the law “make enforcement confusing, and have prompted accusations of political showcasing”.

In many cases, there is insufficient follow through and coordination. Gold says: “We know from the Climate Change Committee [formed as part of the 2008 Climate Change Act] that the UK is due to miss its fourth and fifth carbon budget. The UK act isn’t achieving sufficient integration of emissions reduction across all sectors.”

Room for improvement

That the UK is well off track to meet its next carbon budgets suggests improvement is sorely needed.

ClientEarth wants to use the research to drive a new and improved second generation of climate change frameworks that have greater efficacy in achieving their targets.

Gold says: “The first generation of climate change laws will inspire other jurisdictions to do better. We have seen New Zealand and Ireland introduce more recent carbon laws and they have used imperfections in the first laws to inform and inspire.”

The ClientEarth report notes that “challenges arise when legislatures do not set sufficiently hard legally binding interim reduction targets; duties are split between various arms of government or are imposed on the wrong arm of government” and pertinently for the UK at least, “when implementation is delayed”.

Gold says: “The key failings for the UK is the need for a more coordinated, broader effort applied to sectors like transport, housing and agriculture. Part of this lack of coordination is due to the government’s engagement with the Act. Climate change receives relatively little attention in parliament, particularly around the setting of carbon budgets.”

In fact, the ClientEarth report suggests that since the pomp and ceremony of passing the UK Climate Change Act in 2008, there has been little ‘uptick’ in the number of mentions of climate change in parliament. It notes that even after the Climate Change Committee publishes its annual report every summer, there is still limited debate.

The committee’s own members share ClimateEarth’s disappointment in the Act’s ability to drive debate and ultimately action on climate change.

Baroness Brown, Chair of the Adaptation Committee, says: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver net zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”

A positive example

Despite the disappointment in some of the UK’s approach, Gold says the nation does set strong a positive example to other countries. Notably, the government has made legally binding interim targets for emission reductions where other countries have only set long-term goals in law.

Gold says: “In the UK, the carbon budget scheme essentially puts interim stages in law which creates an obligation on the minister to make sure that [carbon] budget is not exceeded.”

Outside the UK, Gold points to good practices in Australia where Victorian state law dictates a climate science report must be produced every five years which coincides with when parliament sets interim emission targets.

“Any jurisdiction that introduces science into legislation for climate change can make a real difference,” she says.

Gold would like to see more countries appoint an independent scientific adviser who would have the potential to provide accountability and credibility as well as depoliticising the climate change debate.

Corporate influence

While the ClientEarth report did not explore the role of corporations in influencing the formation of climate law frameworks, Gold acknowledges the private sector has a role to play in the success, or otherwise, of legislation. For example, ever-powerful lobbying organisations such as American Petroleum Institute have been accused of putting obstacles in the way of climate change laws in the States and elsewhere.

“What is alarming is that for the longest time climate lobbyists were able to deny climate change. Now that is no longer realistic, the tactic seems to be to delay transition [to net zero],” she says.

Gold also points out that while more companies are pledging a commitment to net zero by 2050 and many more expected to do so ahead of COP26, there is still no reliable means of assessing how realistic these promises may prove.

The same, Gold says, can be said of investors’ ESG investment strategies and she calls for greater transparency on company reporting to make the whole system much easier to implement.

“Companies are not releasing information at the level of detail in financial and narrative reporting to help investors make those ESG decisions. Transparency here would be a major step forward,” she says.

ClientEarth has shown that climate law frameworks in their current state provide a solid base from which the next generation of legislation can form, yet this is only possible if those at the top are willing and able to learn.

As Gold concludes, COP26 will offer a strong indication as to whether decision makers can pass on their experience and develop the next step in successful climate change law.

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