Labour calls on government to mandate 1.5C-aligned transition plans for financial institutions and major companies to turbocharge the global shift to net zero and make the UK the green finance capital of the world ahead of COP26
In a major speech today ahead of COP26 in Glasgow, Shadow Business Secretary Ed Miliband set out Labour’s five demands of the Government to ‘Keep 1.5C Alive.’ Warning that the Government are miles from where they need to be to secure the necessary emission reductions to tackle the climate crisis, Miliband has set out a bold new policy to mobilise the City behind climate action, turbocharge the global shift to net zero, and make the UK the green finance capital of the world.
Labour’s five demands of the Government to “Keep 1.5C Alive” include:
- Leading by example, with climate action at home, by investing £28bn every year until 2030 to tackle the climate crisis, and creating secure jobs in the UK;
- Support for developing countries through reversing the overseas aid cut, delivering and surpassing the $100 billion pledge for countries to cut emissions and adapt to climate change and vaccinating the world’s poorest;
- Pressuring the big emitting nations, phasing out fossil fuels, and ensuring a just transition for workers;
- Protecting nature with a robust Net-Zero and Nature Test for all government spending;
- Mobilising private finance behind climate action by requiring financial institutions and FTSE100 companies to publish their carbon footprint and adopt credible 1.5C-aligned transition plans.
Labour believes this fifth demand would be a game-changer. They argue the Government should mandate UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement across their portfolios by 2023.
As a major global financial centre, one of the largest impacts the UK could have on global emissions would be to mobilise the trillions of pounds of private finance in pursuit of the ambitions of the Paris Agreement and establish the UK as the green finance capital of the world.
The investments of companies and financial institutions based in The City of London account for approximately 15% of global emissions. The portfolios of the 15 largest banks and 10 largest asset managers headquartered in the UK emitted almost double the UK’s entire annual domestic emissions.
Labour is pushing for regulation to ensure companies are not just reporting on compliance with the Paris Agreement but acting on it too. This would underscore the opportunities that the green transition promises, while ensuring an orderly transition that does not leave people and communities behind.
Many companies and financial institutions are already taking a lead. Just this week, major UK companies and financial institutions collectively responsible for over £4.5 trillion in assets, including BT, Tesco, Aviva, and Legal & General Investment Management wrote to the government calling for net zero transition plans to be a mandatory requirement for large firms.
These calls sit alongside plans recently announced by Shadow Chancellor Rachel Reeves to be the country’s first ‘Green Chancellor’ with a pledge to invest an additional £28 billion every year between now and 2030 to accelerate the transition to net zero. Under a Labour Government, public and private finance would be pulling in the same direction to tackle the climate crisis and unleash the opportunities that the green transition promises to every region of this country.
Ed Miliband MP, Labour’s Shadow Business Secretary, commenting on this new policy, said:
“Many of our leading financial institutions and businesses have been ahead of government when it comes to climate action. But we need all to meet the standards of the best.
“That’s why we’re demanding government mandate financial institutions and our FTSE100 companies to have their own climate transition plan, consistent with 1.5 degrees, by 2023.
“Furthermore, we should be asking in Glasgow that all other major economies follow suit. This proposal would be a game-changer in the fight against climate breakdown, setting a global standard and making the UK the green finance capital of the world. It would offer huge opportunities for our companies and investors and ensure that we manage the transition properly and act in this decisive decade.”