Climate change reform ramps up

ICAEW wants to hear your thoughts

If you would like to submit comments on ULEZ or the decarbonisation consultation, please contact Rachel on Rachel.Underhill@icaew.com by 19 July.

The urgent need to address the negative impact of climate change is higher up the political agenda now than since the financial crash. The House of Commons recently passed a motion which declared a climate emergency. Although it doesn’t legally bind the government to any formal action, the motion – passed without a vote – showed Parliament’s growing concern about the issue.

Transport is certainly an area in which action is needed. As a result of initiatives in other areas, such as reducing reliance on coal for energy supplies, transport is now the single biggest emitter of greenhouse gases in the UK. The health benehowfits for reducing transport pollution are enormous: UK Health Forum and Imperial College London estimate that small reduction in fine particulate air pollution arising from vehicle exhausts could prevent 50,900 cases of coronary heart disease, 16,500 strokes, 9,300 cases of asthma and 4,200 lung cancers over the next 18 years.

As part of this policy agenda, London has introduced the Ultra Low Emission Zone (ULEZ). Cars and vans need to meet high emissions standards or their drivers need to pay a daily charge to drive within the zone. Similar policies are being examined across the country, with Manchester and Bath just two example.

One month in, the Ultra Low Emission Zone (ULEZ) is being touted as a success with just under 10,000 fewer of the worst polluting vehicles entering central London in April compared to March. This number is more drastic when compared to the figures when ULEZ was announced – 36,000 fewer of these vehicles came into the zone in April 2019 versus February 2017.

The impact on businesses in the capital and surrounding areas is particularly marked; a rise in operating costs in what is an acutely challenging business environment simply isn’t appealing to many- with small businesses taking the brunt. That being said, being more environmentally friendly makes sense; from both a social responsibility and a long term profitability angle.

The profession will have a key role to play here as leaders and advisers of business. Climate change is not something that we can think about tomorrow: it is affecting us and business now. Finance professionals can play an important role implementing change in businesses, and it is time to adapt.

At a big picture level, we are seeing a rise in the importance of corporate social responsibility (CSR) to investors. Climate Action 100+ (a group of the world’s largest investors managing some $32tn in assets) called on BP to make greater disclosures on its emissions and show how its investments and business strategy align with the Paris climate goals to limit global temperature rises. More than 99 per cent of shareholders voted in favour of this resolution, which is a particularly powerful message.

Unilever has also released an open letter requesting their trade associations and business groups ensure their climate policy is consistent with Unilever’s. Businesses are looking out to their supply chains and networks to ensure they are working with the right people whilst exerting peer pressure.

The benefits for businesses in becoming more environmentally friendly are ramping up too. Consumers are choosing their products more carefully now, with organic and sustainable ranges becoming more popular. The outrage from the general public as a result of Sir David Attenborough’s programme on plastic waste and the impact on the environment has changed consumer behaviour on things like plastic straws forever. Small businesses are well placed to be agile enough to adjust to peer and consumer pressures with the right support, although the upfront costs of changing regulation such as ULEZ is challenging.

In early June, on World Environment Day, the House of Commons Treasury Committee launched a new inquiry into the decarbonisation of the UK economy and green finance. It looks to scrutinise the role of government, regulators and financial services firms in supporting the Government’s climate change commitments. It also wishes to explore the economic potential of decarbonisation for the UK economy in terms of job creation and growth.

ICAEW will submit to the Committee’s inquiry, and we look to our members in business carrying out cutting edge work to highlight the positive role chartered accountants can have in the decarbonised world. We would also be interested to hear views from members as to how ULEZ has impacted you. In particular, if you or clients are involved in impactful decarbonisation projects then we would be delighted to hear about it.

ICAEW is part of the United Nations Global Compact, and we work closely with both the Natural Capital Coalition and Accounting for Sustainability to ensure accounting for climate change is rigorous yet usable for businesses. To further support our members, we are releasing a training programme in July which is designed to raise awareness of the impact climate change is having on humanity and business, along with exploring how businesses need to adapt to manage risks and take advantage of opportunities.

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