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A coalition of influential investors has urgently cautioned UK Prime Minister Rishi Sunak that his recent relaxation of eco-conscious policies could spell trouble for the UK's attractiveness to inward investments.
Initiated by the Institutional Investors Group on Climate Change, in concert with the UN-endorsed Principles for Responsible Investment and the UK Sustainable Investment and Finance Association, the letter dispatched earlier this week was an unambiguous call to action. Signed by 32 financial powerhouses—Aviva Investors, the Local Authority Pension Fund Forum, and Jupiter Asset Management—it expressed deep reservations about the government's change of course on pivotal environmental directives essential for the UK's transition to a net-zero carbon footprint.
"Diluting ambition at this critical juncture erodes the UK's position as a global leader on climate, undermines our international competitiveness and increases the risk that we fail to capitalise on one of the greatest economic opportunities of the 21st century," the letter states.
This critical feedback from the investment groups, collectively managing assets to the tune of £1.5 trillion, adds to a growing chorus of disapproval. This dissent follows the government's controversial choices to postpone the UK's cessation of new internal combustion engine (ICE) vehicles from 2030 to 2035, forgo plans for phasing out gas boilers in rural residences, and scrap impending energy efficiency mandates for property owners.
The changes above have shaken investor confidence, raising questions about the UK's resolve to lead in global sustainability and potentially deterring crucial capital influxes in the long run.
In their letter, the investors have urged the government to "uphold ambition and avoid backsliding on key climate policies, including by reconsidering the decision to delay phase-outs of new ICE car sales and gas boilers, and maintaining commitments to deliver on energy efficiency targets".
The group argued a "coherent, whole-of-government approach to the economic transition, underpinned by detailed policies" would be necessary if the UK was to attract the investment required to meet its legally binding climate commitments.
While the group welcomed the Prime Minister's decision to expand financial support for heat pump installations under the Boiler Upgrade Scheme and plans to speed up and enhance grid connectivity, it argued the decision to relax other clean tech targets would "erode market confidence".
The group warned that delivering the tens of billions of pounds in private finance required to meet climate goals will depend on the Prime Minister achieving the" 'four Cs' that underpin effective policymaking": certainty, consistency, clarity and continuity.
"Ultimately, delaying key targets and lowering the ambition of existing government policies would be misguided," the group wrote. "It reduces the capacity of industry to plan ahead and make investments that will drive down the costs of adopting low-carbon technologies.
"Not only will the government's current approach increase the UK's cumulative emissions, but it will also end up costing the taxpayer more and hinder our ability to lead the charge in rolling out the climate solutions of the future."
The letter concludes with a warning that an "absence of strong policy incentives" would lead investment to flow to regions and nations "taking a more consistent, long-term approach".