The UK Environment Plan 2018: Business Challenges, Choices and Opportunities
by Charles Secrett
One would hope that the mainstream business community would react strongly to the launch of any new strategically determined legislative and policy programme, especially one which addressed evident market worries and looked to boost national competitiveness, innovation and productivity. And whose primary objective was to marry sustainability — economic, environmental, governance and social — priorities in order to improve living standards and quality of life.
The UK Environment Plan (the Plan), coupled intimately to the new Industrial Strategy and Clean Growth Strategy, is the government’s preferred 25 year road-map to secure the nation’s long-term economic and environmental future.
So, how did the 15 most affected UK trade associations react to January’s publication of the Plan? The answer: near deafening silence and an apparent business-as-usual (BAU) indifference — unlike many of their member companies who grasped the implications for their own operations.
Time to name and shame. Thus: searching the websites of the British Bankers Federation, CBI, Chartered Institute of Wastes Management, Chemicals Industry Association, Construction Industries Council, Country Land and Business Association, Energy UK, Federation of Small Businesses, Food and Drink Federation, Home Builders Association, National Farmers Union, Society of Motor Manufacturers and Traders, UK Bio-industry Association, Visit Britain and Water UK reveals not one mention of the Plan. (The CBI, CLBA, Energy UK, FSB, NFU, Water UK managed short reactive media quotes, but nothing else.)
That’s right: zero recognition of its central importance to companies large and small, let alone any substantive analysis of this official assessment of the challenges, choices and opportunities to grow a better business in our turbulent, uncertain world.
This is, surely, a catastrophic failure of corporate leadership, representation and understanding. Too bad Michael Gove, the Secretary of State for the Environment, didn’t put words like ‘Legislation’, ‘Tax’, ‘Productivity’ and ‘Prosperity’ in the title just to wake these dozy captains of industry up. Somehow, ‘Environment’ just doesn’t do it! As a company, I’d be questioning the value of my membership fees. Because there is so much still to play for: revenues, jobs, product prices, market opportunities, government support, customer satisfaction and brand value.
The Plan, and its sister strategies, charts the direction of travel for cross-departmental delivery and partnerships with commercial, local authority and civil society groups. This tri-partite package sets out to manage the Brexit transition in key sectors, and respond to existential challenges to the BAU economy like climate change, genetic and molecular engineering, AI and robot technologies, and stresses on the disintegrating natural systems and species populations upon which business and people depend.
Virtually every sector is directly impacted by the package. For companies, consumers and NGOs alike, its broad policy framework is welcome information. But the devil is in the delivery detail — or lack of it. Here the Plan badly falls down because there is so much missing, still to be drafted, published, consulted upon and finalised.
What will the proposed new Agricultural Bill, National Policy Statement for Water Resources, revised National Planning Policy Framework, second National Climate Adaptation Plan and Sustainable Fisheries Policy contain? Or the promised Bioeconomy, Chemicals, Clean Air, Marine, Nature, Peat, and Resources and Waste Strategies actually embed? What about the oft repeated reliance on private sector investment in sustainable technologies and green infrastructure to make the Plan work, or the Natural Environment Impact Fund and new set of Natural Capital Accounts? Who will sit on the Green Finance Taskforce, Green Business Council and independent statutory body intended to hold government to account for delivery? Why virtually no meaningful short-term targets, and little new or substantive public money?
As importantly, can an ideologically divided Cabinet, and over-stressed civil servants, make all this happen in time and to order? Will time be made for required primary legislation in an already backlogged Parliamentary schedule?
No wonder Jonathon Porritt compared the Plan very unfavourably to the last all-embracing government sustainability initiative, but one far more explicit and fully worked through: ‘This Common Inheritance’, published in the run-up to the 1992 Earth Summit. Nor that the main green NGOs — CPRE, Friends of the Earth, Greenpeace, RSPB and WWF — welcomed its aspirations but, given the extent of the environmental crisis and confusion of Brexit, condemned the lack of urgently needed decisions and missing actions.
So, is the policy glass half-full or less than half empty? The next busy couple of years will tell, as this barrel-load of accompanying strategies, planning and regulatory arrangements, and fiscal incentives roll off the Whitehall production line.
We are where we are. It’s up to the business, professional and NGO communities to ensure that their preferred, and in many cases common, priorities are met, while best serving the public interest.
It is precisely because these vital strategies, policies and implementation programmes are still undecided, that the government has, in fact, offered up an unprecedented advocacy opportunity for business (and NGOs) to get their collective act together and ensure that critical inter-dependent economic, environmental and social needs are met.
And not, as has happened so often, played off against each other in Cabinet, or cut to the bare minimum, to placate any single over-dominant Ministry (yes Treasury, every one is looking at you).
There are hard choices to be made, and deep divisions between BAU and green company executives over what to do next. This despite their shared agreement to tackle the most urgent environmental problems (climate change, biodiversity loss, health-threatening pollution, wasted resources) and action a clean, smart economy — aims also widely supported by consumers of nearly all stripes.
Let’s look briefly at some examples: Brexit, farming and food, climate and energy, and green infrastructure finance.
Brexit uncertainties pose some of the greatest policy choices for the business community. Does one advocate a hard or soft departure, EU or international (e.g. WTO or US) standards, a more or less regulated economy?
While the implications for food and farming have dominated public debate, EU policy has significantly raised UK standards over air and water pollution, carbon emissions and energy efficiency, habitat and species conservation, and recycling and waste management.
Friends of the Earth recently commissioned an independent expert risk assessment of 15 different environment policies under five different Brexit scenarios. In each case, the study predicted a high risk to current protections over wildlife and habitats, water quality (bathing, fresh, ground and urban waste), nitrate, fisheries, agricultural and waste disposal impacts.
Michael Gove and Theresa May have promised that current environmental standards will be maintained post-Brexit. But promises are not the same as legal obligations. Who knows what will be in those missing core elements. Given Mr. Gove’s hard Brexit credentials, and behind the scenes lobbying by industry groups like the Initiative for Free Trade, there is plenty to worry about.
The Leave camp has made much of the importance and ease of securing a free trade agreement with the US. But the 2018 US Trade Representative Report gives very little reassurance that current standards will be accepted. The USTR wants to dump “onerous” and anti-competitive EU rules on animal welfare, chemicals, biofuel crops, country of origin labeling, food safety, public standards and accreditation bodies, and vehicle safety and emission standards.
Historically, the UK has an extremely poor record of standing up to US demands. Post-Brexit that is hardly likely to change, whatever ‘red lines’ Mr. Gove currently declares.
Do companies really want regulations over pesticides and other harmful chemicals weakened or dropped? Or supermarket shelves full of chlorinated chicken, hormone and antibiotic filled beef and pork, or made with feebly regulated GM crops and livestock or bits of cloned animals. Consumers do not. Without informative labels, we couldn’t even avoid these imports. In opinion polling by Opinium and the Institute of Public Policy Research, 82% of consumers wanted current standards kept, even if that killed a deal. I doubt social media activists and NGOs will allow farmers, manufacturers and retailers to get away with anything else. Is it going to be a hard Brexit, or successful brand management and consumer satisfaction?
Shouldn’t business publicly support Michael Barnier, the EU chief negotiator, who, while welcoming the Plan, insisted that any future partnership must include a ‘non-regression’ clause to maintain current environmental and social standards and prevent the UK gaining unfair competitive advantages.
According to the major food supplier Cranswick, public trust in the food sector has reached an all-time low. Consumers are demanding greater accountability and transparency across supply chains, and high quality food hygiene, ethics and sustainability standards as the norm. Cranswick is going 100% renewable, and becoming a zero-waste company by 2030. Who else will follow? With the rapid growth in healthy and plant-based eating, locally sourced and family farm produced goods, and organic foods, the agriculture sector is at a crossroads.
Food is the UK’s largest manufacturing sector, with a 4 million workforce. That matters. But the tide is turning against its nutritionally deficient, highly processed products. A third of its workers come from overseas, with 80% of exports going to the EU. What now? Mr. Gove has promised that EU subsidy levels will be kept until 2022. After that?
Will business continue to support the majority of subsidies going to large industrial farm companies, which are the most damaging for wildlife, or be channeled toward the type of farming and food that Britons increasingly want? Where does biotechnology fit in? And, what about the rural economy, and the fate of market towns and countryside communities? The NFU reports that seasonal workers coming to the UK have dropped by 17% this year. Does the government envisage their replacement with innovative AI and robot technologies, as could happen? Software code and automatons don’t shop, go to school, use public transport and other services, or buy houses, vehicles and consumer goods — and they don’t pay taxes.
Other sectors face comparable choices, notably energy. Centralised supply or decentralised? Nuclear and gas, or renewables and efficiency? The Plan rightly wants much more low carbon distributed energy and heat networks, renewable supplies and efficiency gains. But UK regulatory and fiscal frameworks mostly support big power plants, like nuclear, gas and offshore wind. The government has slashed public money for the solar sector, blocked onshore wind power and dropped its flagship energy efficiency scheme. Yet these could employ large numbers of people, creating opportunities in S/ME manufacturing, retail, installation, maintenance and repair, and in every constituency countrywide.
As the ‘Big 6’ energy companies start raising prices yet again, the Plan’s backing for smart systems, machinery and appliances, community renewables, and energy storage open the way for domestic and commercial buildings and neighbourhoods to produce their own clean energy. More disruption is on the way for BAU suppliers. It’s an opportunity to move from being simple power providers to selling a broad range of low carbon energy services, products and projects.
In April, the Aldersgate Group calculated that, to meet targets set under the Climate Change Act’s fifth carbon budget, up to £693 billion investment in low carbon infrastructure will be needed by 2032. A few days later, the Governor of the Bank of England warned of the catastrophic climate threat to the financial system unless firms, banks and insurers disclosed their vulnerabilities. A functioning market will price in those risks, and reward firms that mitigate them. But investors do not have the information to spread risk safely, or allocate capital efficiently and grasp new business opportunities.
The Aldersgate Group and business-led Green Finance Taskforce recommend key reforms to fulfill the potential for green infrastructure financing. These include: expanding mandatory carbon reporting; a new fiduciary duty for company boards to account for financially material ESG (environment, social, governance) risks; embedding sustainability requirements in public procurements; establishing Clean Growth Regeneration Zones to guide finance towards new green industrial zones; and, for government to issue sovereign green bonds, alongside municipal green bonds and pension fund investment in green infrastructure.
Measures like these are essential for sufficient money to swing from BAU into clean growth. Despite claiming to be an international leader in green finance, the government has never issued a green bond. Anglian Water recently did, and its £250 million offering on the LSE got double the investor interest over its normal bond offers. The demand is there, but policy must be shaped appropriately.
Targeted interventions, including facilitated borrowing and policy certainty, are crucial if government is to stimulate the levels and types of financing that the Plan needs.
Working together, public, private and social sectors can develop a pipeline of green schemes to invest in: buildings energy efficiency, flood defences, solar, wind and other renewables, low carbon heat, electric and hydrogen vehicles, smart systems, and conserved natural capital.
Finally, what about the law? Companies large and small cry out for policy certainty. As Michael Jacobs has persuasively argued, the Climate Change Act is the model to follow. The Act requires government to limit UK GHG emissions to levels set in law, and “effectively places the UK economy under a sustainability constraint”. Every five years, the government must adopt a binding 5 year carbon budget set at least 12 years in advance to give investors and companies time to plan and adapt, and meet the long-term statutory goal of a minimum 80% reduction in GHG emissions by 2050.
The workings of the Act, and its target setting climate change committee, should be replicated in a new Environment and Sustainable Economy Bill. The Bill would mandate set environmental limits in problem areas identified in the Plan and future iterations, such as air and water pollution, soil degradation, resource depletion and the circular economy, plastics pollution, and wildlife and habitat loss. For each significant adverse environmental impact, the Bill would establish a long-term goal, and shorter-term targets, plans and budgets. The Plan recommends several long-term goals and targets. The proposed independent statutory body could, like the climate change committee, report to Parliament — and ensure the legislature’s primacy over the executive in this critical regard.
There are multiple commercial opportunities flagged in the Plan and its sister strategies. But so are the BAU pitfalls. It’s time for business to back the growth of a truly sustainable economy — and head for the future now.
Charles Secrett — charles.secrett@robertsbridgegoup.com
Charles Secrett is an independent sustainability advisor, policy analyst and occasional campaigner. He is a co-founder of the Robertsbridge Group, a sustainability consultancy for business. He has been a member of Royal Dutch Shell’s Global External Review Committee, advising the senior management team on sustainability priorities, as well as Chair of Triodos Renewables, Senior Associate at the Cambridge Programme for Sustainability Leadership, Special Advisor to the Mayor of London, Board Member of the London Development Agency, Director of Friends of the Earth (England, Wales and Northern Ireland), and a member of the UK Government Roundtable/ Commission on Sustainable Development. He has worked on a variety of environmental research and investigation projects in Brazil, Costa Rica, Indonesia, Malaysia, Nicaragua and Nigeria
