The Environment Agency's Emma Howard Boyd says the need to restore nature and tackle global warming are inter-linked
I can’t quite believe that it’s been 20 years since I was interviewed for the first issue of Ethical Corporation. A lot has happened in that time but particularly in the last five years, and with COP26 just behind us, action on the climate crisis needs to accelerate now like never before.
Back in 2001, we were celebrating the growth of UK retail socially responsible funds (to £3.7bn), and the launch of FTSE4Good, a new family of indices. The Myners Review of institutional investment, calling for greater transparency and investor activism was also hot off the press.
Fast forward to COP26, $130tn of private capital was committed to hitting net-zero emissions targets by 2050. I think this means we can see the enormous tanker of global finance beginning to turn into the climate emergency.
When I arrived in Scotland on Friday, October 29, the rivers were roaring and we had seen flooding in Cumbria. It was a reminder that while the climate crisis is a global problem, the impacts are personal. They take a toll on homes and businesses. But we can also be hopeful: over 1,400 properties were protected by EA flood schemes. Similarly, halfway through COP26, millions of people were protected from the highest tide of the year because the Environment Agency operated the Boston Barrier, the Hull Barrier and the Thames Barrier.
Last year, more than 76,000 incidents were reported to the EA, including flood, drought, fires, fish kills and pollution incidents. One every seven minutes, 24 hours a day
A couple of weeks before COP26, the Environment Agency launched our third Report to Ministers under the Climate Change Act about how we are helping England prepare for climate impacts. The report shows that last year, more than 76,000 incidents were reported to the Environment Agency’s incident management service, including flood, drought, fires, fish kills and pollution incidents. One every seven minutes, 24 hours a day.
Climate change is increasing their severity, frequency and duration. In the press release I said it is a case of “adapt or die”. This year, 200 people died in the German floods. We’ve also seen a devastating heatwave and flooding in Vancouver, the drought in Madagascar, and the polar vortex in Texas.
Everyone needs to plan, adapt and thrive. The rise of adaptation as a concern in climate discussions was welcome at COP26, as was the importance of restoring nature. The integration of these challenges and their solutions is something we all need to embrace, and as interim-chair of the Green Finance Institute, it is something we need businesses and investors to understand.
Mark Carney with UK chancellor Rishi Sunak at COP26 in Glasgow. (Credit: Yves Herman/Reuters)
Launched in July 2019, the Green Finance Institute is the UK’s principal forum for public and private-sector collaboration in green finance. It aims to identify and unlock barriers to deploy capital at a pace and scale that will deliver action and positive environmental outcomes on the ground.
In October, analysis from the Green Finance Institute highlighted the need for private investment, in addition to public-sector funding, for the UK to meet its net-zero and nature-positive ambitions. It said that £44bn to £97bn of additional investment is needed over next decade to meet UK’s nature-related targets, with a central estimate of £56bn.
The Green Finance Institute will soon launch Hive, backed by the Esmee Fairbairn Foundation, an information and solutions centre for financing nature in the UK. It will work with the financial sector to build momentum for investment, showcasing examples of private investments in nature and nature-based solutions, and sharing insights, research and reports. I hope readers of Ethical Corporation will find it useful.
By pricing climate risks and including them in upfront financial decision-making, the CCRI aims to incentivise a shift towards greater climate resilience
Another group I hope organisations will look to is the Coalition for Climate Resilient Investment. The CCRI currently has 120 members, featuring both governments and investors with over $20tn in assets. It is not about rich organisations and countries protecting their own assets or handing out aid. It is about improving the way everyone does finance, and creating methodologies that can be adopted everywhere, so that the whole world can manage climate shocks better. By pricing climate risks, particularly for infrastructure, and including them in upfront financial decision-making, the CCRI aims to incentivise a shift towards greater climate resilience.
Four years ago, the Church of England National Investing Bodies and the Environment Agency Pension Fund set up the Transition Pathway Initiative. Today, the TPI has supporters around the world who manage assets worth $40tn. Every year, the TPI reviews the progress made by the world’s highest-emitting public companies.
Flooding in York, England, after the River Ouse burst its banks. (Credit: Lee Smith/Reuters)
This year, the report found that no sector is reducing emissions fast enough to meet the UK’s 2050 target. Although an increasing number of companies now have net zero commitments, these pledges, in the oil and gas sector for example, only sometimes include operational emissions, not the emissions from the point of use. Most companies now have a policy commitment to act on climate change and disclose their operational emissions. But, measuring current and future emissions, the TPI found: only 15% of companies are on track to be below 2C by 2050; 16% provide insufficient disclosure; and, 47% do not align with any of the benchmarks.
Two decades ago, when Ethical Corporation was launched, the resistance to action on climate was huge. Today, we can see the impacts all around us, in the UK and around the world, so the discussion has moved on. We are no longer just talking about reducing CO2 emissions to mitigate climate change, we are talking about a climate emergency, and that means reducing emissions, preparing for shocks and restoring nature. Corporations that ignore all of this will be swallowed by the rising tide, but ethical corporations, those that actively seek collaboration with communities, governments and each other to manage the climate crisis, can flourish.
The goal is a new era of climate prosperity to the whole world, and in those circumstances, ethical corporations are a sound investment.
Emma Howard Boyd CBE is chair of the Environment Agency and interim chair of the Green Finance Institute. In December 2001 she was head of the environmental research unit at Jupiter Asset Management.
This article is part of the Winter 2021, and anniversary issue, of The Ethical Corporation. See also:
Environment Agency COP26 climate adaptation Green Finance Institute Esmee Fairbairn Foundation