As scientists become increasingly convinced that we are living in a new geological epoch, defined by humankind’s impact on the planet – the Anthropocene – it seems that the public are increasingly heeding messages around climate change.
Even a few years ago, data from the Ipsos Global Trends survey showed that three-quarters of Britons attributed most climate change to human activity, while two-thirds believed the country was headed for an environmental disaster without rapid changes to people’s habits. As always, there is a gulf between what people ‘say’ motivates or concerns them and what actually drives their behaviour, but 2019 has seen the highest spontaneous concern about climate change Ipsos MORI has measured in 29 years. In addition to increasingly frequent public demonstrations – whether by hardened activists Extinction Rebellion, or the fresher faces marshalled in school strikes inspired by Greta Thunberg – we are also seeing the dial beginning to move at the macro level.
Polling we conducted to coincide with Earth Day in March 2019 showed 37% of global citizens put climate change as one of the top environmental issues, narrowly ahead of air pollution (35%) and dealing with rubbish and waste (34%). Other issues – whether deforestation (24%), depletion of natural resources (22%) and the overpackaging of consumer goods (15%) – were further behind still.
Yet it is important to remain grounded. For now, at least, the environment remains a ‘second order’ concern. The large majority of citizens consider employment, healthcare or crime to be bigger worries than dealing with climate change. In Britain, we have Brexit to preoccupy us too – while the proportion worried about the environment has recently hit a new high of 20%, more than three times as many people say the same about Britain’s exit from the EU (66%).
But it is somebody else’s problem to solve…
Perhaps as a result, the increasing public concern may not be sufficient to overcome the biggest barrier to taking positive steps; while actions speak louder than words, they require a lot more effort. Despite the warm words, people are not especially likely to alter their behaviour with just 9% of consumers feeling it is their responsibility to lead in tackling climate change.
Recent polling around single use plastics lays this contradiction bare: 85% of the British public are concerned about the effects of plastic packaging and bags on the environment, and 41% say they are very concerned. There is a high level of support for several initiatives to tackle the problem, including taxes on shops that use a lot of non-recyclable packaging, and forcing councils to spend more on recycling.
However, when we asked the public what they would be willing to do personally to deal with the problem, relatively few said they would go significantly out of their way: 18% might stop shopping at the biggest offenders, 14% would pay more tax to support local councils, and 12% would pay more for goods which used single-use plastics.
Instead, we believe government and policymakers have latent permission to make changes – the plastic bag levy was introduced without a referendum, and has seen an 85% reduction in plastic bag usage in one year. It makes sense, it ‘nudges’ people to do their bit, it seems broadly fair. London has a Congestion Charge precisely because the then Mayor, Ken Livingstone did not hold a referendum, but introduced it in the face of public opposition – and got re-elected in 2004 with 55% of the vote. The alternative modes of transport were in place, and the charge was applied to all road users in what was seen as ‘fair’.
So, is climate change more important to policymakers?
With trust in the political establishment at very low levels, we see climate change impacting policy in unpredictable ways. In France, the announcement of a highly unpopular fuel-tax increase led to the gilets jaunes movement, a presidential crisis and the eventual withdrawal of that policy. In the UK, as Prime Minister Theresa May prepares to leave office, we see more than 120 businesses urging her to push through legislation for the UK to slash greenhouse gas emissions to net zero by 2050. Rather than being viewed as a drag on business, the signatories, including household names John Lewis and Aviva, state that: “By being the first major economy to legislate an ambitious, domestically achieved net-zero target… the UK can show leadership on a global level while strengthening the UK economy.”
Alongside the target change, the letter calls for a policy package that would address areas such as energy efficiency and electric vehicles. “Business stands squarely behind the ambition for the UK to have a net-zero emissions economy by 2050,” said Carolyn Fairbairn, CBI Director-General. “Immediate and decisive action is needed to avoid the catastrophic impacts of climate change and create opportunities in low-carbon technologies.”
With the Greens making significant gains in the European Parliament elections in May, there will also be increased pressure within Europe to reduce greenhouse gas emissions to net-zero by 2050. It seems, Brexit or no Brexit, there will be a definite need for finance to take a leading role in tackling climate change.
Will this impact investment decisions?
So, when it comes to making decisions about which financial providers to become customers of, or where to make investments, we can’t expect most consumers to actively reward companies doing the most to tackle climate change. However, with younger consumers more likely to be motivated by sustainable investments – and set to inherit $30 trillion in assets from their baby boomer parents by 2025 – we can expect this picture to change and for it to become a business imperative for advisors to offer sustainable investments to attract and retain clients. Similarly, we see that activist investors and even lone shareholders can have an influence and can bring boards to account on their Sustainable Development Goals.
Recently, we have seen some institutional investors such as HSBC and AXA moving out of ‘fossil fuel’ funds. With both consumer and political pressure, it seems inevitable we will see many more corporates voluntarily making ESG commitments, some genuine, some ‘greenwashing’, with some hoping we are on the cusp of a new dawn.
Sir Ed Davey, the former Energy secretary, speaking on BBC Radio 4’s Today Programme, said:
What we need to do is have a new economic model. I’m talking about decarbonising capitalism, making capitalism turn green so Britain is a world green finance capital. That means being tough on our banks, on the stock exchange, on the pension funds, so they take account of climate risk.
His party, the Liberal Democrats, are currently seeing a resurgence, along with the Green Party itself, so this type of view – strongly aligned with a ‘Remain’ perspective, may gain ground.
It looks as though the tide is turning, with consumers, policymakers and some businesses recognising the need to tackle climate change. With the importance of environmental concerns gradually rising and unlikely to reverse, it would appear we are on the cusp of a step change whereby sustainable finance becomes simple ‘table stakes’ in the investment community.
This article was written for the Social Market Foundation (SMF) for their publication 'How sustainable finance can tackle the climate emergency' and also appeared in The Telegraph.