4 Sep 2019
Business must take the lead in tackling the climate crisis
In 2019, we saw widespread mass protests throughout western societies not experienced since the anti-Vietnam war movement of the 1960s. More than a million students walked out of classes worldwide. And once again people from all walks of life took to the streets fully prepared to face arrest by demonstrating in support of the extinction rebellion movement.
The climate crisis is now being seen as an extreme global emergency, rather than an inconvenient change in weather systems. At the end of 2018, the UN Secretary General warned us:
- Humanity and life on Earth now face a ‘direct existential threat’
- The world must act swiftly and robustly to keep global warming under 1.5°C and try to avoid utterly catastrophic impacts to life on Earth
Governments start to take action; but is it enough?
The UK government, led by the previous Prime Minister, Theresa May has now set a goal for the UK to achieve net zero carbon emissions by 2050. Gas boilers will be banned in new homes from 2025. And the sale of new conventional petrol and diesel cars will be banned from 2040.
However, at the current rate of warming: 0.2°per decade, global warming will reach 1.5°C between 2030 and 2052. This means that by 2050, London may already be nearly 6°C degrees warmer in the hottest summer month. The horrendous 38° conditions seen this year on 25 July could become a regular occurrence.
According to the Intergovernmental Panel on Climate Change (IPCC), even 2°C of warming above pre-industrial levels would mean catastrophic flooding, drought, food scarcity and large scale loss of many species. These changes will impact economies, disrupt markets and make life extremely difficult for companies and people.
We recognise the seriousness of the climate crisis. As a very long-term business, with commitments to customers and their families over 50 years or more, we want to ensure that the environment supports communities and businesses throughout this century and beyond.
Our actions to reduce carbon emissions
We also recognise that most young people want to see urgent action to reduce global heating. The feeling exists that the older generation has massively failed the young and their future families.
Legal & General agrees that carbon emissions must reduce and consumers must switch from fossil fuels like gas and oil to green energy. We have invested into both offshore-wind projects and onshore-wind farms. We helped finance the acquisition of the Hornsea Project One offshore wind farm, which will become the world’s largest offshore wind farm project, powering over one million homes.
We have also taken action to accelerate the use of electric cars. By 2030 there could be up to 11 million electric vehicles on the road and up to 36 million by 2040. We have invested into Pod Point, one of the UK’s leading companies in providing electric vehicle charging solutions for homes.
As one of Europe’s biggest investors we know that we can use our strength to influence boards both in the UK and elsewhere to develop strategies that support the transition to a low-carbon future. We have taken action to remove companies from our Future World funds that fail to develop a sufficient strategic response to climate change. Under our Climate Impact Pledge, we assess and score over 80 of the world’s largest companies, engaging with them to improve their management of the risks and opportunities presented by climate change.
What business needs to do
Our CEO, Nigel Wilson is chairing a cross-industry body to address climate change risks and opportunities in institutional and retail financial services. We believe that all big companies should follow our lead in fighting to ensure that the aim of the Paris Initiative to limit temperature growth to well below 2°C above pre-industrial levels is achieved.
The key actions that investors should take are:
- Increase investments in clean energy such as solar power, offshore and onshore wind
- Invest in electric car production and the infrastructure to support this, such as batteries and charging points
- Invest in helping consumers meet the cost of replacing fossil-fuel heating systems, with green energy systems
- Phase out investing and lending to companies that create excessive carbon usage
- Companies that invest in housing should ensure that house builders not only follow environmental standards of production, but also create environments where the infrastructure supports walking, cycling and the use of public transport
- All companies, regardless of whether they are investors, should ensure that any board plans to reduce the company’s carbon footprint are followed through
It’s no exaggeration that we are facing an unprecedented global emergency. Action for change must start today and business must take the lead in making that change happen.