ClientEarth recently won a landmark high-court case in which the Secretary of State for BEIS was ordered to provide more detail on the UK’s plans to achieve net zero. Martina Menegat summarises the background to the case, the decision and what this means for the finance sector below.

Some background:

  • In June 2019, the UK Parliament amended section 1 of the 2008 Climate Change Act to achieve the #netzerotarget in 2050.
  • The Secretary of State was required to break the overall target in a series of 5-year #carbonbudgets leading up to 2052. The budgets were approved by the Parliament.
  • The 2008 Act imposes a legal duty upon the Secretary of State to ensure that the target will be met.

The case:

  • The Secretary of State failed to comply with the Climate Change Act which requires preparing credible policies and proposals to enable the carbon budgets to be met. The policy package published under the Net Zero Strategy is ambitious but too vague: most notably, 1) it does not estimate exactly how policies set out for affected economic sectors will meet the carbon budgets 2) it quantifies how to achieve only 95% of the target of the first carbon budget.
  • As a result, the Secretary of State did not discharge his reporting obligation towards the Parliament – which prevents it from exercising sufficient scrutiny on his activities.

The result:

  • The High Court has ordered the Secretary of State to inform his Strategy with the quantitative effects of sectoral policies. Also, he must explain which policies the Strategy could rely on to meet 100% of its first carbon target. A new report must be submitted to the Parliament and to public scrutiny before the end of March 2023.
  • The Secretary of State was refused the appeal on the basis that has not put grounds with a real prospect of success.

What does it mean for finance?

  • The dilemma that the Secretary of State is called to solve is how to fill the gap between promises and delivery of the Net Zero Strategy. A report published by the House of Lords Industry and Regulators Committee in March already revealed that in the Strategy there was no plan in place to unlock essential investments to lead the #netzerotransition.
  • The Secretary of State will not only have to estimate how to reduce emissions across the economy, but also plan how to pump unpreceded amounts of #greeninvestments into the UK economy.
  • #Followthemoney to test the credibility of the new report. To plan a credible carbon-neutral future, we must have clear in mind how to pay for it. #Climatefinance is ready to meet the challenge.

 Congrats to ClientEarth, Friends of the Earth, Good Law Project and Joe Wheatley for their fantastic work.