UK asset owners, including a number of pension schemes, have written to Prime Minister, Rishi Sunak, to warn that the government’s recent rhetoric could risk stopping the finance sector from making the investments needed to reach net zero and grow the economy.

The open letter, which received backing from financial organisations representing £1.5trn in assets under management, argued that, without long-term clarity from government, the £50-60bn per year of investment needed to reach net zero won’t happen.

The letter raised particular concerns that the government's recent public statements and policy signals could be undermining the UK’s climate commitments, 'blurring' regulatory visibility for investors and risking the finance sector's ability to make the large-scale investments required to accelerate net-zero delivery.

"Recent public debates have cast doubt on the UK’s 2030 phase-out of new petrol and diesel cars and 2035 phase-out of gas boilers, while the reforms to the UK’s carbon markets, energy efficiency standards for the private rented sector, and plans to issue new oil and gas licences in the North Sea all cast uncertainty on government’s commitment to the UK’s near and longer-term climate targets," it stated.

“As investors and financial institutions, we need confidence in the government’s long-term commitment to this agenda to allow us and our investee companies to make multi-billion-pound investments in the UK’s sustainable economy of the future."

In particular, the group urged the government to provide long-term policy certainty to ensure the UK is a world leader in sustainable finance, by making clear that important policy pillars driving investment, like predictable carbon pricing mechanisms, the transition to EVs, and improved energy efficiency standards for housing, will not be changed abruptly.

This, according to the group, would then enable investors to follow suit and channel private capital into new technologies and projects that will decarbonise the country.

Commenting on the open letter, UK Sustainable Investment and Finance Association (UKSIF) chief executive, James Alexander, stated: “The global competition to capture billions of pounds of private investment in the clean industries of the future is intense. Ministers’ recent remarks are undermining investor confidence and putting the UK’s net-zero head start at risk.

“The major financial players are deciding where to invest, and the UK needs to look both attractive and consistent as a leading destination for sustainable investment.”

Adding to this, BT Pension Scheme chair, Otto Thoresen, stated: “We call on the UK government to uphold its net-zero ambition and take meaningful action over the coming years to demonstrate its commitment. Long-term and consistent policy will help drive real investment into the UK economy.

“Holding sustainability considerations at the core of this will lead to a more prosperous economy, increased growth and job creation which in turn will help secure our members’ pensions.”

Signatories to the letter included Aegon, Brunel Pension Partnership, BT Pension Scheme, Camden Council Pension Scheme, Royal London, Railpen, People’s Partnership, Scottish Widows, TPT Retirement Solutions and Universities Superannuation Scheme.

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