We, as a nation, are set to become the ‘greenest’ on the planet. Under new government proposals, the UK’s greenhouse gas emissions will be cut to almost zero by 2050, in a radical set of plans put together by the outgoing Prime Minister Theresa May.
If the so-called ‘net zero’ target is achieved, Britain’s green and pleasant land could lead the world in the war against greenhouse emissions and climate change. And mean that the UK will not contribute to global warming in any way in 30 years’ time.
The UK is the first major nation to propose this target and it’s an advancement on the 80% target already set for 2050. That was agreed by MPs under the Climate Change Act in 2008, but will now need to be amended with new legislation.
The government's advisory Committee on Climate Change recommended the "net zero" target in May. Its report said if other countries followed the UK, there was a 50-50 chance of staying below the recommended 1.5c temperature rise - considered to be the threshold for dangerous climate change - by 2100.
So what’s likely to change?
In practice it means that emissions from homes, transport, farming and industry will have to be eliminated completely or at least offset in some drastic way.
We can expect to see more things like LED light bulb, but there would also need to be a change to things like hydrogen rather than gas central heating and a shift to electric vehicles.
Of course, all these changes will cost and there will need to be massive investment in clean energy generation. The government hasn't yet spelled out if the cost will fall on bill-payers, or tax-payers, or the fossil fuel firms that have caused climate change. But one thing’s for sure, companies that are already adopting sustainable practices stand to be at the forefront of this green revolution.
In the investment world, green has already become big business, and initiatives like this will only speed up the need and the demand to go greener, faster and on a much larger scale.
For investors the opportunities are plentiful and make incorporating ESG - environmental, social and governance - issues an essential part of how you choose the companies you invest in.
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As Ned Salter, head of equities and Marty Dropkin, head of research, fixed income at Fidelity told me when I spoke to them for the latest episode of MoneyTalk, interest among investors in ESG investing is growing exponentially. They also firmly believe that the businesses that invest their capital sustainably are going to be the companies that perform the best.
All of which means that ESG is a win-win for everyone. Investors and companies get to know they’re investing in ways that best protect our planet and, at the same - and indeed as a direct result of that - are also likely to be getting the best returns on their investments.
Take a look at what the Fidelity experts have to say and watch the full episode here.
To find out more about sustainable and ethical investing, our ESG hub is the place to start.
Our latest MoneyTalk podcast also discusses the importance of sustainable investing.
The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. The Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.