Climate Change: A Growing Election and Legal Battleground

Climate change is gearing up to become a key election – and legal – battleground. 

‘Just Stop Sunak’ screamed Tuesday’s Daily Mirror in response to the government’s confirmation on Monday that it would grant more than 100 new North Sea oil and gas drilling licences, while The Sun led with the launch of its ‘Give Us A Brake’ campaign, urging politicians to “protect hard-up motorists from expensive net zero policies”. The Times, meanwhile, reported that the government will ask the heads of major UK energy companies to reconsider their investment strategies following Rishi Sunak’s call to “max out the opportunities” in the North Sea.

Emboldened by the Conservatives’ recent Uxbridge by-election victory, in which opposition to the expansion of London’s ultra-low emission zone played no small part, the Prime Minister insisted that plans to expand North Sea drilling, said to be essential for the UK’s energy security, were “entirely consistent with our plan to get to net zero”.

The new North Sea licensing round – which will be accompanied by two more carbon capture and storage projects – drew condemnation from environmental groups, opposition figures, the renewable energy industry, investors and some former Tory ministers.

Lambasting the plan as “the wrong decision at precisely the wrong time, when the rest of the world is experiencing record heatwaves”, Chris Skidmore, the former science minister who led a review into net zero, said it was “on the wrong side of modern voters who will vote with their feet at the next general election for parties that protect, and not threaten, our environment.”

The North Sea plan follows the government’s approval in December of the UK’s first new deep coal mine in thirty years, recent changes to the UK’s carbon trading scheme that cut incentives for industry to reduce emissions, a planned national review of low-traffic neighbourhoods, not to mention a damning progress report from the Climate Change Committee in June, which claimed that the UK has lost its global leadership position on climate change and risks failing to meet legally binding emissions targets made at the COP26 climate summit in Glasgow.

Meanwhile, a coalition of nature groups, including the National Trust, RSPB and RSPCA, have threatened to mobilise their 20 million or so members, should the government “use the environment as a political football” by watering down its climate commitments. 

The net zero fallout comes amid a continuing rise in climate litigation. According to research published last week by the Sabin Center for Climate Change Law at Columbia University and the UN Environment Programme, the number of climate-related lawsuits has more than doubled in the past five years to 2,180 court cases globally.

And a report by the LSE’s Grantham Research Institute on Climate Change and the Environment, published in June, found a significant increase in legal challenges to the climate policy response of governments and companies, particularly outside the US. It also reported a surge in greenwashing cases relating to climate mis- and disinformation, and an increase in litigation concerning investment decisions – a fact of which the energy companies summoned to Number 10 will be only too aware. 

While both reports highlight a growing ESG backlash with a rise in lawsuits that seek to delay climate action or obtain compensation for government climate policies, in the overwhelming majority of cases, “People are … turning to courts to combat the climate crisis, holding governments and the private sector accountable and making litigation a key mechanism for securing climate action and promoting climate justice,” according to Inger Andersen, Executive Director of UNEP. 

Indeed, Friends of the Earth, ClientEarth and Good Law Project are taking the UK government to court for the second time in under two years over its plans for tackling climate change. They claim that the government’s revised net zero strategy – the Carbon Budget Delivery Plan – is unlawful and are seeking a judicial review. It follows the organisations’ landmark legal victory last year, with the High Court ruling that the government’s net zero strategy breached the Climate Change Act and required revision to show how key emissions reduction targets would be met.

Greenpeace, meanwhile, was in court last week to challenge the government’s “reckless decision to greenlight a new oil and gas licensing round, without properly checking the damage it will do to the climate”.

The UK government’s climate climbdown and vocal support for motorists, while clearly a calculated risk, is a polarising issue, pitting as it does short-term energy security against long-term green investment, economic self-interest against the ‘greater good’, and – as the Financial Times suggested yesterday – individual freedoms against statutory diktat. 

But whatever the ultimate impact on UK voting intentions of the net zero pushback, especially in light of the prolonged cost of living crisis, the increasing appetite for challenging governmental and corporate climate policy response in the courts as we enter the “era of global boiling” means that these latest lawsuits are unlikely to be the last. 

With more than half of climate litigation cases having direct judicial outcomes favourable to climate action, including prompting policy changes, according to the LSE report, Rishi Sunak – and the energy companies – better take note.  

By Sarah Peters

03/08/2023

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Irresponsible investment? HSBC’s ESG communications crisis

For HSBC, a bank committed to “playing a leading role in mobilising the transition to a global net zero economy … by helping to shape and influence the global policy agenda”, sponsoring and addressing the FT Moral Money Summit, with its theme of “Turning Talk into Action to Hit ESG Targets”, must have seemed like the perfect profile-raising opportunity.

But far from burnishing its ESG credentials, HSBC is now reeling from a PR disaster involving the suspension of Stuart Kirk, the global head of responsible investment at its asset management division, following his controversial comments on climate change at last week’s event.

The fallout from Kirk’s speech and HSBC’s response have made headlines around the world – from the Financial Times to The Mirror, The Straits Times to The Wall Street Journal – and polarised opinion, prompting both outrage at his ‘offensive’ remarks and support for daring to tell the ‘truth’.

Kirk – a former FT journalist and editor of Lex – gave a presentation entitled “Why investors need not worry about climate risk”, which accused policymakers and central bankers of overstating the financial risks of climate change and included a slide saying “Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong”.

Attacking climate “nut jobs”, he complained about having to spend time “looking at something that’s going to happen in 20 or 30 years”, and joked about the risk of flooding, saying, “Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages and that’s a really nice place.”

Following an outcry over his remarks from climate change activists, HSBC’s chief executive and its head of wealth and personal banking both denounced Kirk’s remarks via social media posts.

Yet according to the FT, which first reported Kirk’s suspension, the theme and content of his speech had been agreed internally within HSBC a couple of months earlier.  

The bank’s PR team has, unsurprisingly, been firefighting ever since the event but declined to comment on Kirk’s suspension when contacted by media.

Kirk’s remarks were always likely to be controversial and provocative, given his views on climate change risk and his outspoken nature, of which HSBC’s management and PR team were presumably aware. So why did HSBC sanction his speech, yet fail to predict and prepare for the inevitable backlash, only to perform a spectacular U-turn after the event and ‘cancel’ him pending an internal investigation? Moreover, in light of his uncompromising and combative stance on climate change, what does Kirk’s position as global head of responsible investment say about HSBC’s commitment to a net zero future? Is the bank simply playing lip service in its climate strategy pledge?

Businesses should either accept that they are broad churches with individuals holding different views with full entitlement to express them (as long as this is done respectfully), and be prepared to deal with the potential fallout – or they should make clear that there is only ever one corporate line that can be expressed publicly, and ensure consistency in actions as well as words. This principle extends way beyond the ESG sphere – and it is the basis from which all communications advice should flow.

The PR debacle comes just weeks after HSBC faced accusations of greenwashing by the UK’s advertising regulator. A leaked draft report by the Advertising Standards Authority ruled that two HSBC adverts misled customers by selectively promoting green initiatives while failing to disclose information about the bank’s financing of companies with substantial greenhouse gas emissions.  

And last year, HSBC came under fire from shareholders for failing to take climate change seriously, with some of Europe’s leading investors filing a climate resolution that called on the bank to publish a strategy and targets to reduce its exposure to fossil fuel assets.

One thing is certain: if HSBC wants to fulfil its “ambition … to be the leading bank supporting the global economy in the transition to net zero,” as CEO Noel Quinn posted on LinkedIn over the weekend, it has a long way to go.    

Written by Sarah Peters

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