A group of major investors, overseeing £1.5 trillion in assets, has called upon Prime Minister Rishi Sunak to provide clear, long-term policies for the transition to a net-zero economy. Electric vehicles and oil and gas licenses are among the areas of highest contention.

The investors expressing concerns are made up of 36 financial institutions, organised by the UK Sustainable Investment and Finance Association (UK SEF). It includes well-known names such as Jupiter Asset Management, Scottish Widows, Aegon, and Royal London.

Investors emphasise that clarity on key dates and milestones are missing in the sectors expected to decarbonise in the coming years. Without structured intent, investors say they are unable to support the country’s transition to net zero.

In an open letter to Rishi Sunak, they state, “As investors and financial institutions, we need confidence in the government’s long-term commitment to this agenda to enable us and our investee companies to make multi-billion-pound investments in the UK’s sustainable economy. We have concerns that recent events and signals risk eroding this trust, potentially delaying net-zero-related investment.”

Can the UK scale up decarbonisation technology in time?

It’s been estimated that investment in low-carbon sectors “must scale up to £50bn each year to deliver net-zero, supporting the UK’s economic recovery,” according to guidance from the Climate Change Committee’s Sixth Carbon Budget in 2020.

However, the Committee’s most recent progress report to Parliament warns that the UK is falling short of its 2050 net-zero target, primarily due to political reversals. Notably, in July, Prime Minister Sunak approved over 100 new oil and gas field licenses, and the UK’s electric vehicle (EV) mandate has faced criticism from some Members of Parliament and media outlets.

The investors caution that these investments are at risk without a clear and consistent political direction. Their letter outlines key policy requirements to attract investments, including carbon pricing mechanisms, policies shaping the EV transition, and legislative frameworks enhancing energy efficiency standards for housing. They stress the importance of avoiding abrupt policy changes in critical areas.

James Alexander, CEO of UK SEF, said, “The competition to secure private investment in clean industries is intense. Recent remarks by ministers are undermining investor confidence and putting the UK’s net-zero goals in jeopardy.

“Major financial players are deciding where to invest, and the UK must appear attractive and consistent as a leading destination for sustainable investment.”