What has COP ever done for me?

Looking ahead to Conference of the Parties (COP) 28

What do 140 heads of state, and senior government leaders, over 70,000 participants and more than 5,000 media professionals attending an event in a country that has based its economic development on extracting fossil fuels and you have in common?

Helene Winch, Head of Responsible Investing, highlights the practical impacts the annual COP summits could have on climate policy here in the UK.

For information purposes only. The views and opinions expressed here are those of the author at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.

A burning platform

Summer of 2023 was Earth’s hottest since global records began in 1880, according to scientists at NASA’s Goddard Institute of Space Studies (GISS) in New York.

This new record comes as exceptional heat swept across much of the world, exacerbating deadly wildfires in Canada and Hawaii, and searing heat waves in South America, Japan, Europe, and the U.S., while likely contributing to severe rainfall in Italy, Greece, and Central Europe.

Since last year’s COP meeting, the world has seen severe weather events including heatwaves, droughts and floods which continue to destroy people’s homes and crops, impact their ability to earn a living and encourage migration. This led the Chief of the UN to say that we have “entered the era of global boiling”.

COP out or COP in?

Every year, world leaders gather to discuss climate change at COP, which stands for Conference of the Parties. Since 1995, the United Nations has brought together the 197 signatories to the UN Framework Convention on Climate Change (UNFCC) to work on how to tackle climate change.

As weather events become more intense and frequent worldwide, this year’s meeting, COP28 is a critical opportunity to take meaningful action to reduce global emissions and support countries that are already experiencing the worst physical impacts of climate change.

Could embracing a low carbon transition be an election vote winner?

Considering the UK, you could look at the practical policies it has put in place and argue strongly it is behind the curve. For example, the US with the introduction of the Inflation Reduction Act has propelled itself forward in the race, the EU is responding through various Directives linked to the European Green Deal, while China has already built almost as much wind and solar power capacity as the rest of the world combined.

Yet as an international consensus forms on the need for a robust low carbon or “green industrial strategy” that maximises the economic benefits, the UK stubbornly refuses to take part. As the UK falls behind, and especially as the EU begins to introduce import tariffs on high-carbon products, there is a serious risk to the UK’s global competitiveness.

Should we then be viewing the UK’s response to this year’s COP as an economic one rather than an environmental one and in that context a potential vote winner at next year’s general election?

From missed chances to green advances

Looking at the Institute for Public Policy Research paper ‘From missed chances to green advances: The case for a green industrial strategy.,’ the transition to net zero is the economic opportunity of the 21st century. While the UK has made considerable progress in reducing emissions, it has failed to ally these environmental gains with comparable economic ones.

According to this paper from the Institute for Public Policy Research, the UK employs fewer people in renewable energy as a proportion of its working age population than most other European countries. For example, in the wind industry if the UK was performing as well as Denmark it could enjoy an additional 98,000 jobs, or as well as Germany, an additional 20,000 jobs. UK public investment commitments into low-carbon technologies are among the lowest in the G7.

The Confederation of British Industry (CBI) recently estimated that promoting key green growth opportunities such as electric vehicles, heating and insulation could deliver between £37–£57 billion of annual UK GDP by 2030, representing 1.6–2.4 per cent in UK GDP and 14–20 per cent of the total GDP growth between now and 2030.

But this will only happen with coordinated, long-term public policy, substantive public support, and dedication from the government to work in partnership with industry, unions, local communities, and workers themselves.

A deflated wind industry?

The failure to translate leadership in renewable energy asset deployment into economic benefits is perhaps most evident in the UK’s wind industry. The UK is the second largest installer of offshore wind in the world, after only China. However, despite strong deployment figures, the UK has squandered the opportunity to create domestic manufacturing supply chains and the associated jobs. By contrast, Germany, Denmark, and the Netherlands have all substantially developed their wind manufacturing capacity and in 2020, these three countries alone accounted for 70 per cent of exports of wind farm components. Meanwhile, the UK is a net importer of offshore wind components, again referencing the Institute for Public Policy Research paper ‘From missed chances to green advances: The case for a green industrial strategy’.

The transition to net zero remains a huge economic opportunity for the UK, but we need strong guidance form clear, long-term, robust industrial strategy alongside a credible carbon reduction pathway to realise it.

Curiously, we may be able to look to the home of COP28 – the United Arab Emirates for a potential model to follow.

Unlikely leadership from the UAE

Reduced global demand for fossil fuels has long represented an existential threat to the region’s economy growth and wealth.

Saudi Arabia and the UAE have positioned themselves as leaders in providing clean energy globally with both expertise in hydrocarbons and a potential advantage in renewables and energy transitions. GCC (Gulf Cooperation Council) states have announced ambitious long term renewable energy targets supported with plans for carbon capture and reduction technology, and widescale decarbonization targets across the economy.

Could do better

Learning from the forward aggressive planning from the UAE, the actions the UK government takes now could set us on a path to achieving our low carbon future that balances environmental, economic and social outcomes. But the clock is ticking, and rapid progress demands priorities and action both inside and outside of the high-profile COP events, including:

  • Provision of detailed strategy plans with clear accountability beyond political cycles.

 

  • Bold action in incentivizing the market and mandating change including supporting investment from domestic investors such as pension schemes.

 

  • Boost innovation through increased funding.

 

  • Improve the design and delivery of green initiatives.

 

  • Promote a whole-of-society, people-centered approach and lead and control the communications.

 

  • Embed local supply chains and expertise from steel to universities.

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The value of stock market investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.

IMPORTANT INFORMATION:

For Investment Professionals only. No other persons should rely on the information contained within.

Whilst every effort has been made to ensure the accuracy of the information provided, we regret that we cannot accept responsibility for any omissions or errors.

Issued by Premier Portfolio Managers Limited, (registered in England no. 01235867), authorised and regulated by the Financial Conduct Authority, a member of the Premier Miton Investors marketing group and a subsidiary of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

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The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

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The information contained in this website is directed at persons who are resident in the United Kingdom and complies with appropriate UK legislation and regulations and is not directed at, nor intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted.

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Premier Miton Investors has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

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By clicking accept you acknowledge that your use of this website is subject to our privacy policy, cookie policy and our general legal and compliance information available on our website.

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Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

Read the full 'website terms of use' >

This section of the website and the content it contains is for professional financial advisers only and should not be relied upon, or circulated to, retail clients. Retail clients should refer to the Individual Investor's site.

The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell shares in the funds or portfolio or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products, represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

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The information in this site is solely for the purpose of acquiring information as, or for, an Institutional Investor (a corporate or other non-retail investment professional acting for their own account). This information must not be used or relied upon by anyone that may be considered a “retail investor” by the home regulator of the country from which this site is accessed.

The information contained in this website is directed at persons who are resident in the United Kingdom and complies with appropriate UK legislation and regulations and is not directed at, nor intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted.

The information or opinions contained herein should not be construed as an offer, or solicitation to deal in any investment or fund nor shall any such investment products or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful or in which the person making the offer solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.

Premier Miton Investors has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

Neither Premier Miton Investors nor any of its group companies or affiliates accepts any liability for any losses arising directly or indirectly from any information accessed from this website, to the fullest extent permitted by law.

By clicking accept you acknowledge that your use of this website is subject to our privacy policy, cookie policy and our general legal and compliance information available on our website.

THE UNITED STATES OF AMERICA:The investment products referred to on this website have not been and will not be registered under the United States Securities Act of 1933, as amended. They may not be offered or sold in the United States of America, its territories and possessions, any State of the United States of America or the District of Columbia or offered, sold or transferred to US Persons (as defined below). The investment products referred to on this website have not been and will not be registered under the United States Investment Company Act of 1940, as amended. Premier Portfolio Managers Limited has not been and will not be registered under the United States Investment Advisers Act of 1940.

“US Person” generally includes the following: (a) any natural person resident in the United States; (b) a partnership or corporation organised or incorporated under the laws of the United States; (c) any estate of which any executor, or administrator, is a US Person; (d) any trust of which any trustee is a US Person; (e) any agency or branch of a non-US entity located in the United States; (f) any non-discretionary account or similar account (other than an estate or trust) for the benefit or account of a US Person; (g) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated or (if an individual) resident in the United States; and (h) any partnership or corporation if: i. organised or incorporated under the laws of any non-US jurisdiction; ii. formed by a US Person principally for the purpose of investing in securities not registered under the 1933 Act. In addition, a Shareholder must qualify as a “Non-United States Person” as used in the US Commodity Futures Trading Commission (“CFTC”) Rule 4.7.

Investment products referred to on this website may not be sold or transferred to a US citizen, or an entity taxed as such or required to file a tax return as such under the United States federal income tax laws (a “US Tax Resident”).

The information in this site is solely for the purpose of acquiring information as, or for, an Institutional Investor (a corporate or other non-retail investment professional acting for their own account). This information must not be used or relied upon by anyone that may be considered a “retail investor” by the home regulator of the country from which this site is accessed.  

The information contained in this website is directed at persons who are resident in the United Kingdom and complies with appropriate UK legislation and regulations and is not directed at, nor intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted.

The information or opinions contained herein should not be construed as an offer, or solicitation to deal in any investment or fund nor shall any such investment products or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful or in which the person making the offer solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.

Premier Miton Investors has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

Neither Premier Miton Investors nor any of its group companies or affiliates accepts any liability for any losses arising directly or indirectly from any information accessed from this website, to the fullest extent permitted by law.

By clicking accept you acknowledge that your use of this website is subject to our privacy policy, cookie policy and our general legal and compliance information available on our website.

THE UNITED STATES OF AMERICA: The investment products referred to on this website have not been and will not be registered under the United States Securities Act of 1933, as amended. They may not be offered or sold in the United States of America, its territories and possessions, any State of the United States of America or the District of Columbia or offered, sold or transferred to US Persons (as defined below). The investment products referred to on this website have not been and will not be registered under the United States Investment Company Act of 1940, as amended. Premier Portfolio Managers Limited has not been and will not be registered under the United States Investment Advisers Act of 1940.

 “US Person” generally includes the following: (a) any natural person resident in the United States; (b) a partnership or corporation organised or incorporated under the laws of the United States; (c) any estate of which any executor, or administrator, is a US Person; (d) any trust of which any trustee is a US Person; (e) any agency or branch of a non-US entity located in the United States; (f) any non-discretionary account or similar account (other than an estate or trust) for the benefit or account of a US Person; (g) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated or (if an individual) resident in the United States; and (h) any partnership or corporation if: i. organised or incorporated under the laws of any non-US jurisdiction; ii. formed by a US Person principally for the purpose of investing in securities not registered under the 1933 Act. In addition, a Shareholder must qualify as a “Non-United States Person” as used in the US Commodity Futures Trading Commission (“CFTC”) Rule 4.7.

 Investment products referred to on this website may not be sold or transferred to a US citizen, or an entity taxed as such or required to file a tax return as such under the United States federal income tax laws (a “US Tax Resident”). If those investment products are held by a US Person, a US Tax Resident or a person who does not qualify as a “Non-United States Person” within the meaning of CFTC Rule 4.7, Premier Portfolio Managers Limited shall be entitled to redeem such Shareholder’s entire holdings.