Clause 80

Part of Climate Change Bill [Lords] – in a Public Bill Committee at 5:15 pm on 8 July 2008.

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Photo of Nick Hurd Nick Hurd Opposition Whip (Commons) 5:15, 8 July 2008

I refer the Committee to my declaration in the Register of Members’ Interests. I will speak very briefly, because I would like to keep my powder dry for new clause 8, but I support the principle of mandatory disclosure of greenhouse emissions for companies of a certain size, which is how clause 80 is framed.

We recommended that mandatory disclosure in the quality of life policy commission, because we see it as a piece of constructive regulation that will perform a key task in meeting the key challenge of helping us to put a value on carbon. Putting a value on carbon is not necessarily the same as putting a price on carbon. It is a process of elevating the importance of this new currency, this new business risk, which is carbon, to the level of the boardrooms of major British companies, because it is a major business risk that they will have to manage.

In seeking to do that, we are not promoting a piece of excessive bureaucracy that goes against the grain of the market; we are seeking to accelerate an existing market trend. As my hon. Friend the Member for Bexhill and Battle stated, one only has to look at the trend of take-up for the carbon disclosure project and the initiatives run by Trucost to see that there is a trend of growing participation.

Again, when one talks to businesses and asks, “How big a burden is it on business to do this?” the answer is, “This is not insuperable bureaucracy at all”. Having said that, as my right hon. Friend the Member for Suffolk, Coastal pointed out there is an urgent need to develop a common standard, because that would be easier for the businesses involved and it would also make it much easier for increasingly interested private investors—owners of capital—to make comparisons between the companies that they invest in.

So, very briefly, I see clause 80 as a very welcome addition to a Bill that is designed to be a framework Bill, sending the most powerful signals to the market, and it is a nudge at exactly the right time, if one wants,  as we do, the British economy to be in the vanguard of the transition to the low-carbon economy. If one wants that to happen, one wants British companies to be among the most energy-efficient and the most carbon-productive in the world, and we must get on with it, because this is a very real risk that people will have to manage.

It is extremely disappointing in this context, when there is a need for the Government to send strong signals to the market, that we see a Government in retreat from what is, as has been pointed out by the hon. Member for Northavon, really quite a timid proposal. I would actually go further. I would encourage the Minister to look further up the chain of capital, which is extremely apathetic now, and look at the way that pension funds and insurance companies, which own 50 per cent. of the FTSE 350, are engaged with the issue of climate change. The answer is that they are insufficiently engaged with it.

I urge the Government to look at the statutory requirement on pension fund trustees and their fiduciary duty, because companies such as Freshfields are beginning to point out that pension funds’ fiduciary duty must take into account climate change. However, we hear nothing from the Government in this respect and pension fund trustees are not engaged with this issue. Equally, insurance companies have no obligation on them at all in relation to climate change. If we saw activity upstream in the chain of capital, it would drive down through the choices made by fund managers, and we would start to see a process of engagement between capital and business. We have the most powerful capital markets in the world, and they are not being deployed in the interests of the agenda. We talk a lot about how we want the City of London to be the centre of carbon finance, yet when push comes to shove, and when we see a test whereby the Government are asked to take a relatively small initiative that goes with the grain of the market, they retreat rather than advance. The disclosure is insufficient. We need to do more. That would be extremely welcome, and we shall listen carefully to the Minister’s argument.