How can we put an end to greenwashing? Labour Party Conference fringe meeting - Sunday 8 October, 12.30-1.30 Room 25, Liverpool ACC

 CHAIR

·        Clive Betts MP, Chair Parliament Levelling Up, Housing and Communities Committee

SPEAKERS

·        Baroness Blake of Leeds, Lords Spokesperson Energy and Net Zero

·        Cllr John Gray, Vice Chair, Local Authority Pension Fund Forum (LAPFF)

·        Cllr Rishi Madlani, SERA - Labour’s Environment Campaign and Chair, London Borough of Camden Pensions Committee

BACKGROUND

There is widespread concern and public anger about companies making misleading and sometimes false statements about their environmental credentials. The issue is also on the radar of regulators and governments with growing interest about the use of terms and labels such as ‘sustainable’. Although interventions are starting to be made will they be enough to guard against the dangers that greenwashing poses?

For government, such dangers include delayed action to meet the goals of the Paris Agreement and avoid the worst effects of climate change. It also poses significant risks to our financial system and for investors. Unclear or misleading disclosures from companies could mean risks are masked and action is not taken by investors through their stewardship activity. Equally, misleading financial products also carry with it the risk that capital is misallocated while also undermining confidence in green products and sustainable investment.

The fringe event will discuss what more needs to be done nationally and internationally to improve disclosures and taxonomies and tackle greenwashing? And in the UK, what roles should government, councils, investors, companies and civil society play to end greenwashing?  

As the event is open to all people attending the conference it will not be held under Chatham House Rules.

FRINGE HOSTS

The event is supported by the Local Authority Pension Fund Forum (LAPFF), which represents the interests of 87 UK public sector (LGPS) pension fund members and seven Pools with combined assets of over £350bn. LAPFF promotes the highest standards of corporate governance to protect the long-term value of local authority pension funds. It does so primarily by engaging some of the world’s largest companies on environmental, social and governance issues.

The Smith Institute, an independent, not-for-profit think tank, is the co-host, providing the secretariat for the fringe event.

CONTACT ON THE DAY Paul Hackett

Picture https://lapfforum.org/engagements/were-going-to-need-a-bigger-planet/

"Levelling up net zero:How can we invest in a fair and just transition" Fringe #Lab22

 This is the presentation I gave on Monday at the LAPFF/the Smith Institute fringe alongside panel speakers, Olivia Blake MP and Professor Nick Robins. Chaired by Paul Hackett. Many thanks to Paul Hunter from PIRC for speaker notes.

"First for context a bit about me, I am John Gray a councillor in Newham, East London and Unison rep and through these roles I have been involved in local government pensions for a number of years.

This includes being vice-chair of the Local Authority Pension Fund Forum (LAPFF), which is a membership organisation representing over 80 public sector pension funds and investment pools.

Together our members have over £350 billion of assets under management and have holdings in many of the largest companies within the UK but also globally.

And across our pension funds, there are millions of scheme members who serve or have served our communities who rely on our investment funds to provide a pension in retirement. I included.

The role of LAPFF is to protect these pension fund investments by engaging with investee companies on responsible investment issues, including around climate and social issues such as employment standards and human rights.

So why I am here and why as investors are we interested in issues around the environment, levelling up, and social issues associated with the transition to net zero?

For us these issues are not just a matter of good corporate behaviour for its own sake, but also protecting the pension funds that provide for millions of people.

To give an example of what I mean, LAPFF recently visited Brazil to meet communities and discuss with one of the world’s largest mining companies the mining disasters that have happened in South America over the last decade.

These disasters were a human tragedy. Over the period a series of (what are called) tailing dams used in the mining process have failed, submerging people under a wave of water and mud with a significant loss of life, livelihoods decimated, and communities destroyed.

It is impossible not to be affected by stories we have heard by community members.

However, while quite clearly primarily a human disaster it is also an issue for us as investors. We want to act as long-term responsible investors. And when disasters like these happen it not only undermines our purposes as responsible investors, it also comes at considerable costs with reparations and the clean up running into multiple billions of pounds.

And when you look at this example, one of the most galling components was that it was avoidable – safety concerns were raised by workers and communities before the tragedies but were ignored.

I wanted to start with this example not only to show what I mean by the importance of environmental, social and employment standards for long-term investors but also because the mining sector provides a very good case study for today’s discussion.

It is an industry in transition – it is having to power past coal as part of our move away from carbon intensive energy sources and industrial processes.

And it is vital sector for so-called transition minerals – cobalt, lithium, nickel and the like – which are all needed in green technology such as electric vehicles.

Without mining activity for such transition minerals, decarbonising our economy won’t be possible and as long-term investors we face significant market-wide risks from climate change. And at an individual company level we run the risk of being invested in stranded assets and in firms left behind as regulation ratchets up.

In the mining sector we also have a pretty good case study in the UK context of how not to do an industrial transition. We know all to well what happens when we don’t consider the implications for workers and communities and social dislocation that can follow. Olivia mentioned the coalfields in South Yorkshire in the 1980s, I was brought up in industrial North East Wales at the same time while we are of course now in Liverpool, which took decades to recover.

And in the case of mining disasters, the lack of engagement between companies and their stakeholders that I mentioned creates their own set of risks.

Although I have used mining as an example, the transition is likely to have significant impacts across a whole range of sectors – energy, utilities, manufacturing, housing, agriculture, transport – to name a few. While mining in the UK may have declined over recent decades, these other sectors are all large industries in the UK and are all now in period of change.

And in this period of change, if we repeat the mistakes of the past and ignore the social implications of the industrial transition, we will almost certainly create deep-seated opposition to climate action. This morning we woke up to the news that a far right government has been elected in Italy in part due to such fears.

This includes potential opposition within specific communities because of the geographical dimension to achieving net zero.

Carbon intensive sectors are often located in the least wealthy places and regions and so are facing the biggest adverse impacts of the transition.

But, it’s not all doom and gloom. The transition comes with risks but there are real opportunities. We have the chance to create new jobs, support local growth and bolster efforts to level up the country while also helping to avoid the worst effects of climate change.

What this does demand is careful consideration about how we can best support communities as we decarbonise our economy. How we can level up net zero.

As investors we have a role in this: Scrutinising and engage investee companies on how they are approaching the social implications. Understanding how they are engaging workers and communities on industrial change, their plans for retraining and redeploying staff as jobs change and how they are supporting the communities in which they operate through the transition.

But investors and companies can’t do it alone. Government clearly plays the primary role, including in supporting and demanding us to do more. That is why we supported an inquiry into a just transition run by the All Party Parliamentary Group for local authority pension funds and a copy of the report is on our website.

Much of what that inquiry heard suggests there has to be a firm commitment to a just transition from governments. In the UK context there is a strong case for a Just Transition Commission to bring stakeholders together and provide guidance, including on what interventions are needed to support local economies and communities over the coming decades.

As the levelling up white paper mentions, there could be a role for local authority pension funds to invest locally to support growth. But the feedback from our members is that this requires policy certainty. As long-term investors, without certainty it is hard to make local investments in the transition or understand the social implications.

There is also regulation that could help. It is a positive step that government recently introduced rules requiring large companies to consider the risks and opportunities they face as a result of climate change. These TCFD reporting requirements compel companies to disclose this information in a clear and consistent way so investors can understand their financial exposure to climate risk.

However, currently this does not have to include the social risks associated with the transition. Be it push back on their climate transition plans, workforce and skills issues of the transition, the impacts on stakeholders such as communities or managing reputational and operational risks with employers, consumers, suppliers or communities.

Considering the social implications is not an impossible task. Indeed, some companies are already starting to develop just transition plans. Energy company SSE, for example, have a just transition plan covering engagement with workers and communities, making a commitment to decent work and the creation of new low-carbon job, sharing value with communities and having a road map for an orderly and planned transition for their business.

Achieving that orderly transition is not a straightforward task.

We are all too aware of the pressures to water down environmental regulations in the face of the energy crisis.

And I think this an important point to finish on.

More broadly, in whatever role we play as investors, government, politics or civil society, if we don’t consider the social and economic impacts for communities of the transition to net zero, we will face opposition to climate action.

Preventing that ultimately demands that we all play our part, including businesses and the investment community, in ensuring the shift to net zero is part of the solution and not part of the problem when it comes to narrowing economic divides and levelling up the UK".

Labour Party Conference 2022 (& plug for fringe ‘Levelling up net zero: How can we invest in a fair and just transition?’)

 

Labour Party conference starts on Sunday in Liverpool and I am looking forward to being one of the two elected UNISON Labour Link delegates for Greater London. I will post when I can.

However, quick plug with a different hat for a fringe I will be speaking at on behalf of the Local Government Pension Fund Forum. 

Levelling up net zero: How can we invest in a fair and just transition?’

Labour Party Conference fringe meeting

Monday 26 September at 12:30 to 13:30

Hall 2, Room 4, ACC Liverpool

CHAIR 

·         Paul Hackett, Director, the Smith Institute

SPEAKERS

·         Olivia Blake MP, Shadow Minister for Climate Change and Net Zero

·         Professor Nick Robins, Grantham Research Institute on Climate Change and the Environment, LSE

·         Cllr John Gray, Vice-Chair, Local Authority Pension Fund Forum

"Can Scotland deliver a just transition to net zero" LAPFF fringe at SNP conference 21

 

This evening I took part in a panel discussion at a SNP conference virtual fringe hosted by the Smith Institute and supported by the Local Authority Pension Fund Forum (LAPFF).on "Just transition". I took part in my capacity as a Joint Vice Chair of LAPFF.  

It was a really interesting debate and Q&A. The Chair was Professor Nick Robbins (LSE) and other speakers, Alan Brown MP (Shadow SNP Spokesperson Energy & Climate Change) and Rachel McEwen (Just Transition Commission Scotland & Chief Sustainability Office SSE). It was a shame that Richard Lochhead MSP (Minister of Just Transition, Employment and Fair Work) was unable to join due to technical problems. 

This is my introductory contribution :- 

"Thank you, Nick.

I am a Councillor in East London and vice-chair of the Local Authority Pension Fund Forum (LAPFF), which is a membership organisation representing over 80 public sector pension funds and investment pools.

Together our members have over £300 billion of assets under management and have holdings in many of the largest companies within the UK but also globally.

The work of LAPFF is focused on engaging these companies on responsible investment issues, including around climate and social issues

We do so not only because it is the right thing and I say this also as an active trade unionist who pension is in the LGPS, but also because as long term investors the environmental impact of companies and how they treat their workers matters for long term value of those companies and ultimately protecting the pensions of beneficiaries.

The theme of today’s fringe combines both these areas; how best to manage climatic and social risks and I am going to focus my time on the role that investors can play in supporting a just transition to net zero.

As we head towards COP26, the climatic risks we face as a society are well known. And reaching net zero is increasingly viewed as a priority for governments across the globe.

The urgency of the need for immediate climate action for all societal actors has been reinforced by the Intergovernmental Panel on Climate Change’s latest report which has been called a ‘Code Red’ for humanity by the UN Secretary General.

This report shows that many changes are becoming irreversible and that there is no room for delay or excuses to avert climate catastrophe.

Climate change also has significant implications for long term investors such as pension funds. This includes stranded assets such as oil that cannot be extracted because of regulation or taxes and companies more generally failing to move to low or zero carbon business models

Moving to a zero carbon business model is far from straightforward and has social implications – many of these are very positive such as creating new green jobs and improving the air quality in our towns and cities.

But there are also risks of moving away from carbon intensive industries.

We have seen in the past the impact of deindustrialisation and pit closures on unemployment and local communities. I myself was brought up in NE Wales in the 1980s & experienced first-hand the closure of steel works & mills which resulted in massive social deprivation & up 33% male unemployment rates.

If we repeat the mistakes of the past and ignore the social implications of the transition, we risk creating opposition to the urgent and effective climate action that needs to be taken. We should never forget the “yellow jacket” protests in France which forced the government to reverse moderate rises in fuel duty & that it was Kentucky coal miners who helped elected Donald Trump

So as investors we have a role in supporting not only the transition to net zero but also one that is just.

As investors we can do so by first recognising the challenge and including the issue in policy statements to help guide investment decisions.

Investors can seek to understand the risks, including by engaging employee and community groups to get their views on the threats and opportunities.

Investors can also set expectations of companies and engage with company directors on these. LAPFF, for example, has been engaging a range of companies to ensure they have just transition plans. And the scale of the challenge means it is not just about oil and gas companies, but also utilities, carmakers, mining and manufacturing to name a few sectors.

However, investors can’t do it alone and we require support from governments

That is why LAPFF are supporting an inquiry into a just transition run by the All Party Parliamentary Group for local authority pension funds, which will be publishing its findings next month.

I think it is fair to say that much of what the APPG has heard suggests Scotland is leading the way, not least with the Scottish Just Transition Commission, something that the Forum thinks should be replicated at a UK level.

Over the past nine months the APPG has heard from different investors about the need for clear commitment from the UK government regarding a just transition and policy certainty. As long-term investors, without certainty it is hard to make investments in the transition or understand the social implications.

There are also areas where regulation could help, including ensuring companies disclose information on their workforce and that company TCFD (Task force for Climate-related Financial Disclosures) climate reporting includes the social implications of the transition.

And when it comes to financing projects to deliver the just transition, government funding in Scotland and across the UK will be needed to crowd in private finance.

This final example shows the importance of partnership working. While the roles of investors and government in ensuring a just transition are distinct, they are complementary.

Partnership working or social partnership, lies at the heart of what a just transition means, with all stakeholders involved in the process of making plans.

And to finish, the scale of the climate crisis and potential social implications of action required to address it, demands that investors, governments, companies, trade unions and society work together to ensure that the worst effects of climate breakdown are avoided.

Thanks"

Local Government under Labour - Setting the Agenda

On Wednesday evening I went to the Local Government Association (LGA) headquarters in central London for the launch of a new report on the future of Councils under a Labour Government.

Paul Hackett from the Smith Institute opened the meeting and noted that we were in Bevin Hall in what use to be "Transport House", the former national offices of the T&G union.  There must be various labour movement ghosts of the past in this room and building.

Paul hoped that this report will help bring together Labour Councils and the Parliamentary Labour Party. 

Clive Betts MP was first speaker. He thought that after the the fundamental attack on local government by this present government we cannot just go back to the way things use to be. There is also a disconnect between the political class and those we serve that has to be addressed. 

Labour needs to think in opposition now since we will be too busy when in government.

 

Next speaker was Hilary Benn MP, the Shadow Secretary of State for Communities and Local Government

Hilary thought that there is a struggle between local and central government. In the NHS we need national standards but there is an appetite for change for what local government provides. 

Interestingly he thought that the referendum on independence in Scotland will settle the Scottish Question but then the English Question on decentralisation will have to be answered. 

He talked about the crisis of confidence in our politics and the failure of consumerism, where far too many people think they can just sit back and do nothing but moan about the way things are run and don't realise they need to contribute. 

He ended by stating his belief that the tide is flowing towards real localism.

Cllr Lib Peck, the leader of Lambeth Council spoke about canvassing and speaking to people who said they "don't do voting". She wanted to ask them "what bit of voting do you not get?". 

The next Labour government needs to be bold. Emphasis the core values of public service. Councils need greater income raising powers, the ability to borrow and planning powers to get rid of too many payday loan and betting shops.

Final speaker was Cllr Sir Richard Leese, Leader of Manchester City Council. He asked what Labour authorities wanted to do? They want to encourage economic growth and jobs. End social determination but not by the tools of the past. Instead of national programmes there should be  devolved economic development.

I asked a question to the panel that a future Labour government needs to trust Local Authorities with taxation and spend. I appreciate there is a battle with our Treasury team over expenditure but times have changed and in the Party we have largely got rid of out trot head bangers who wrecked local government in the 1980s. We can only get rid of the centralised nanny state if you trust the people to hold councils to account for their money.

Hilary responded by saying that while he wished that there was a political consensus on income raising for local authorities there is currently not one.

There followed a wide range of interesting questions and answers. I think that it is fair to say that there was a consensus about the need to devolve real power from the centre and a wish that Labour made its mind up quickly before 2015 and if elected, took no prisoners and got on with things from get go. 

Check out of course, the excellent Chapter 10 of the report: "Troubled families in troubling times" which just happens to be written by my local MP, Lyn Brown, Shadow Fire and Communities Minister :)

Lab12: Workplace pension fringe

This fringe by NAPF/Smith Institute was on Monday. Gregg McClymont MP, pension shadow minister is speaking. Monday (1 October) was of course the day that Workplace Pensions began. So it was pension wise, a special and even historic day.

The Labour position outlined by Gregg is encouraging. He wants full transparency on charges. He wants to encourage scale. There are nearly 50k pension schemes in the UK. Pensions should not be a "cottage industry".  Policy now is for member Trustees for all pension funds (including those run by insurance companies) and changes in fiduciary duties.

NAPF CEO Joanne Segars spoke next about how it is interesting that pensions are being reported for the first time in a largely positive way. By Christmas 500k extra people will be saving for their pensions. Their research is that 2/3rd of people will not opt out. She agreed with Gregg about scale and also the need to have a better alignment of interests between savers and pension providers.

 

My question was that one of the reasons why there has been a low take up of pensions so far is that people are not stupid, they realise that the products currently offered are often pretty rubbish and that they do not want to take all the defined contribution (DC) investment risk.  I wondered if the new look Local Government Pension Scheme 2014 could not be a model for a rebirth of sustainable and affordable defined benefit schemes in the private sector?

 

Gregg thought the idea was interesting while Joanne reminded everyone that many defined benefit schemes were in serious difficulties.

 

This was the first of four pension fringes I attended this conference. One was under Chatham House rules so I can't post on it which is a great shame but I will do the others (eventually).