In this latest Environmental Law News Update Christopher Badger and Mark Davies consider turning the page on austerity, imminent compliance deadlines for pension providers to publish social, environmental or ethical considerations used in their investments and ClientEarth writes to local authorities to ask how they intend to meet their environmental obligations.
The end of austerity?
On 4 September, Sajid Javid, Chancellor of the Exchequer, delivered his ‘Spending Round’ speech in which he set out the Government’s spending priorities and promised that the UK has “turned the page” on austerity. £13.4 billion is to be added to the plans for total public spending.
Environmental buzzwords included cleaner energy, greener transport and a national priority of decarbonisation.
Key headlines included:
- DEFRA is to be given £432 million of funding to set “world leading environmental standards”.
This is actually described by the Treasury as “Brexit funding”, intended to deliver a safe and ambitious departure from the European Union while setting global standards in protecting and harnessing value from the natural environment. However, DEFRA has been pledged a 3.3% increase in total funding, which will take DEFRA’s overall annual budget to £2 billion.
- £30 million in new money is being provided to tackle air quality.
- Another £30 million for biodiversity, including an expansion of the Blue Belt programme.
- New funding for BEIS to develop new programmes to meet the net zero commitment by 2050.
No actual detail was provided on how this additional funding will be implemented. The Government will set out further plans for decarbonisation in the National Infrastructure Strategy, due to be published this autumn. The Chair of Natural England has already expressed his disappointment in the level of funding for biodiversity, stating that Natural England cannot do what is necessary without increased investment. Not everyone has been so pessimistic however: although the Chancellor didn’t give a figure, Chris Stark, Chief Executive of the Committee on Climate Change stated that the figure of £30 million to be spent on staff and programme expenditure would be, in his words, a “potentially huge increase in staffing” on net zero.
Of course, this could all be for nothing depending on the results of any forthcoming general election.
Deadline approaches for pension schemes
The Occupational Pension Schemes (Investment) Regulations 2005 have been amended to require trustees to update their ‘Statement of Investment Principles’ (“SIP”) to cover “financially material considerations over the appropriate time horizon of investments, including how those considerations are taken into account in the selection, retention and realisation of investments”. Financially material considerations include but are not limited to environmental, social and governance considerations, including climate change, which the trustees of the trust scheme consider to be financially material.
Updates to the SIPs must be in place by 1 October 2019. Any trustee who has failed to take all reasonable steps to secure compliance may be subject to a civil penalty under section 10 of the Pensions Act 1995. The maximum amount in the case of an individual is £5,000 and £50,000 in any other case. Of more importance, potentially, is the stigma that will attach to any particular occupational pension scheme that fails to properly address ESG considerations and the associated reputational risk.
Expect this to be the subject of some scrutiny. ClientEarth has already expressed its interest, writing to the trustees of 14 pension schemes that it described as “in the spotlight” after the Environmental Audit Committee highlighted that some of the UK’s largest pension scheme had a poor understanding of climate risk.
Christopher Badger and Mark Davies have written an article on the amendments which can be found here. This includes reference to pre-existing guidance for local government pension schemes which may prove both relevant and useful.
In a related move, the Institute and Faculty of Actuaries has published a ‘Practical guide to climate change for general insurance practitioners’. Insurance companies have also been a focal point for ClientEarth, who reported three to the Financial Conduct Authority earlier this year for failing to disclose climate risks in their annual reports. The practical guide can be found here
ClientEarth puts local authorities on notice over climate inaction
ClientEarth have indicated that they are writing to 100 local authorities currently in the process of developing their local plans to warn them of the risks of legal challenge should they not introduce ‘proper climate change plans’.
The letters reportedly give each local authority eight weeks to explain how ‘evidence-based carbon reduction targets’ will be set and how it will be ensured that these targets are ‘central’ to any new planning policies. There is of course no legal requirement for local authorities to respond to such letters, but they would be well advised to do so given ClientEarth’s history of successful challenges to bodies which fail to comply with environmental obligations.
Echoing a growing consensus that action on climate change should not be the sole preserve of central government but will require action from the individual up, Sam Hunter Jones, a climate lawyer with ClientEarth stated, “There is a collective failure by local authorities across England to plan adequately for climate change. Too often climate change is perceived to be just a national or international issue and therefore solely the responsibility of central government.”
It will be interesting to see if any of the local authorities that ClientEarth write to respond with any measures as drastic as those proposed in the 2015 opinion produced for ‘Clean Air in London’. That opinion proposed that against the backdrop of serious breaches by the UK of the limit values of the Air Quality Directive 2008/50/EC, planning authorities should refuse permission for any development that would cause worsening air quality in an area already in breach.
It would not be envisaged by this author that any local authority would be so bold as to say that there will be a wholesale block on development in order to combat climate change or improve air quality, but there are good arguments to say that local authorities should introduce stricter, greener standards in respect of all developments.
Chambers UK Bar Awards 2019
Six Pump Court is delighted to have been nominated for two Environment/Planning awards in this year’s Chambers UK Bar Awards. We have been shortlisted in the Environment/Planning Set of the Year category and Christopher Badger has been nominated as Environment/Planning Junior of the Year – more here.
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