Today I joined other finance directors from some of the biggest businesses in the UK to discuss the role of the finance community in driving climate action in the run up to COP26.
HRH The Prince of Wales also joined us, as patron of the Accounting For Sustainability organisation which SSE is a partner to, and was passionate in his support for the work that the finance sector can do to lead from the front in tackling the climate emergency.
High praise but a big challenge for us all as globally we seek to put in place the practical solutions to climate change.
I’m proud SSE is already delivering action on many fronts. Building the world’s largest offshore wind farm at Dogger Bank, developing the largest offshore wind pipeline in the world, exploring new technologies like CCS and hydrogen – and revisiting old ones such as pumped hydro storage at Coire Glas. We’re also building the electricity networks to transport more green power and hep get more electric vehicles on the road and cleaner heating in homes.
We know that electricity is key to the transition to net zero because – once we take carbon out of electricity – which we will probably achieve in the middle of the next decade – then electricity becomes the energy source that decarbonises other key sectors of the economy. Especially transport and heat.
But alongside the fantastic project teams that develop these opportunities, it is the finance sector that ensures they become a reality.
The role of the CFO and finance teams is to work behind the scenes to make it happen smoothly. To support the business case, ensure risks are identified and managed, and to deliver the finance for the investments.
There is no doubt that the investment community has become more focused on climate change and the importance of net zero strategies and plans. And too be frank – so they should. As Larry Fink at Blackrock puts it – climate risk is financial risk.
"It’s in everyone’s interests that climate risks and, importantly climate opportunity is baked into investor assessments and analysis of companies. I’m heartened that the dialogue has changed and is continuing to in recognition of the role the investment and finance communities have in driving a more sustainable way forward."
Gregor Alexander
COP26 is a diplomatic exercise - a meeting of nation states to collaborate on climate change. But it is too important “just” to leave it to governments. It will take business, governments, the finance community, NGOs and society working together to tackle the biggest threat mankind faces.
The Race to Zero has already seen businesses across the world making their own pledges and setting targets to cut emissions on a pathway consistent with global warming of no more than 1.5 degrees.
Last week the Climate Change Committee published it’s 2021 progress report to government on progress. At the heart of that report is the recognition that – while the right targets are hugely important – ultimately, it’s action that matters. And there is no doubt that it is business that can get things done.
In SSE’s case we’re already putting our money where our mouth is. We’re investing £7.5bn in low carbon projects across the UK and Ireland – and we want to do more.
Behind all of the energy systems, electricity grids, big engineering projects and huge assets that will need to be delivered will be the finance community. Our role is to bring sustainability into decision making and ensuring long-term good for society and investors.