Labour’s manifesto outlined an ambitious vision to transform Britain’s energy landscape, improve social inclusivity and equity while delivering economic stability and growth. We look at the key sustainability proposals from the new government and how they may impact UK businesses.
Key elements of Labour’s manifesto
Energy independence and 100% clean power by 2030
Labour plans to introduce a new publicly owned company, Great British Energy (GB Energy), to drive energy independence, bolster the nation’s clean energy capabilities in order to push towards net zero targets and provide new job opportunities. The plan includes a phased transition for the fossil fuel industry in the North Sea, while advocating for renewable energy. Labour aims to achieve 100% clean power by 2030 with expanded sources of energy, such as wind, solar and hydrogen, to ensure long-term energy security.
Climate transition plans
Labour intends to make the UK the ‘green finance capital of the world’, and to increase investment from pension funds in the UK market. UK-regulated financial institutions will be required to develop and implement credible transition plans that align with the Paris Agreement, ensuring financial support for sustainable initiatives. The mandate will be an extension to the existing requirement for listed UK companies, asset owners and managers to disclose climate transition plans.
National Wealth Fund
As a part of the Green Prosperity Plan, Labour will establish a National Wealth Fund that will boost public investment, focus on building-up supply chains across the UK and invest in the industries of the future, such as green hydrogen and carbon capture. The fund will support decarbonisation of the most energy intensive sectors.
Protecting nature and supporting British farmers
Labour commits to deliver for nature and meet targets set under the Environment Act. Increased partnership with civil society, communities and businesses to restore and protect nature is expected in this space. Water resource attracted a spotlight in Labour’s manifesto.
Labour will empower regulators to penalise water polluters through a series of measures from fines to criminal charges. Labour committed to set a target that half of all food purchased across the public sector will be locally produced or certified to higher environmental standards. A land-use framework is expected under the Labour government, and it plans to make environment land management schemes work for farmers and nature.
Workplace equity
As part of the Make Work Pay initiative, Labour intends to introduce measures that ensure fair working conditions, including banning exploitative zero-hour contracts, ending fire and rehire practices, and enforcing pay equity. Building on gender pay gap reporting, Labour intends to introduce disability and ethnicity pay gap reporting for large employers.
Support for small and medium-sized enterprises (SMEs)
Labour aims to make it easier for SMEs to access capital and reform procurement rules to provide SMEs greater access to government contracts.
Compared to the previous Conservatives government, sustainability ambitions shown by Labour present a different picture. A comparison between the Conservatives and Labour’s commitments and actions around sustainability matters are outlined below:
* See our article on Carbon Border Adjustment Mechanism for more information on this topic.
Implications of Labour’s plan for UK businesses
The ambitious plan set out in Labour’s manifesto may affect UK businesses in the following ways:
Strategic planning for net zero
Labour’s plan on energy independence and clean energy by 2030, along with the emphasis on climate transition plans, will have profound implications for businesses. A net zero economy needs businesses of all sizes across the UK to decarbonise. Although larger corporates are targeted first by regulators to establish their transition plans, sustainability related requirements are expected to trickle down to SMEs. Forward looking businesses are expected to embed sustainability and climate actions strategically that go beyond current regulation requirements.
Adapting to stricter environmental regulations
Businesses across sectors will need to adapt to more stringent environmental regulations. Labour’s advocacy for nature and clean water intends to empower regulators to block bonuses for executives of polluting companies and introduce criminal charges on persistent polluters. The changes in environmental regulation and corresponding enforcement measures needs a stronger risk management approach. Managing environmental and wider sustainability related risks induced by more stringent regulations is increasingly important in overall enterprise risk management.
New market opportunities
The Green Prosperity Plan presents new market opportunities for businesses looking to develop and expand in the renewable energy sector. Companies that innovate and adapt to the plan will find new avenues for growth and collaboration with the public sector.
Supply chain and sustainability
With Labour’s plan to rebuild supply chains at home for both the British and global markets, more questions and requests around sustainability information will be expected from customers, especially those who are registered in areas with enhanced sustainability regulations.
For example, the EU Corporate Sustainability Reporting Directive (CSRD) explicitly requires in-scope companies to take value chain sustainability into consideration. In addition, the EU Corporate Sustainability Due Diligence Directive (CSDDD) specifically focuses on value chain sustainability to encourage transparency on environmental and social issues. UK businesses that fall on the global supply chain will need to enhance their sustainability data monitoring and reporting to align with these requirements.
Sustainability data requirements in public procurement
Labour’s plan to improve SMEs’ access to government contracts implies that SMEs will also be subject to the Procurement Policy Note (PPN). Suppliers providing goods and services to the public sector may need to disclose greenhouse gas emissions, carbon reduction plans and social value information as part of the tender process under the PPN.
Workplace wellbeing and equity
Labour’s commitment to workplace equity implies more actions from businesses in this space. Companies will face heightened expectations for sustainability reporting. Labour intends to introduce a Race Equality Act and pay gap reporting for ethnicity and disability, in addition to existing gender pay gap requirements. Businesses embracing workplace wellbeing and promoting equity at work should proactively address different spectrums of pay gaps before the mandatory requirements comes into force.
Final thoughts
Labour sets a bold vision for a sustainable future in the UK with significant implications for businesses. By focusing on renewable energy, stricter regulations, climate transition plans, strategic public investment and workplace equity, businesses that prepare early for these areas will be well-positioned to thrive in a new green economy.
How we can help
By embedding sustainability into business strategy, companies can create long term value for stakeholders and improve resilience against the future climate. If you need any support in your sustainability journey, please get in touch with Richard Collis and Yi Zheng.
Contact Us
