Embedding sustainable development across Government, after the Secretary of State’s announcement on the future of the Sustainable Development Commission

Written evidence submitted by the Aldersgate Group (ESD 25)

Introduction

1. The Aldersgate Group (AG) is a coalition of businesses, NGOs, professional bodies, MPs and others that provide leadership on vital sustainability issues. We promote the case that strong environmental policies are essential for economic competitiveness and seek to be a catalyst for fast and effective change. The AG engages actively with key decision makers in government, business and civil society to contribute to the future development of UK economic and environmental policies.

2. Please note that the views expressed in this document can only be attributed to the AG and not to individual members.

How can mechanisms to ensure the sustainability of Government operations, procurement and policy-making be improved and further embedded and mainstreamed across Government departments?

3. Sustainability is a major challenge to both strategic and operational management of all organisations including Government. It requires new thinking, innovation and integration. Any overhaul of the mechanisms for ensuring that Government procurement and policy-making accelerates the transition to sustainability will need to address the significance of this challenge.

4. The Aldersgate Group believes that addressing the long-term environmental challenges of climate change, energy security and resource depletion are just as critical for our wellbeing as the Government’s response to the global recession and reducing the budget deficit. Mainstreaming sustainability will require several changes in Government processes.

5. Mechanisms will need to be far more effective at challenging existing conventions and assumptions and in order to do so will need to stimulate timely input of new and different perspectives from both inside and outside Government.

6. Prices must reflect environmental realities. While it is invariably complex to price environmental externalities (by which we mean environmental changes that impact human welfare and the biosphere but are not reflected in markets), current prices are a long way off providing a sufficient incentive for investments at the pace and scale required to meet environmental challenges. The Aldersgate Groups believes that the current carbon price is not sufficiently stable, high or credible to stimulate the required investment in low carbon technologies. Conventional mechanisms based on cost benefit analysis do not effectively address the uncertainty, irreversibility and thresholds in environmental wealth implicit in climate change. The non-market price for carbon should be used in the assessment of procurement decisions.

7. The Government must also ensure that all policy and procurement mechanisms within Government are far more tightly geared to UK carbon budgets. For example, in particular, it would make the reality of environmental limits have traction with decision makers and it would encourage – even demand - policy integration to ensure that the collectively government investment and public policy decisions did not breech the budget.

8. The scale and speed of the required transition to a low-carbon resource efficient economy will require mechanisms that accelerate and maximise the economic opportunities for the UK. As resource efficiency and related innovation increasingly become primary benchmarks of a successful economy, the UK will need to address critical resource constraints and ensure long-term competitive advantage. This will require that the mechanisms to mainstream sustainability in government facilitate this integrated approach. For example, the UK’s £175 billion public procurement budget is a massively underused lever for progression towards a low carbon, resource efficient economy.

Was the SDC successful in fulfilling its remit? Which aspects of its work have reached a natural end, or are otherwise of less importance, and which remain of particular continuing importance?

9. The SDC has made valuable contribution to advancing sustainability across government. Its independence has allowed it to provide advice to Government that has drawn on a wide variety of relevant perspectives and disciplines and that is not constrained by political pressures or existing conventions. Its recent work on a Sustainable New Deal and delivering neighbourhood sustainability retrofitting are good examples of this.

10. The SDC has also played a significant role in the growing debate over whether there is a need to rethink the conventional approach to growth as sustainability asks important questions about the assumptions made by that approach and its ability to deliver sustainable development. The Aldersgate Group, in line with other business based organisations such as the World Economic Forum, believes it is important for this debate to be had in public and whilst not endorsing its findings recognises the important contribution to the debate made by SDC’s publication Prosperity Without Growth.

In formulating a future architecture for sustainable development in Government, how can it take on board wider developments and initiatives (eg to develop ‘sustainability reporting’ in departments’ accounts) and the contributions that other bodies might make (eg Centre of Expertise in Sustainable Procurement)?

11. Wide-ranging environmental challenges cannot be effectively addressed through segmented government. Departmental carbon budgets are welcome and should be monitored by the Climate Change Committee. The Treasury should assume a greater leadership role, expanding the scope of its carbon budgets and making the design of environmental regulation a key objective in the management of the economy. A resource productivity drive must also be supported across government departments.

How, without the assistance of the SDC, will the Government be able to demonstrate that it is ‘the greenest government ever’?

12. The Government needs to ensure its decisions are well informed and take longer term environmental, economic and social consequences fully into account. New arrangements must include activities to improve policy innovation and long term performance. To achieve this, the sustainable development agenda needs to be the responsibility of a senior minister with a cross-government remit and supported by a dedicated policy team.

13. The Aldersgate Group published a report entitled Accelerating the Transition just before the General Election that sets out eight priorities for the first 100 days of the new Government to ensure an effective transition to a low carbon and resource efficient economy. These have been slightly modified so as to act as a benchmark for the "greenest government ever".

(1) Ensure that prices reflect environmental realities. In particular, the UK should work with its European partners to tighten the EU ETS cap, principally by increasing the EU’s overall emissions reduction target for 2020 from 20% to 30%. This must be leveraged to the maximum possible effect to incentivise other nations to increase their own emission targets in the ongoing international negotiations for a new UN climate change treaty. Further EU ETS reform should aim to tighten limits on the use of carbon offsets credits [1] , introduce the auctioning of permits at a faster pace [2] and introduce an auction reserve price [3] . As these measures will require pan-European agreement when there is currently little political appetite for reform, a contingency policy must be action to underpin the domestic carbon price by creating a price floor at a sufficiently credible and effective level.

(2) Don’t’ rely on pricing alone. Although important, pricing remains a blunt instrument. Government should aim both to reduce the UK’s carbon intensity and to help UK business become a world leader in resource efficient products and services. Well designed and effective regulation is necessary for both these objectives. A comprehensive domestic energy efficiency plan is vital for a cost effective transition to a low carbon economy and the Government’s Green Deal needs to be rolled out widely, quickly and effectively.

(3) Simplify the regulatory framework. Too often, environmental policy has been an ad hoc response to an isolated challenge. This is rarely effective and often creates unintended consequences elsewhere. The Government should rationalise the large number of complex environmental regulations (and regulatory bodies) that are creating unnecessary administrative burdens and ensure a more uniform (and effective) carbon price across all regulations.

(4) Create an ambitious Green Investment Bank. Following the publication of the report by the Green Investment Bank Commission, it is essential that the Government builds on this bold vision by swiftly putting forward credible proposals for a strong, powerful and effective institution. The AG has published a joint statement with Transform UK that sets out recommendations that the Green Investment Bank should address. This must include sufficient capitalisation of at least £4-6 billion for the first four years.

(5) Stimulate low carbon industry. The Government must have a credible strategy for removing market barriers and ensuring the UK is a world leader in the development of environmental goods and services. This must include a sufficient framework to accelerate growth, jobs and innovation in targeted sectors, as well as skills development [both high level STEM (Science, Technology, Engineering and Maths) skills and the generic ‘green skills’ increasingly required of all employees to support the move to green, low carbon workplaces].

(6) Improve accountability across government. Wide-ranging environmental challenges cannot be effectively addressed through segmented government. Departmental carbon budgets are welcome and should be monitored by the Climate Change Committee. The Treasury should assume a greater leadership role, expanding the scope of its carbon budgets and making the design of environmental regulation a key objective in the management of the economy. A resource productivity drive must also be supported across all government departments.

(7) Incorporate a lifecycle approach. Effective management of resources necessitates a consideration of the whole resource cycle. UK waste policy must move away from a linear model and look towards ‘closing the loop’. In particular, the Government should encourage the use of recycled materials in UK manufacturing and construction, either via green procurement in the public sector or by a voluntary code in the private sector leading to competitive advantage. The AG supports the Government’s drive to implement immediate carbon reductions across the government estate that seeks to outperform carbon budgets and should also focus on how public procurement could be improved to contribute to the achievement of sustainability objectives.

(8) Plan a just transition. The radical decarbonisation of the economy has the potential to be a major source of wealth and employment. It will also involve massive and complex changes that will create losers as well as winners. The role of the Forum for a Just Transition should be expanded, so that it reviews the social impact of carbon budgets and has a formal advisory role to the Green Investment Bank.

18 October 2010


[1] Carbon offsets incentivise cheaper emission reductions through investments in projects outside of the EU ETS. However, they generally lower the carbon price and can reduce potential benefits for the domestic economy.

[2] A recent Carbon Trust study finds that low carbon manufacturing would be severely weakened if all sectors currently deemed at risk of carbon leakage by the Eureopean Commission received free allocation of permits. See Carbon Trust (March 2010) Tackling carbon leakage: Sector-specific solutions for a world of unequal carbon prices

[3] Alternatively, a floor price could be underwritten by revenues generated through the auctioning of permits.