Our latest sustainability update: what is the environmental cost of leaving the EU?
In this focus on sustainability, we consider the potential impact of Brexit on the environment. What is the process to determine the new policies and legislation?
EU legislation guaranteed that the UK had more than 1,100 laws protecting the environment1. These covered many areas, including wildlife, habitats, marine conservation, air quality and energy efficiency. Our membership of the EU played a significant role in our ecological protection: according to the House of Commons environmental audit committee, 80% of the UK’s environmental rules originate from EU directives2.
Many of these laws are tricky to transfer directly into new UK legislation. To get round this problem, the aim is that an Environment Bill, Agriculture Bill and Fisheries Bill will replace the EU’s comprehensive framework directives, such as the Common Agricultural Policy and Common Fisheries Policy3.
However, leading campaigners fear that protections may be lost, diluted or distorted in the process4. Of course, a greener outcome is also possible. Without the need for uniformity across the EU, the UK would be free to go further and faster to support and enhance the environment.
Which is most likely? Let’s take a look at the evidence so far.
Green promises
Back in 2018, the then Environment Secretary, Michael Gove, promised a “green Brexit” that would set global standards. He particularly highlighted “the inter-dependence of a healthy environment, a healthy population and a flourishing economy” and, to achieve this, promised to work on everything from animal welfare to air quality5.
More recently, Prime Minister Boris Johnson unveiled a ’10-point’ plan, describing a ‘green industrial revolution’ to support green jobs and accelerate our path to net zero greenhouse gas emissions6. A new environment watchdog was promised as part of Brexit, ensuring a totally independent body to monitor compliance. According to Defra, it would be a “key part of the government’s vision to lead the world in protecting our environment and building back greener from the COVID pandemic7.” Critics say that it is too weak and will not have the required power to hold the government to account if targets are not met8.
The global context – a greener US
President Biden appears keen to lead a green approach for the US. This includes re-joining The Paris Agreement9, a legally binding international treaty on climate change, and halting the cross-border Keystone XL oil pipeline10. Whilst campaigning, President Biden said that climate change is “the number one issue facing humanity”, and announced a raft of environmental initiatives, including a plan to achieve net zero emissions by 2050. Both his rhetoric and actions show early evidence of environmental prioritisation. This new, greener America is likely to have global influence. The UK will want to keep up11. It also increases the chance, as the UK engages in talks with the US, for the environment to remain on the trade deal agenda.
Greener UK
Whilst the top line messaging from the UK Government is reassuring for those with ecological concerns, it is a more complex picture when examined in depth.
Greener UK, a coalition of 12 major environmental organisations, was established to ensure that environmental protections are maintained and enhanced during the Brexit process12. At the close of 2020, they carried out an environmental analysis of the EU-UK Trade and Cooperation Agreement. This explained that, whilst both the EU and UK confirmed they are “determined to maintain and improve their respective high standards” and achieve economy-wide climate neutrality by 2050, the actual agreement was light on detail. Significantly, it lacked the guarantee of ‘non-regression,’ meaning that targets could be weakened in the future13.
In terms of the UK’s wider progress on developing our own environmental protections beyond our relationship with the EU, Greener UK’s risk tracker, updated quarterly, is even less positive. There are some strong points highlighted, particularly within the Agriculture Bill14. However, all areas, from climate and energy, chemicals, air pollution to nature protection were considered of high concern15.
Recent headlines reinforce this assessment. The UK has been accused of ‘failing to honour its promise’ to curb shipments of plastic waste to developing countries. Since 1st January, the EU stopped exporting unsorted plastic waste to non-OECD countries, but the UK will continue to do so16.
At time of writing, the long-awaited Environment Bill has been delayed for the third time, and campaigners fear that the focus on long-term targets for issues such as biodiversity, resource use and air pollution means that short-term action in the next few years could be neglected17.
Looking forward
There is still hope that improvements will be made to the three bills. Afterall, the UK is taking a high profile on the global climate change stage this year. First hosting the G7 summit in Cornwall where the world’s leading democracies will discuss tacking climate change, then in November, Glasgow will welcome the delegates of COP26, the 26th UN Climate Change conference. The UK will certainly be at the forefront of global climate conversations this year.
Meanwhile, a newly digitised and decarbonised economy is already creating societal and economic change. Positive results are showing that more ethical and ecological sectors can be profitable18. Of course, Covid, not climate, has driven this shift, but it shows our ability to take widespread action if needed.
In the complex post-Brexit world, where society still grapples with the challenges of a pandemic, the environment is arguably not being considered as high a priority as campaigners might like. It’s of course a time of compromise and negotiation, but at Holden & Partners, we believe that the long-term prosperity and health of individuals and the wider economy is inextricably linked to healthy ecosystems and a flourishing, fair society.
Holden & Partners offers sustainable portfolios and sustainable equivalents in almost all of our conventional portfolios. This gives you the choice to invest your money in investments which aim not only to negate negative outcomes for people and planet, but positively contribute towards them.
For example, we hold Ninety-One Global Environment Fund as one of our global equity offerings. It aims to have an active approach to investment in companies providing solutions for a decarbonised world, focusing on renewable energy, electrification, and resource efficiency. This is particularly potent, given Prime Minister Johnson’s recent announcement of a ’10-point’ plan to accelerate our path to net zero emissions.
We look forward to working with you towards a more sustainable future.
1 UK Environment faces a ‘cocktail of threats’ from Brexit | Caroline Lucas
2 No-deal Brexit: environmental impact | Friends of the Earth
4 How will Brexit affect the environment? Brexit means podcast | Environment | The Guardian
5 Green Brexit: a new era for farming, fishing and the environment – GOV.UK (www.gov.uk)
7 Environment Bill: New Independent Environmental Regulator – Defra in the media (blog.gov.uk)
8 Fears over ‘weakening’ of UK green watchdog – BBC News
11 Here’s how Biden’s presidency could be a boost for impact investing (cnbc.com)
12 Greener UK
13 GreenerUK_initial_analysis_of_the_EU-UK_deal.pdf
14 https://greeneruk.org/sites/default/files/download/2020-06/GreenerUK_risk_tracker_10.pdf
17 Fury as long-awaited UK environment bill is delayed for third time | Environment | The Guardian
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