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Client: Global Climate & Health Alliance THE GLOBAL CLIMATE & HEALTH ALLIANCE +44 (0)207 666 9999 | [email protected] | global-climate-health.com 75 Brokesley Street | Lincoln House | E3 4QJ – London | United Kingdom Mrs. Ané-Mari Peter 75 Brokesley Street E3 4QJ London Ref: Nullam posuere augue sit amet posuere pretium. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam laoreet gravida est nec ornare. Aliquam hendrerit, nulla non sollicitudin laoreet, diam diam consequat tellus, in vehicula felis est sit amet magna. Nullam sem nisl, laoreet id tincidunt vitae, accumsan condimentum mollis vel nec metus. Suspendisse feugiat pellentesque rhoncus. Ut ut faucibus enim. Morbi feugiat lorem in mollis aliquam. Integer vestibulum eros risus, nec tristique urna elementum posuere. Morbi in mattis sapien. Phasellus auctor, libero id mollis adipiscing, dui nulla malesuada sapien, vitae auctor nibh mi eu neque. Donec tortor eros, imperdiet malesuada sapien vel, tincidunt sagittis ante. Sed a consecte- tur sapien. Aenean commodo ut dolor sit amet condimentum. malesuada eget mauris. Aliquam erat volutpat. Cras facilisis nibh eu risus varius volutpat in sed enim. Sed odio libero, luctus vitae molestie et, vehicula in nisi. Nullam posuere augue sit amet posuere pretium. Donec ullamcorper leo et nisi malesuada, ut adipiscing lectus posuere. Aliquam vestibulum enim vel dapibus rutrum. Nullam pulvinar hendrerit ligula sit amet faucibus. Sed non molestie augue, ac gravida risus. Vestibulum urna risus, hendrerit a accumsan sit amet, porttitor ac libero. Fusce quis rhoncus metus. Pellentesque eget enim mi. Nulla facilisi. Sed tincidunt lorem at rutrum consectetur. Vestibulum et turpis commodo, tempus odio sed, mattis ligula. Curabitur ullamcorper metus tellus. In a mattis sapien, nec interdum enim. Phasellus ac nisl eget dui blandit blandit. Vestibulum ante ipsum primis in faucibus orci luctus et ultrices posuere cubilia Curae; Praesent quis tellus et erat pellentesque iaculis nec sed felis. In ornare eleifend augue, eget venenatis tellus posuere eu. Etiam euismod odio et dictum cursus. Kind Regards Nick Watts THE GLOBAL CLIMATE & HEALTH ALLIANCE +44 (0)207 666 9999 [email protected] global-climate-health.com 75 Brokesley Street Lincoln House E3 4QJ – London United Kingdom NICK WATTS ENVIRONMENTALIST THE GLOBAL CLIMATE & HEALTH ALLIANCE Concept A Corporate Colours / Fonts Colours Fonts Helvetica Neue Light ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 0123456789 .:,;!?()+–/&@$£ Helvetica Neue Heavy ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 0123456789 .:,;!?()+–/&@$£

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Page 1: On idle-portfolio (1)

Client: Global Climate & Health Alliance

THE GLOBAL CLIMATE & HEALTH ALLIANCE

+44 (0)207 666 9999 | [email protected] | global-climate-health.com

75 Brokesley Street | Lincoln House | E3 4QJ – London | United Kingdom

Mrs. Ané-Mari Peter75 Brokesley StreetE3 4QJ London

Ref: Nullam posuere augue sit amet posuere pretium.Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam laoreet gravida est nec ornare.

Aliquam hendrerit, nulla non sollicitudin laoreet, diam diam consequat tellus, in vehicula felis est sit

amet magna. Nullam sem nisl, laoreet id tincidunt vitae, accumsan condimentum mollis vel nec

metus. Suspendisse feugiat pellentesque rhoncus. Ut ut faucibus enim. Morbi feugiat lorem in

mollis aliquam. Integer vestibulum eros risus, nec tristique urna elementum posuere. Morbi in mattis

sapien.

Phasellus auctor, libero id mollis adipiscing, dui nulla malesuada sapien, vitae auctor nibh mi eu

neque. Donec tortor eros, imperdiet malesuada sapien vel, tincidunt sagittis ante. Sed a consecte-

tur sapien. Aenean commodo ut dolor sit amet condimentum. malesuada eget mauris. Aliquam

erat volutpat. Cras facilisis nibh eu risus varius volutpat in sed enim. Sed odio libero, luctus vitae

molestie et, vehicula in nisi.

Nullam posuere augue sit amet posuere pretium. Donec ullamcorper leo et nisi malesuada, ut

adipiscing lectus posuere. Aliquam vestibulum enim vel dapibus rutrum. Nullam pulvinar hendrerit

ligula sit amet faucibus. Sed non molestie augue, ac gravida risus. Vestibulum urna risus, hendrerit

a accumsan sit amet, porttitor ac libero. Fusce quis rhoncus metus. Pellentesque eget enim mi.

Nulla facilisi. Sed tincidunt lorem at rutrum consectetur. Vestibulum et turpis commodo, tempus

odio sed, mattis ligula. Curabitur ullamcorper metus tellus.In a mattis sapien, nec interdum enim. Phasellus ac nisl eget dui blandit blandit. Vestibulum ante

ipsum primis in faucibus orci luctus et ultrices posuere cubilia Curae; Praesent quis tellus et erat

pellentesque iaculis nec sed felis. In ornare eleifend augue, eget venenatis tellus posuere eu. Etiam

euismod odio et dictum cursus.

Kind Regards

Nick Watts

THE GLOBAL CLIMATE & HEALTH ALLIANCE

+44 (0)207 666 [email protected]

75 Brokesley Street Lincoln HouseE3 4QJ – LondonUnited Kingdom

NICK WATTSENVIRONMENTALIST

THE GLOBAL CLIMATE & HEALTH ALLIANCE

Concept A Corporate Colours / Fonts

Colours

Fonts

Helvetica Neue LightABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789.:,;!?()+–/&@$£

Helvetica Neue HeavyABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789.:,;!?()+–/&@$£

Page 2: On idle-portfolio (1)

Client: Good Homes Alliance

Defining and delivering Good Homes

Benefits of joining the GHA

Priority booking and free or discounted attendance at GHA events

Networking opportunities with developers, landowners and other key stakeholders

Involvement in GHA research, working groups and policy campaigns

Promotion of your projects and sustainability credentials

Support to improve project performance (Leader and Developer Members only)

Practical learning and best practice from exemplar projects

Access to leading knowledge from national and international experts

Advocacy to remove barriers and create opportunities for new work

Get in touch

The Good Homes AllianceGround Floor1 Baldwin TerraceLondonN1 7RU

Tel: +44 (0)20 7704 3503Email: [email protected]

For more information and to join visitwww.goodhomes.org.uk

Membership of the Good Homes Alliance

The GHA has three levels of membership: Leader MemberAssociate

All members sign up to the GHA Charter, which includes clear guidelines on promoting sustainability for health, social and community benefits. This will be developed into a measurable code on an ongoing basis.

All Leaders and Developer Members also sign up to the GHA Standard, currently set at:

1. Energy performance to FEES, Passivhaus or Code 4 energy

2. Health & Well-being develop a plan for addressing indoor air quality, temperature and moisture

3. Proof of performance monitor performance and share results with GHA

Supported by

What is the Good Homes Alliance?

The UK authority on Good Homes, the GHA is an alliance of the leading players in the sector. We work with our members to define a Good Home, and help all those involved in building and maintaining houses to deliver Good Homes that really perform.

Our vision

The UK is recognised as the world leader in building the best new homes.

Our mission

To transform the UK housing sector to ensure it creates and maintains Good Homes for all.

The GHA definition of a Good Home

A Good Home is sustainable, well-designed, spacious, healthy and quality built. A source of pride and satisfaction, it is attractive, comfortable and a pleasure to live in. A Good Home is designed, built and maintained using quality processes, with particular regard to the health and wellbeing of its architects, builders and occupants. A Good Home is the right of all.

Define Good Homes

We define what a Good Home is and stimulate debate and discussion within and between the building industry, the government and the public to raise ambitions and standards.

Deliver Good Homes

We help our members create business development opportunities and equip them with the knowledge and skills they need to create Good Homes.

Support leadership in the sector

We promote Good Homes across the sector and encourage planners, land-owners and government to gather evidence of success and set robust requirements for better performance.

What the GHA does

What is a Good Home?

A Good Home is one that has effective insulation and

that actually delivers energy savings and comfort.

A Good Home is one that has been built with the

occupants’ lifestyles in mind, as well as the health,

wellbeing and safety of the construction workers.

A Good Home is one that has low environmental impacts

and is also healthy, with good ventilation and daylight, fresh

air, and built using natural, non-polluting materials.

A Good Home is one that has been built

to deliver spatial quality and room sizes that

help a family live together in harmony.

A Good Home is one that delivers the comfortable

and quiet environment that the occupants

were promised when they bought the home.

A Good Home enhances its local surroundings and supports creation of

good neighbourhoods and communities.

I can’t remember the last time we put the

heating on. People can see these places are

high quality – that makes you feel good.

Tenant of Greenoak Housing AssociationShare practical lessons and evidence

We focus on the practicalities of delivering Good Homes. We plan, organise and host events and site visits. We share learning from industry leaders and international experts, and we undertake research in conjunction with industry and academic partners.

Share practical lessons and evidence

We focus on the practicalities of delivering Good Homes. We plan, organise and host events and site visits. We share learning from industry leaders and international experts, and we undertake research in conjunction with industry and academic partners.

Defining and delivering Good Homes

GHA members

The Good Homes Alliance is composed of a diverse group of organisations and individuals – united by a common interest in Good Homes.

Architects, designers, developers and local authorities all find value in being part of the Good Homes Alliance. If you’d like to join, then do get in touch.

Benefits of joining the GHA

Priority booking and free or discounted attendance at GHA events

Networking opportunities with developers, landowners and other key stakeholders

Involvement in GHA research, working groups and policy campaigns

Promotion of your projects and sustainability credentials

Support to improve project performance (Leader and Developer Members only)

Practical learning and best practice from exemplar projects

Access to leading knowledge from national and international experts

Advocacy to remove barriers and create opportunities for new work

Get in touch

The Good Homes AllianceGround Floor1 Baldwin TerraceLondonN1 7RU

Tel: +44 (0)20 7704 3503Email: [email protected]

For more information and to join visitwww.goodhomes.org.uk

What is a Good Home?

A Good Home is one that has effective insulation and that actually delivers energy savings and comfort.

A Good Home is one that has been built with the occupants’ lifestyles in mind, as well as the health, wellbeing and safety of the construction workers.

A Good Home is one that has low environmental impacts and is also healthy, with good ventilation and daylight, fresh air, and built using natural, non-polluting materials.

A Good Home is one that has been built to deliver spatial quality and room sizes that help a family live together in harmony.

A Good Home is one that delivers the comfortable and quiet environment that the occupants were promised when they bought the home.

A Good Home enhances its local surroundings and supports creation of good neighbourhoods and communities.

The GHA definition of a Good Home

A Good Home is sustainable, well-designed, spacious, healthy and quality built. A source of pride and satisfaction, it is attractive, comfortable and a pleasure to live in. A Good Home is designed, built and maintained using quality processes, with particular regard to the health and wellbeing of its architects, builders and occupants. A Good Home is the right of all.

Supported by

GHA Activities

Research

The GHA conducts research in partnership with leading academics, industry practitioners and policy makers. Current topics include low carbon for real, ventilation for good indoor air quality and building performance evaluation.

Events

GHA events provide opportunities to hear about the latest research and learn from real life examples, with talks from leading experts and developers. The GHA also organises site visits to Good Homes across the UK. Networking, sharing and learning are central to all GHA events.

Training

The GHA runs detailed training sessions on key aspects of delivering low energy, healthy, sustainable homes in partnership with others.

Policy and campaigns

The GHA has developed a significant policy presence leading on as-built performance, encouraging a fabric first approach and inputting to Building Regulations, Zero Carbon definitions, the Code for Sustainable Homes and other policies and regulations.

GHA standard

All Leaders and Developer Members sign up to the GHA Standard, currently set at:1. Energy performance to FEES, Passivhaus or Code 4 energy

2. Health & Well-beingdevelop a plan for addressing indoor air quality, temperature and moisture

3. Proof of performancemonitor performance and share results with GHA

GHA Developer Projects

Racecourse PassivHaus scheme

A 28-unit bungalow scheme, this is the first certified PassivHaus scheme of its scale in the UK. The development will set a national precedent for the design and construction of sustainable, low carbon homes.

Derwenthorpe and Temple Avenue

A 540-home development at Derwenthorpe based on two prototype sustainable homes built at Temple Avenue. The homes have been designed to accommodate families through their lifetimes, using modern methods of construction to achieve high levels of air tightness, and are provided with heat and hot water from biomass district heating boilers located in the Energy Centre.

Worth Matravers

Five rural affordable homes will soon be completed, developed in partnership with Worth Community Property Trust - a local community land trust. The homes have sedum roofs and open plan living to maximise light and solar gain in winter. Synergy Housing will employ local labour and support rural skills and local businesses on this project.

Fieldways

This is a Code for Sustainable Homes level 5 house with high levels of insulation, a thin joint masonry system, local and sustainably sourced materials, triple glazed windows and mechanical ventilation and heat recovery. The Natural House

The Natural House is a pioneering collaboration between The Prince’s Foundation, BRE, Natural Building Technologies and Kingerlee Homes on the BRE Innovation Park. It demonstrates how a simple, but robust, thermal shell can be built by combining natural materials, good design and careful site practice.

What is the Good Homes Alliance?

The UK authority on Good Homes, the GHA is an alliance of the leading players in the sector. We work with our members to define a Good Home, and help all those involved in building and maintaining houses to deliver Good Homes that really perform.

Our vision

The UK is recognised as the world leader in building the best new homes.

Our mission

To transform the UK housing sector to ensure it creates and maintains Good Homes for all.

What the GHA does

Define Good Homes

We define what a Good Home is and stimulate debate and discussion within and between the building industry, the government and the public to raise ambitions and standards.

Deliver Good Homes

We help our members create business development opportunities and equip them with the knowledge and skills they need to create Good Homes.

Support leadership in the sector

We promote Good Homes across the sector and encourage planners, landowners and government to gather evidence of success and set robust requirements for better performance.

Share practical lessons and evidence

We focus on the practicalities of delivering Good Homes. We plan, organise and host events and site visits. We share learning from industry leaders and international experts, and we undertake research in conjunction with industry and academic partners.

H o u s i n g

Page 3: On idle-portfolio (1)

Client: CORE Coalition

Doing Business Better:

for Political Leadership on

CORPORATE ACCOUNTABILITY

& SUSTAINABILITY

RECOMMENDATIONS

CORE

CORE

PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

PUTTING PEOPLE & THE PLANET AT THE CORE OF BUSINESS

CORE PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

3

TAX TRANSPARENCYThe next government should

adopt measures to improve the

availability of, and free access to

companies’ statutory accounts in all

countries (including UK Overseas

Territories and Crown Dependencies)

as well as requiring all large companies

to adopt public country by country

reporting on tax.

INVESTMENT TREATIESThe UK government should make

human rights obligations central to its

Bilateral Investment Treaties (BITs) and

press for the same within EU investment

agreements: investor protections should

be contingent on companies’ adherence

to international labour, human rights

and environmental standards.

Recourse to Investor-State Dispute

Settlement (ISDS) mechanisms should

not be included in UK BITs and the UK

should lead calls for removal of ISDS

from EU investment agreements.

CONFLICT MINERALSThe UK should press for a

mandatory EU scheme to compel

companies to take steps to source

natural resources responsibly. The

scope of companies covered by the

proposed scheme should be broadened

from the limited number of primary

importers, to include companies that

first place component parts or finished

products containing those materials on

to the EU market.

POLICY COHERENCEUK companies receiving taxpayer

support or delivering government-

funded projects should meet the

threshold standards set out in the UN

Guiding Principles on Business and

Human Rights. For example, partnership

companies or those receiving other

kinds of support from DFID should be

required to conduct human rights due

diligence. These criteria should also

apply to businesses seeking Export

Credit support.

Use the 2015 review of the UK’s

Business and Human Rights Action

Plan to create a genuine strategy to

support responsible business activities

by developing detailed actions and a

timeline for delivering on commitments.

SUPPLY CHAINSAmend the Modern Slavery Bill

to require large companies to report

on what they are doing to identify

and address modern slavery in their

international supply chains.

Require all large companies, including

those not publicly listed on the Stock

Exchange to report on key social,

environment and human rights issues in

their supply chains.

ACCESS TO JUSTICEAddress the legal and financial

barriers which make it difficult for

vulnerable individuals and communities

in developing countries to bring civil

damages claims against UK companies.

Enforce laws and enact reforms to allow

for criminal prosecutions against UK

companies for conduct that results in

human rights abuses.

Ensure non-judicial mechanisms have

the appropriate resources and powers to

hold companies to account.

SUMMARY OF RECOMMENDATIONS

2

Doing Business Better: Recommendations for Political Leadership on Corporate Accountability and Sustainability

THERE IS NO SHORTAGE OF OPPORTUNITIES to make a difference; the run-up to the 2015 General Election is the time for political parties to join the conversation.

The private sector is a vital part of the

domestic and international economy.

Yet the last five years have seen a

crisis of trust in business, following

scandals around tax avoidance and

excessive executive pay, and revelations

of shocking practices in supply chains

causing serious harm to people and

the environment.

The UK has taken some significant

steps to address irresponsible corporate

behaviour and to meet the growing

expectations of ethical business

standards from consumers and

investors. In 2013 the UK put corporate

transparency on the G8’s agenda and

became the first country to release a

National Action Plan to implement the

UN Guiding Principles on Business and

Human Rights. Political will is needed

now to translate policy commitments

into practical changes.

There is no shortage of opportunities

to make a difference: effective

international frameworks on tax and

investment; measures on due diligence

and greater transparency to help

prevent abuses in supply chains; and

steps to guarantee access to justice for

victims of corporate abuse should be

priorities. Business people, consumers,

campaigners, and investors are already

talking about what they expect from

government. The run-up to the 2015

General Election is the time for political

parties to join the conversation.

ABOUT CORECORE is the UK civil society network on corporate accountability.

We bring together experience and expertise on international development,

the environment and human rights from NGOs, academics, trade unions

and legal experts. CORE’s aim is to reduce business-related human rights

and environmental abuses by ensuring companies can be held to account

for their impacts both at home and abroad, and to guarantee access to

justice for people adversely affected by corporate activity.

The content of this document was prepared with assistance from the

following organisations: ABColombia, ActionAid, Amnesty International

UK, CAFOD, Christian Aid, Friends of the Earth, Global Witness,

Save the Children, Traidcraft and WWF-UK.

September 2014

‘JUST BUSINESS: LABOUR LEADERSHIP ON BUSINESS AND HUMAN RIGHTS’

Chair: Lisa Nandy MP

Speakers:

Kerry McCarthy MP, Shadow Minister for Foreign and Commonwealth Affairs

Steve Waygood, Chief Responsible Investment Officer, Aviva Investors

Richard Howitt MEP, EU CSR Rapporteur

Peter Frankental, Economic Relations Programme Director, Amnesty International UK

‘BUSINESS AND HUMAN RIGHTS: A LIBERAL CAUSE’

Chair: Andrew George MP

Speakers:

Jenny Willott MP, former Minister for Employment Relations and Consumer Affairs, Department for Business, Innovation and Skills

Alistair Dutton, Director, Scottish Catholic International Aid Fund

Louise Rouse, Director of Engagement, ShareAction

CORE

CORE

PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

PUTTING PEOPLE & THE PLANET AT THE CORE OF BUSINESS

Marilyn CroserCORE Coordinator

T +44 (0)207 400 4162E [email protected] corporate-responsibility.org

Unit 306, 16 Baldwins GardensLondon EC1N 7RJ, United Kingdom

CORE PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

CORE PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

Marilyn CroserCORE Coordinator

T +44 (0)207 400 4162E [email protected] corporate-responsibility.org

Unit 306, 16 Baldwins GardensLondon EC1N 7RJ, United Kingdom

CORE PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

CORE PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

T. +44 (0)207 400 4162 | E. [email protected] | W. corporate-responsibility.org

Address. Unit 306 | 16 Baldwins Gardens | London EC1N 7RJ

CORE

Mrs. Ané-Mari Peter75 Brokesley StreetE3 4QJ London

Ref: Nullam posuere augue sit amet posuere pretium.Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam laoreet gravida est nec

ornare. Aliquam hendrerit, nulla non sollicitudin laoreet, diam diam consequat tellus, in

vehicula felis est sit amet magna. Nullam sem nisl, laoreet id tincidunt vitae, accumsan

condimentum mollis vel nec metus. Suspendisse feugiat pellentesque rhoncus. Ut ut

faucibus enim. Morbi feugiat lorem in mollis aliquam. Integer vestibulum eros risus,

nec tristique urna elementum posuere. Morbi in mattis sapien.Phasellus auctor, libero id mollis adipiscing, dui nulla malesuada sapien, vitae auctor

nibh mi eu neque. Donec tortor eros, imperdiet malesuada sapien vel, tincidunt sagittis

ante. Sed a consectetur sapien. Aenean commodo ut dolor sit amet condimentum.

malesuada eget mauris. Aliquam erat volutpat. Cras facilisis nibh eu risus varius

volutpat in sed enim. Sed odio libero, luctus vitae molestie et, vehicula in nisi.Nullam posuere augue sit amet posuere pretium. Donec ullamcorper leo et nisi

malesuada, ut adipiscing lectus posuere. Aliquam vestibulum enim vel dapibus rutrum.

Nullam pulvinar hendrerit ligula sit amet faucibus. Sed non molestie augue, ac gravida

risus. Vestibulum urna risus, hendrerit a accumsan sit amet, porttitor ac libero. Fusce

quis rhoncus metus. Pellentesque eget enim mi. Nulla facilisi. Sed tincidunt lorem at

rutrum consectetur. Vestibulum et turpis commodo, tempus odio sed, mattis ligula.

Curabitur ullamcorper metus tellus.In a mattis sapien, nec interdum enim. Phasellus ac nisl eget dui blandit blandit.

Vestibulum ante ipsum primis in faucibus orci luctus et ultrices posuere cubilia Curae;

Praesent quis tellus et erat pellentesque iaculis nec sed felis. In ornare eleifend augue,

eget venenatis tellus posuere eu. Etiam euismod odio et dictum cursus. Kind Regards

Marilyn Croser

CORE PUTTING PEOPLE& THE PLANET AT THE CORE OF BUSINESS

CORE

CORE

PUTTING PEOPLE

& THE PLANET AT THE

CORE OF BUSINESS

PUTTING PEOPLE & THE PLANET AT THE CORE OF BUSINESS

Page 4: On idle-portfolio (1)

Client: UKSIF – UK Sustainable Investment and Finance Association

Attitudes to Ownership 2014Exploring pension fund and public opinion on ownership and stewardship issues

Produced by Sponsored by Supported by

3

Active ownership, or stewardship, commonly

refers to engagement and the use of shareholder

rights to improve the long-term value of a com-

pany. For all investors – from individuals with ISAs

and savings to global institutional investors and

pension funds – it is about understanding that

the shares they hold make them part-owners of

those companies, as such they should consider

encouraging those who manage their money to

engage on their behalf with investee companies

to protect and increase value. That can involve

using both AGM votes and direct engagement

to support effective and well-executed business

strategies, and also to challenge poor risk man-

agement, ineffective delivery or a disproportion-

ate focus on short-term issues at the expense of

long-term value.

Effective and collective shareholder intervention

can be a powerful tool for ensuring the responsi-

ble and sustainable management of a company.

It is in shareholders’ best interest to ensure that

they are actively engaged in how their capital is

being managed. Since the 2008 financial crisis

a focus on the importance of the concepts of

long-termism and engaged investing is appar-

ent in policy, asset management strategies and

public scrutiny of the financial services sector as

a whole.

This report uses data gathered by the NAPF for

its 2013 Engagement Survey and a 2014 YouGov

survey of the Great British public run by UKSIF1

to examine both pension funds’ and the publics’

views on a range of active ownership issues. The

‘Talking Points’ within the report are intended to

stimulate debate and discussion of these issues.

According to the Investment Management Associ-

ation, the UK institutional market is estimated at

£ 2.7 trillion, of which pension assets account for

£ 2 trillion. NAPF fund members represent approx-

imately £900 billion in assets under management.

The vast majority of pension fund assets relate

to defined benefit pension arrangements. Fig-

ures provided by the NAPF from its’ 2013 Annual

Survey suggest that the percentage of UK defined

benefit (DB) pension scheme assets invested in

equities is now around 30 % with the percentage

invested in UK equities down to 8.8 %. The rise

of defined contribution (DC) pension schemes

means however, that there is likely to be a shift

back towards equities over the coming years.

Given the demographics of the memberships of

most DC arrangements, these schemes are com-

monly biased towards equities with the figures

provided by the NAPF from its Annual Survey

suggesting that there is an average allocation to

equities of 71 % in the growth phase of the aver-

age default fund.

In 2012 the process of pension auto-enrolment

began meaning that over time more and more of

the population will benefit from pension saving.

This means that it will soon be possible to use the

general public as a reasonable proxy for pension

savers as we do here, and that more than ever,

members of the public have a vested interest in

how institutional investors, and in particular DC

pension providers, are managing their assets.

Active ownership and good stewardship is all

about asking the right questions. Pension funds

need to ask the right questions of their consult-

ants and their fund managers but also to consider

asking questions of their members. This report

explores and contrasts pension funds’ and the

publics’ answers to some important questions on

active ownership issues.

*Notes on pension fund dataThe pension fund opinion data used in this report

was gathered by the NAPF as part of its ninth

annual survey of pension funds’ engagement with

investee companies. NAPF fund members with

more than £ 1 billion in assets under management

were invited to give their views. Responses were

received from 48 pension funds, with combined

assets under management of £ 394 billion.

*Notes on public opinion dataAll public opinion data used in this report, unless

otherwise stated are from YouGov Plc. Fieldwork

was undertaken between 05–07 March 2014. Total

sample size was 2,683 adults. The survey was car-

ried out online. The figures have been weighted

and are representative of all UK adults.

The question of ensuring trust and confidence in DC is a critical challenge for the UK, linking to wider reputational issues faced by the financial services industryInvestment Management Association

1 UKSIF is the UK Sustainable Finance and Investment Association, the membership association for sustainable and responsible financial services

Introduction The importance of the concepts of long-termism, responsible ownership and engaged investing is increasingly apparent in policy, asset management strategies and public scrutiny of the financial services sector as a whole

5

Extra-financial factors and materiality | Ownership Day

Public OpinionQuestion to the public: To what extent do

you agree or disagree with the following

statement: “ESG issues and other non-finan-

cial considerations can affect the value of an

investment in the long-term (i.e. increasing or

decreasing its value)?”.

Discussion: The results are interesting. In the pension uni-

verse where ESG is a more familiar concept 82 %

of respondents agreed that ESG factors can have

a material impact on their fund’s investments in

the long-term. Among the public, where the term

is newer, 37 % said they didn’t know. This may

indicate the extent to which pension funds are

ahead of their members, and the extent to which

they need to publicise their approach. But of the

public who did answer a strong majority agreed

61 %. This suggests that the majority of informed

pension savers probably agree with the attitude

of the pension funds and should be of comfort

to the funds: their members share their view.

And the number of funds and members of the

public that disagree are similarly broadly similar

at 6 % and 3 % respectively.

Talking point: Considering the high level of public respondents who felt unable to answer the question regarding ESG issues and their effect on the value of an investment in the long-term (37 % ‘Don’t know’) is there a need for pension funds to communi-cate with their members more effectively on this issue? Why do individuals not feel able to answer this question and does this indicate a lack of understanding of what can affect the value of an investment overall?

0 %

10 %

20 %

30 %

40 %

Agree Neither Disagree Don’t know

2

UKSIF ForewordThis report marks the first discussion piece we

have produced for Ownership Day and we hope

it will be the first of many. This work goes to the

heart of some key issues by looking at what pen-

sion funds think about their role in engagement

and comparing that to public opinion. There are

important differences which show that many

funds are on the right lines but that they may

need to flex their messages to meet the expec-

tations and understanding of their members. It

also highlights how some generally smaller funds

are not yet able to engage fully which prompts

concern. And if defined benefit (DB) schemes are

finding it hard to engage the issue for defined con-

tribution (DC) may well be more serious yet.

We have been delighted to work with NAPF on

this inquiry into some of the fascinating data

from their engagement survey 2013. And we are

very grateful to Aviva Investors for their generous

sponsorship.

Ownership Day is about helping asset owners

in the widest sense boost long-term returns by

being active and asking their agents to follow suit.

The argument is becoming increasingly main-

stream as the realisation spreads that a short-

term focus ignores fundamental longer-term

threats. This report suggests that beneficiaries are

broadly sympathetic to active ownership which

adds further to the case for schemes to adopt this

approach.

For more information on Ownership Day please

visit www.ownershipday.co.uk.

Simon Howard, UKSIF Chief Executive

NAPF ForewordPension funds understand that the assets they

own can play an important role in determining

the society members will inhabit in the future

and thus the real value of their income in retire-

ment. Therefore, in line with their duty to pursue

members’ best financial interests, pension funds

recognise they have stewardship responsibilities

which include engaging with companies and

voting. In most cases however, day-to-day activ-

ities are delegated to asset managers.

The NAPF is a long-standing supporter of the UK

Stewardship Code and are encouraged to see

a growing number of asset owners signing up –

there was a 30 % increase during 2013. More asset

owner signatories will further influence behav-

ioural changes that lead to better stewardship by

asset managers and companies. Whilst increasing

sign-up to the Code’s Principles is important, it

is crucial asset owners are able to identify those

investment manager’s committed to both the

spirit and letter of the Code.

The NAPF’s Stewardship Disclosure Framework

was developed to enable trustees to compare

and contrast different asset managers. More than

a quarter of the asset manager Stewardship Code

signatories have completed a Framework and

these are available on the NAPF website. This

extra transparency should catalyse the market for

‘good’ stewardship and provide an incentive for

asset managers to compete in a ‘race to the top’.

For pension funds, being ‘active owners’ is not

about their ‘going greener’ but about achieving

better outcomes for members.

Will Pomroy, NAPF Policy Lead:

Corporate Governance

Aviva Investors ForewordAviva Investors is predominantly a long-term,

risk-averse investor. Our parent company – Aviva

plc – can trace its history back more than three

hundred years to 1696. As both insurers and

investors we are well accustomed to thinking

in the long term. Over the next few decades we

see sustainable development as a matter of key

importance to our clients, to the companies in

which we invest and to global economic growth.

However, these long term sustainability issues

are regularly overlooked by the capital markets

because the financial pressures are to focus much

more on the short term. Short-termism reduces

the long term return potential for our customers

and undermines the ability of capital markets to

deliver sustainable economic development.

The Stewardship Code is an important commit-

ment to the long term. It sets out a number of

areas of good practice where asset owners and

managers can protect the value of investments.

We warmly welcome the findings outlined in this

report. We support the calls for pension trustees

to govern the long-term stewardship of their

fund managers, holding us to account for good

performance. In this way, their demand will

help to ensure that capital markets integrate

sustainability issues throughout the supply

chain of capital, reducing risks to companies

and the global economy – and help secure

sustainable development.

Steve Waygood, Chief Responsible Investment

Officer, Aviva Investors

Attitudes to Ownership 2014Exploring pension fund and public opinion on ownership and stewardship issues

4

Long-term strategic issues facing companies go

beyond the purely financial. There is a growing

realisation that environmental, social and govern-

ance issues (“ESG”) are central strategic concerns

as the world faces wide-ranging threats linked to

climate and the environmental limits and associ-

ated social change.

Increased emphasis on active ownership with its

focus on the long-term and extra-financial factors

should tend to support and encourage compa-

nies to tackle these strategic sustainability issues.

This message can be conveyed by fund managers

when their clients – the owners – instruct them.

In its October 2013 survey the NAPF asked a

series of questions on these issues to pension

funds. Here we examine the answers to those

questions and answers from the public to a series

of related questions.

Pension Fund OpinionQuestion to pension funds: Do you agree

that extra-financial factors eg. Environmen-

tal, social and governance factors – can have a

material impact on the fund’s investments in the

long-term?

Institutional investors acting in the best interest of their clients should consider the environmental and social impact of companies’ activities and associated risks among a range of factors which might impact on the performance of a company, or the wider interests of savers, in the long-term Kay Review 2012

Extra-financial factors and materialityCan extra-financial factors, such as environmental, social and governance factors, have an impact on value in the long-term?

0 %

10 %

20 %

30 %

40 %

50 %

Strongly agree

Agreesomewhat

Neither agreenor disagree

Disagree somewhat

Stronglydisagree

8

Discussion:These results may also be showing how under-

standing among members – taking the public as a

proxy for the combined DB/DC/population which

is evolving- lags that of pension funds. The over-

whelming majority view among those relatively

large pension funds surveyed by the NAPF is that

institutional investors have stewardship responsi-

bilities. Among members of the public there is less

agreement. 26 % ‘don’t know’, which is less than

those who responded ‘don’t know’ with regards

to the question on ESG.

This may reflect a greater understanding of

stewardship in the sense of “doing what’s right”

than of ESG. This enhanced understanding

suggests that “stewardship” as a concept may

currently be easier to promote for funds than

ESG. Again, of the members of the public who

answered very few actively disagreed, thus prob-

ably validating, if validation is needed, the stance

of the pension funds.

Talking point: With such strong agreement from pension funds and a significant level of agreement from the public it seems counterintuitive that there are only 74 asset owners currently signed up to the UK Stewardship Code. Those that are however represent a significant proportion of assets and there are positive signs of progress with a 30 % increase in signatories last year.

Question to pension funds: Has your fund

formally committed to the Stewardship Code and

its Principles?

Local authority & public

Private

Encouragingly most of the respondants have

either already formally committed to the Stew-

ardship Code or intend to in the future. The

majority of pension funds that do not intend to

are private funds. Interestlingly the majority of

funds who have already committed to the Code

are large funds with over £10bn in AuM.

Less than £ 2 bn

£ 2 – 5 bn

£ 5 – 10 bn

£ 10 bn or more

Stewardship and Responsibility | Ownership Day

0 %

5 %

10 %

15 %

20 %

25 %

Yes Within 6 Months

6 and 12Months

Greater than12 Months

No anddoesn’t intend to

0 %

5 %

10 %

15 %

20 %

25 %

30 %

Yes Within 6 Months

6 and 12Months

Greater than12 Months

No, the fund does not indend to commit

to the Stewardship

11

‘Looking ahead’ UKSIF’s wish list for the future of active ownership

Leadership from local authority and public pension fundsThat all local authority and public pension funds will sign up to the UK Stewardship Code and provide improved levels of information on how they manage extra-financial factors Increased demand for high quality active ownership That asset owners will increasingly include information and capability on ownership activities in their selection of investment managers Increased public awareness and engagement with the finance systemThat as public awareness of ESG issues and how these relate to the financial sector grows investment decisions will increasingly be considered and challenged when not aligned to the best interests of wider stakeholders That all large firms will be required to report on how their DC pension plans integrate ESGRegulators will require all large firms to report on a ‘comply or explain’ basis how their DC corporate pension plans integrate ESG factors

9

Key issuesWhat are some of the important environmental, social and governance issues?

Question to pension funds: How important is

it that the fund’s investment managers take the

following factors into consideration when making

investments?

Not important

Slightly important

Important

Very important

Extremely important

Question to the public: Which of the follow-

ing issues do you think are MOST important for

UK pension funds to be more active about (i.e.

on which issues should pension funds use their

influence to try and improve how companies

approach that issue)?

0 %

10 %

20 %

30 %

40 %

50 %

60 %

321 4 5 6

!"#$%&'"()"*+,+"-&.+-/01%+-2&%+34$*+,56

0 %

10 %

20 %

30 %

40 %

50 %

1 2 3 4 5 6 7 8 9

1 Encouraging companies to reduce their use of fossil fuels

2 Ensuring that executive pay, including bonuses, is not excessive

3 Encouraging more women to be on the boards of major companies

4 Encouraging all companies to pay a ‘living wage’ ( i.e. a wage which is high enough to maintain a normal standard of living )

5 Ensuring there are no instances of child labour or human rights abuses in a company’s supply chain

6 Ensuring there are no instances of animal welfare abuse in a company’s supply chain

7 Ensuring that each company pays its fair share of UK tax

8 Don’t know

9 Not applicable – I don’t think UK pension funds should be more active about any issues

1 Board Composition (including diversity)

2 Company Strategy

3 Remuneration

4 Environmental factors

5 Social Factors (internal)

6 Social Factors (external)

9

Key issuesWhat are some of the important environmental, social and governance issues?

Question to pension funds: How important is

it that the fund’s investment managers take the

following factors into consideration when making

investments?

Not important

Slightly important

Important

Very important

Extremely important

Question to the public: Which of the follow-

ing issues do you think are MOST important for

UK pension funds to be more active about (i.e.

on which issues should pension funds use their

influence to try and improve how companies

approach that issue)?

0 %

10 %

20 %

30 %

40 %

50 %

60 %

321 4 5 6

!"#$%&'"()"*+,+"-&.+-/01%+-2&%+34$*+,56

0 %

10 %

20 %

30 %

40 %

50 %

1 2 3 4 5 6 7 8 9

1 Encouraging companies to reduce their use of fossil fuels

2 Ensuring that executive pay, including bonuses, is not excessive

3 Encouraging more women to be on the boards of major companies

4 Encouraging all companies to pay a ‘living wage’ ( i.e. a wage which is high enough to maintain a normal standard of living )

5 Ensuring there are no instances of child labour or human rights abuses in a company’s supply chain

6 Ensuring there are no instances of animal welfare abuse in a company’s supply chain

7 Ensuring that each company pays its fair share of UK tax

8 Don’t know

9 Not applicable – I don’t think UK pension funds should be more active about any issues

1 Board Composition (including diversity)

2 Company Strategy

3 Remuneration

4 Environmental factors

5 Social Factors (internal)

6 Social Factors (external)

Attitudes to Ownership 2014Exploring pension fund and public opinion on ownership and stewardship issues

Produced by Sponsored by Supported by

Page 5: On idle-portfolio (1)

Client: The Aldersgate Group

»

ALDERSGATEGROUP

RESOURCE EFFICIENT BUSINESS MODELS » THE ROADMAP TO RESILIENCE AND PROSPERITY

»

3Resource efficient business models » the roadmap to resilience and prosperity

ALDERSGATE GROUP The Aldersgate Group is an alliance of leaders from business, politics and civil society that drives action for a sustainable economy.

OUR MEMBERS

While members and REBus partners support this publication and provided extensive input, individual recommendations cannot

be attributed to any single member or partner and the Aldersgate Group takes full responsibility for the views expressed.

Our members include some of the largest businesses in the UK with a combined global turnover of over £300 billion, leading NGOs, key professional institutes and politicians of all parties. We believe that economic success, both now and in the future, depends upon a political and economic framework that delivers a

Foreword and summary 5The circular economy and REBus project 6Policy recommendations 8 ONE: Leadership and prioritisation 10TWO: Stability and consistency 11THREE: Fiscal incentives 12FOUR: Rationalising environmental regulation 13FIVE: Valuing externalities 14SIX: Design standards 15APPENDIX: The REBus project 17

healthy environment and sustainable use of resources, good environmental performance at the organisational level, growth, jobs and competitive advantage in rapidly growing environmental sectors.

We are politically impartial and our policy proposals are formed collaboratively.

We benefit from the expertise of our members who span a wide range of industry sectors and public interests. Our collegiate approach allows us to formulate progressive policy positions to benefit all organisations and individuals in the UK.

www.aldersgategroup.org.uk12

Given the financial constraints within which government must operate supplying subsidy to drive behaviour change is challenging, but taxation remains an effective lever to spur innovation. The government’s review of England’s waste policy in 2011 acknowledges:

» market-based instruments such as taxes and trading systems are an efficient and cost effective way of pricing in the value of environmental resources«27.

Taking the landfill tax as an example, which has halved the amount of waste sent to landfill since its introduction in 199628, the Environmental Audit Committee (EAC) suggests that government should develop a range of VAT rates for products as determined by their varying degrees of environmental impact or recycled content29. Restrictions within EU law currently make this difficult, as:

» Member States are allowed to implement a reduced rate of VAT for certain goods and services, as listed in Annex 3 of the VAT Directive. However, there are no specific provisions that allow for actions to encourage the use of recyclable materials and therefore any changes would require amendments in EU law«30.

However, government could take a leadership position in negotiations. WRAP suggests that re-used items should have zero VAT, since VAT will already have been paid on the new item. The EAC also suggests tax allowances for those businesses that help in the re-use or repair of goods31. There is certainly scope for rationalising the red tape on VAT reporting, which currently makes adoption of circular approaches more administratively difficult.

But alongside new fiscal instruments, the existing system must facilitate the transition towards greater efficiency in all sectors.

KEY ASKS

1 Government should instigate tax reforms that encourage and reward the most resource efficient businesses, for example simplifying the existing VAT system for remanufacturers and considering zero VAT for re-used items

2 Inconsistencies in the taxation system that penalise resource efficiency should be removed, such as rewarding new build over refurbishment in the construction industry

27 » Department for Environment, Food and Rural Affairs (2011) Government review of waste policy in England 2011.

28 » Defra and others, Joint written evidence on Circular Economy, April 2014 http://bit.ly/1zFhPJo

29 » Environmental Audit Committee (2014) Growing a circular economy: Ending the throwaway society.

30 » Environmental Audit Committee (November 2014) Growing a circular economy: Ending the throwaway society: Government response to the Committee’s Third Report of Session 2014–15.

31 » Environmental Audit Committee (2014) Growing a circular economy: Ending the throwaway society.

THREE: FISCAL INCENTIVES

» The consumption of resources, and embodied carbon, associated with new build dwellings and commercial properties is significantly greater than that of refurbished property, yet the current VAT regime offers little or no incentive to developers to retain and refurbish existing buildings; in many cases the current regime actually rewards new build«ROBERT LAMBE, MANAGING DIRECTOR, WILLMOTT DIXON ENERGY SERVICES

www.aldersgategroup.org.uk2

Foreword and summary 5The circular economy and REBus project 6Policy recommendations 8 ONE: Leadership and prioritisation 10TWO: Stability and consistency 11THREE: Fiscal incentives 12FOUR: Rationalising environmental regulation 13FIVE: Valuing externalities 14SIX: Design standards 15APPENDIX: The REBus project 17

AuthorsDr Steve Wallace » Director, Aldersgate Group Victoria Fleming-Williams » Policy Manager, Aldersgate Group Jemma Mae De Leon » Communications Manager, Aldersgate Group

CONTENTS March 2015

11Resource efficient business models » the roadmap to resilience and prosperity

TWO: STABILITY AND CONSISTENCY

24 » Foxon (November 2002) Technological and institutional ‘lock-in’ as a barrier to sustainable innovation http://bit.ly/1z7JFak

25 » Committee on Climate Change (31st March 2014) “The Budget freeze in Carbon Price Support” http://bit.ly/Qyr9tW

26 » IEMA (October 2014) Preparing for the Perfect Storm—Skills for a Sustainable Economy.

A coherent and stable policy framework allows businesses and investors to develop the long-term strategies that will yield more REBMs and ultimately a more circular economy. Many businesses are currently tied to systems that have been locked into linear thinking and this has been a major stumbling block to sustainable innovation 24.

Policy makers must set a clear expectation that resource efficiency is the direction in which the entire economy should move to provide investors and businesses with the confidence to act. Having set topline goals, the government should leave the method of delivery to the market.

Retrospective or short-notice policy changes must be avoided, as this seriously derails market confidence. The Committee on Climate Change has commented, “introducing a policy and then fundamentally changing it a short time later is not conducive to providing the clear and consistent signals that investors require”25. For example, the sudden changes to the Energy Companies Obligation (ECO) were deeply damaging to the energy efficiency industry. The ECO was designed to tackle the UK’s badly insulated housing stock and required energy companies to insulate vulnerable customers’ homes. But in December 2013 the Chancellor relaxed the obligation despite strong opposition from the industry. This resulted in job losses within energy companies’ supply chains and increased uncertainty for all businesses that must invest in their skills base and are exposed by short-notice policy changes26. Robust policy is essential and government must ensure that short- and medium-term business confidence is supported.

KEY ASKS

1 Policy instruments that define medium- and long-term resource efficiency goals should be developed, leaving the method of delivery to the market

2 Government must provide robust and stable policy to ensure that short- and medium-term business confidence is supported

7Resource efficient business models » the roadmap to resilience and prosperity

With REBus, Aldersgate Group is proud to be a part of Step 2, initial findings of which can be found in the Appendix6. The next steps to build on the REBus project will be to drive action at a national level, to make the shift to Step 3.

BENEFITS OF A CIRCULAR ECONOMYThe circular approach offers developed economies a pathway to resilient growth, a systemic answer to reducing dependency on resource markets and a means of reducing exposure to resource price shocks as well as societal and environmental ‘externality’ costs that are not being recognised7. Circularity could contribute £3 billion to the UK’s economy alone8 and savings could be considerable. Local councils currently spend 10% of their budgets on waste management, which is more than their planning or housing allocations9. Net job creation, if circular economy activities are mainstreamed, could reach 54,000 by 203010.

Making the transition to an economy based on the circular use of resources can embed resilience into all aspects of the UK economy, from a household to company, from local to national level. Failing to grasp this opportunity will leave the UK exposed to the vagaries of resource markets. UK businesses are already more exposed than some overseas competitors, such as those in China, the US, Germany, Japan and South Korea, whose governments have recognised the supply risks they face and responded with a comprehensive policy framework. The UK government is lagging behind these efforts both to tackle resource security and capture the opportunities of a circular economy11.

EVIDENCEThis report sets out learnings from policy workshops convened by the Aldersgate Group and attended by a wide range of members, REBus partners and stakeholders. We outline what needs to happen within the UK’s fiscal and regulatory landscape to ensure resources are viewed as assets, regardless of how many times they have been used. We describe a number of priority measures to be addressed if the transition to a circular economy is to be accelerated and our future prosperity assured.

THE CIRCULAR ECONOMY AND REBUS PROJECT

11 » EEF (July 2014) Materials for Manufacturing: Safeguarding Supply.

6 » See page 17.

7 » World Economic Forum (2014) Towards the Circular Economy: Accelerating the scale-up across global supply chains.

8 » Environment, Food and Rural Affairs Committee (October 2014) Waste Management in England.

9 » Green Alliance (2014) Wasted Opportunities: Smarter systems for resource recovery.

10 » Green Alliance (January 2015) Employment and the Circular Economy. Job creation in a more resource efficient Britain.

REBUS SNAPSHOT

Scope » The UK and Netherlands

Partner » WRAP (lead), Aldersgate Group, Knowledge Transfer Network, Rijkswaterstaat, University of Northampton

Purpose » Investigate what businesses must do to achieve a 30% reduction in resource consumption by 2020

Function » Give businesses access to technical expertise in order to develop and employ resource efficient business models (REBMs)

Key sectors » electrical and electronic products, clothing, furniture and construction products. REBus works with large organisations and SMEs

Objective » Deliver 30 REBM pilots with the aim of achieving 15% resource savings in project lifetime

9Resource efficient business models » the roadmap to resilience and prosperity

POLICY RECOMMENDATIONS

»Mission Zero is not just key to Interface: it’s our Mission. In Europe we have reduced energy by 54% and water by 93% per m2 of carpet. Renewable energy is 95% of our use and 45% of our raw materials are recycled or biobased. Through efficient manufacturing, we can tackle smart design that moves beyond reducing immediate impact but also thinks across entire product lifestyles«Ramon Arratia, Sustainability Director, Interface EMEAI

Interface

www.aldersgategroup.org.uk6

»

Natural resources are being used and disposed of at a rate that cannot be sustained if future UK generations are to have equal access to the goods and services from which we benefit. With the global population predicted to reach nine billion by 20501, competition for access to resources will increase alongside the environmental constraints associated with achieving that access, such as water availability or habitat loss. These trends risk impacting the security of business models in the face of increasing demand.

Adaptation to these trends presents some stark choices. Either we must rely upon continual discovery of new sources of materials to answer our needs, or transition away from the traditional linear take-make-use-dispose model of material use that sees 177 million tonnes of waste thrown away annually in England alone2. Under either scenario, it makes sense for us to be more efficient with our limited resources and to ensure efficiency brings a net saving in environmental terms. If resources are used in a way that allows their recovery and reuse creating “closed loops” or “circularity”, we can reduce our reliance on raw materials and build resilience at the company and national level.

But in shifting towards circularity, the limitations of current technology and processes must be remembered to ensure that higher targets do not result in greater use of energy and water (for example), to meet them. The move to circularity must be approached through the prism of system-wide efficiency.

The expectation that most materials will be used just once is already being challenged. UK recycling rates have shown steady improvement over the past decade and increasing numbers of businesses are considering how their products might be reused and redesigned after their first use. These trends could give rise to the next industrial revolution: the emergence of the circular economy that, by design or intention, is restorative and eliminates waste. This transition will have a profound effect on the way that we do business, changing market participants from being ‘consumers’ to ‘temporary users’ of resources. Research has shown there is strong interest from the public for new ways of interacting with products in key areas3.

It will be impossible to make such a significant transition in one go and many feel grassroots efforts can only progress so far without government mandate. Near-term efforts must be prioritised for those areas where the most impact will be felt.

INTRODUCING THE REBUS PROJECTThis is why the Aldersgate Group is part of the EU Life+ funded project REBus4, formed to promote business models that will further the transition to a more circular economy. REBus (developing Resource Efficient Business models), was launched in July 2013 and is working in a range of market sectors worth €350 billion across the EU.

In the UK, REBus is working with businesses to build the financial case for a transition from a traditional to a more circular business model. This includes some innovative small- to medium-sized enterprises (SMEs), who have entered the market with circular business models and need support in refining their proposition to customers.

Meanwhile REBus partners in the Netherlands are driving the delivery of resource efficient business models (REBMs) through the public procurement process. This includes supporting both government and company procurers, developing new models with the market both before and within the tendering process.

This project builds on the Aldersgate Group’s report, Resilience in the Round5, which identified the challenges, opportunities, enablers and barriers to mainstreaming the circular economy. Three steps in the transition to a circular economy were identified:

1 Vision – define the concept and increase its traction

2 Exploration – pioneers undertake trials and create value

3 Scale – shift to mainstream

1 » UNFPA (June 2012) Population Matters for Sustainable Development.

2 » Environment, Food and Rural Affairs Committee (October 2014) Waste Management in England.

3 » WRAP (August 2013) Evidence of consumer demand for retailer services on electrical products that offer alternatives to new product purchase.

4 » REBus website: www.rebus.eu.com

5 » Aldersgate Group (June 2012) Resilience in the Round: Seizing the growth opportunities of a circular economy.

THE CIRCULAR ECONOMY AND REBUS PROJECT

www.aldersgategroup.org.uk8

»

Circularity pioneer, Interface, has replaced 43% of its raw materials since 1996 with bio-based or recycled content. Financial savings gained through resource efficiency measures like this are re-invested into the business, with the goal of creating new products and driving market share. Interface estimates that costs for its annual inputs are €7.5 million lower than they would be without employing circular models12.

Other companies are investigating the potential of circularity, including Unilever13, Kingfisher14, Timberland15 and Ecover through its Glocal initiative16 in Mallorca.

These businesses are driving revenue through the commercialisation of resource and waste management systems, adopting new production models, increasing profitability through remanufacturing and reducing their exposure to resource security risks. This movement is undoubtedly being led by businesses, a process the REBus project seeks to support. In particular we believe companies should be encouraged to:

» Set ambitious, public, material reduction targets measured against units of production

» Engage with their supply chains for better lifecycle data on products and materials17

» Rethink the products that customers want and whether they could be better delivered in a more resource efficient way18

But many of these businesses are succeeding in spite of, rather than because of, the regulatory framework. To maximise the potential for long-term competitiveness and the resilience of UK plc, government must support the transition to more resource secure business models.

12 » Lavery/Pennell report for Interface (January 2014) The New Industrial Model: Greater profits, jobs and reduced environmental impact.

13 » See article reporting Unilever CEO, Paul Polman’s comments, Guardian (29th January 2013) “Davos 2013: taking the circular economy to scale.”

14 » See video interview with then CEO of Kingfisher, Sir Ian Cheshire: http://bit.ly/1K6TjCf

15 » See article detailing Timberland’s partnership with Omni United to create “Timberland Tires”: http://prn.to/1Knm7Vn

16 » See Glocal website: http://glocal.ecover.com

17 » IEMA (June 2014) From Waste to Resources—Implementing Sustainable Resource Management in Your Business.

18 » Lavery/Pennell report for Interface (January 2014) The New Industrial Model: Greater profits, jobs and reduced environmental impact.

POLICY RECOMMENDATIONS

ALDERSGATEGROUP

Page 6: On idle-portfolio (1)

Client: An Economy That Works

–––––––––––––––––––––––––––––––––––––––––––– ––1

An economy that worksbetter growth beyond GDP

better growth beyond GDP

–––––––––––policy Report–––––––––––

–––––––––––––––––––––––––––––––––––––––––––– ––13

Next stepsThe entire An Economy That Works project is about recognising that the UK economy faces a choice between taking the opportunities provided by accelerating social and environmental change and being made increasingly obsolete. The UK’s opportunity crisis is no exception. This requires that individual companies modernise their practices, but it also requires strategy: as Nigel Wilson says, “we need to look to the long term. If Britain is to prosper, it needs to equip itself properly”27.

We have proposed an industrial strategy with characteristics that could build the productivity, prosperity and opportunities of the workforce, and trust in business. Such a strategy requires policymakers to make policy and put in place structures, but the significant, sustainable change that is now necessary requires that new policies and structures are combined with cultural shifts. The necessary cultural shifts involve the adoption of more collaborative attitudes on the part of policymakers, senior business managers, shareholders and workers’ representatives towards each other.

References

11 | Corak; 2012; “Inequality from generation to generation: the United States in Comparison”.

12 | For example: Stiglitz, “The Price of Inequality”, 2012, Norton; Martins “Dispersion in wage premiums and firm performance” Centre for Globalisation Research, 2008; Shaw , Gupta & Delery, “Pay Dispersion and Workforce Performance:Moderating Effects of Incentives and Interdependence” Strategic Management Journal, 2002.

13 | Pickavance; “The Reconnected Leader; An Executive’s Guide to Creating Responsible, Purposeful and Valuable Organizations”, 2014, Kogan Page.

14 | BSA 30 Annotated questionnaire.

15 | CIPD, Oct 2013 Employee Outlook: Focus on trust in leaders.

16 | Sutton Trust: “£140 Billion A Year – The Cost Of Low Social Mobility” March 2010 (website accessed 28 Jan 2015).

17 | Crawford, Johnson, Machin and Vignoles; “Social Mobility: A Literature Review”, 2011, BIS.

18 | Hutton, “How Good We Can Be”, 2015 Little Brown.

19 | Skills Outlook 2013, OECD, 2013.

20 | Resolution Foundation, 2013, Low Pay Britain 2013, p14–5.

21 | Wilson; “We need economic rehab not a quick fix of cheap money”; Financial Times, March 7, 2014.

22 | Mazzucato, “The Entrepreneurial State”, 2013, Anthem.

23 | Mabey and Ramirez ‘Comparing national approaches to management development. In: Handbook of Research on Comparative Human Resource Management’. Edward Elgar, 2012, pp. 185–210.

24 | Mayhew, ‘Industrial strategy and the future of skills policy’, CIPD, 2014.

25 | Pickavance; 2014.

26 | Sutton Trust, ‘The Educational backgrounds of 500 leading figures’ 2007.

27 | Wilson, 2014.

––––––– –––––––––––––––Equality of opportunity––––––– –––––––––––––––

About the authorDuncan Exley is Executive Director of The Equality Trust, which works to improve quality of life in the UK by reducing economic inequality. The Equality Trust provides data and analysis of the impacts of inequality on individual health, society, the economy and organisations, as well as the scale and drivers of inequality and attitudes to it. The Trust works with a wide range of decision-makers and influencers to identify ways of reducing the adverse effects of inequality.

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Core proposalThere is a need to ensure that the level of innovation conducted by UK businesses is, at the very least, enough to keep up with overseas competitors, or better still to maintain an edge. But bringing new products and services to market is an inherently challenging process. The government recognises its vital role in partnering with industry to reduce the risk of innovation and many of the recent changes to innovation support have been positive. However, international statistics suggest that the UK economy as a whole is not investing enough in innovation.

Although UK business expenditure on research and development as a proportion of GDP (BERD intensity) has been stable, remaining between 1.0% and 1.2% of GDP for over a decade, this is far lower than the level for international competitor economies. The OECD average for BERD intensity is 1.6%, and in Germany the figure is 2.0%. What is more, the UK’s relative position has declined as BERD intensity in most competitor economies has improved in the last ten years. This disparity is more pronounced for investment in energy and environmental research and development (R&D). In absolute terms, Japan, the United States and Germany are the largest funders, while Mexico, Canada and Japan are top investors in relative terms. Energy-related R&D accounts for the vast majority of money spent8.

Expenditure on R&D is only one measure of innovation performance. There are a wide range of indicators that can be considered which help to understand the strength of innovation. For example, the European Commission’s annual Innovation Union Scoreboard9 looks at all aspects of the system from key enablers such as research quality and skills, through to outputs such as the number of companies successfully bringing products and services to market.

The Innovation Union Scoreboard finds that there are a number of areas in which the UK’s innovation performance is very strong – particularly in its science base – but the UK is not an “all-rounder”. In particular, the UK underperforms when it comes to applied research. For example, the proportion of small- to medium-sized enterprises (SMEs) bringing innovations to market – as defined by the Community Innovation Survey – falls a long way short of the EU average.

This matters for our long-term competitiveness. The scoreboard finds that leading innovation economies such as Sweden, Denmark, Germany and Finland perform strongly across the range of indicators, so while the UK has a stronger performance than the EU average, due to the strong science base, it is classified as an innovation ‘follower’ because this research is not always successfully applied and brought through to market. Perhaps more worrying is that the UK is slipping down the ranks.

If the UK is to compete internationally, both the level and effectiveness of innovation must be increased. It will not be enough to rely on the strong performance of our science base. The UK must perform strongly across the board from early-stage basic research, through to applied research and commercialisation.

A more overarching approach to science and innovation policy would help ensure funding is optimally allocated. The current balance of funding between different elements of the science and innovation landscape has arisen through evolution, not design.

“ ”Securing a fairer share of the rewards of growth for people at work is good economics as well as vital for household budgets. The UK’s future growth prospects, as well as family livelihoods, depend on our ability to increase the numbers of secure, well-paid jobs that our economy provides. Substantial progress on innovation will be vital to delivering the high value, high productivity economy we all need.

Frances O’Grady, General Secretary, TUC

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Summary proposal The factors that have led the UK to be the joint-worst developed economy for equality of opportunity are also contributing to a downward spiral of productivity and to distrust of business. This piece proposes principles by which industrial policy can create greater equality of opportunity while building the long-term competitiveness of the UK economy.

Why this mattersThe UK has a chronic opportunity problem. We have the joint-worst social mobility of any country in the OECD11. This is obviously a problem for those people who are denied opportunities to realise their potential; opportunities which would not be denied if they were born elsewhere, but it is also a problem for individual UK businesses and the wider economy.

Most obviously, businesses suffer because they cannot make full use of people’s talent, but employers are also affected in other ways. There is extensive research showing that when employees feel that the allocations of roles (and rewards) are undeserved, their engagement with the company and its purpose collapses, harming productivity and innovation12. As Norman Pickavance, former HR & Communications director at Morrisons, writes, when “99 per cent of the population feels like they have missed out [this] can have a highly damaging effect on confidence and performance”13. 

The consequences are not limited to the sum of the micro-economic effects on individual businesses; they also manifest as political risks, as a public sense of unfairness leads to a collapse of trust. When the British Social Attitudes survey recently asked voters to consider the statements “big business benefits owners at the expense of workers” and “Management will always try to get the better of employees if it gets the chance” those who agreed outnumbered those who disagreed by over three to one14. 52% of members of the Institute of Directors now identify ‘anger over senior levels of executive pay’ as a threat to public trust in business; and a third of employees say that their level of trust in senior management is weak15. The political risk that politicians will find it expedient to be seen to be clamping down on businesses is not just a theoretical: there was an element in the Scottish independence referendum campaign of the Yes Scotland campaign being bolstered by voters’ reactions to businesses’ perceived opposition to independence.

And there are measurable costs, which should concern “universal investors” and others with macroeconomic concerns. Research for The Sutton Trust in 2010 found that “Failing to improve low levels of social mobility will cost the UK economy up to £140 billion a year by 2050”16.

Core proposalThe case for a comprehensive industrial policy has been made by a wide range of organisations and individual experts, but there are specific features that an industrial policy must contain if it is to effectively increase opportunity and thereby to promote productivity, innovation, trust in business, and a more efficient overall economy. These features have the capacity to both augment opportunity and reduce the UK’s level of economic inequality, currently unusually high for a developed economy (indeed the two are inseparable: as a literature review for the Department of Business, Innovation and Skills pointed out, “it is likely to be very hard to increase social mobility without tackling inequality”17 ).

––––––– –––––––––––––––Equality of opportunity––––––– –––––––––––––––Integrating equality within industrial strategies to boost UK competitiveness

Duncan Exley, Director

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6

Summary proposal A strong innovation culture holds the key to unlocking the potential of the sectors and technologies of tomorrow: creating lasting job opportunities that address structural labour market issues and encourage more globally focused manufacturers, and the supply chains and services that support them, to expand in the UK. Yet innovation in the UK is being undermined by erosion in spending compared to that of our competitors.

Why this mattersWhat will the jobs of the future look like? And, in turn, what skills will be in demand? It is impossible to second guess what the future will hold, but whilst there is not a definitive answer, current trends help us to prepare. What we think today will help to shape tomorrow.

The labour market is already experiencing challenges: persistent high unemployment in some regions and declining employment in mid-level occupations. Regional imbalances further exacerbate what many already believe to be worrying trends in the UK. Policy makers now need to equip the workforce of tomorrow with the skills that they will need to survive in an increasingly competitive labour market.

But we also need to foster those sectors and companies that promise to address some of these labour imbalances and the challenges of the future. Only an innovation-led approach can help deliver the sectors, and employers, of tomorrow. Innovation is a key driver of growth and competitiveness. Innovative companies do better than those that do not innovate.

Analysts have already begun to point to likely trends for the future: the technological advances, developments in data analytics, greater interconnectivity, demographic changes and a predicted shift in the economic buying power of consumers from West to East. All will have a huge impact on business models, how work is organised and in turn how people are employed.

Environmental trends will also feature prominently. Global economic growth is leading to increasing worldwide demand for natural resources and raw materials. Overexploitation implies higher extraction costs and degradation of ecosystems. The prices of these resources will become more volatile. More regulators will be responding to climate change whilst energy security concerns will continue to drive uptake of non-fossil fuel technologies.

Research by Green Alliance and WRAP7 has highlighted that under a transformational scenario an additional 517,000 jobs can be generated through the creation of a bioeconomy, expansion of remanufacturing, servitisation, and more closed loop recycling and recycling in general. But significantly, their analysis estimates net job creation of 102,000. Furthermore, they suggest that the circular economy could also help to address regional and skills imbalances, reducing structural unemployment and creating lasting jobs, over and above short-term gains. The research hints at a promise of geographically dispersed employment opportunities and job creation across all skill levels, offsetting expected losses in skilled employment by 18% over the next decade.

Elsewhere, recent assessments of early-development stage energy technologies hint at the possible scale of the opportunity for the UK economy through manufacturing, services and distribution. Current estimates range from £39.5–126.5bn between 2010 and 2050 to £189.5bn–877bn if some supply chains are considered. The opportunities are especially promising for manufacturing, which accounts for a significant proportion of the market in many important subsectors (22% in carbon capture and storage (CCS), 37% in photovoltaic and 46% in wind energy). The right framework to develop these technologies could also encourage more globally focused companies to expand in the UK.

High employmentA goal to match the OECD average for business expenditure on R&D 

Themanufacturers’organisation

Susanne Baker, Senior Policy Adviser

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Given that the UK has not built a new coal-fired power station in over 40 years68 and existing plants long ago paid off their construction costs, the price of accelerating a near-term and inevitable decommissioning process is likely to be very low.

Yet doing so can generate some important benefits. In addition to tackling the largest source of power sector carbon emissions, premature closure would address the estimated 1,600 premature deaths caused annually by air pollution from UK coal-fired power stations.69 These power stations also rely on thermal coal imported from Russia – with around 44% of our coal coming from that unreliable trade partner.70

It is perfectly correct to say that rapid plant closure, without a commensurate programme to build replacement capacity, interconnection, and improve energy efficiency, might endanger UK capacity margins. And so the key is to have such a build programme in place early in the next parliament, even if it entails inducing new gas-fired capacity in the short-term. While the removal of old coal capacity would have the consequence of improving the attractiveness of the UK market for other generation and demand reduction options – spurring investment – a scaled up programme of new investment may also be needed and this could be underpinned by the UK government’s electricity market reforms, including new contracts-for-difference (CfDs) and the capacity market.

One of the reasons why a UK coal closure programme is urgently needed, is that if advanced economies with old and inefficient subcritical plants, like the UK, Germany, and the United States, do not act first to close these power stations, we cannot expect China, India, South Africa, or Indonesia to follow suit in a timely fashion. The world’s climate future really does depend on what these countries do with their subcritical coal-fired power stations. Delayed closure in these emerging countries, due to inaction in advanced economies, could be the thing that scuppers global climate change mitigation efforts – regardless of whether we have a new international climate agreement or not.

The direct costs to the UK of closing existing subcritical plants prematurely would be negligible. Though we will have to increase the rate of new build to replace closed capacity, we would have had to build this new capacity in any case. Speeding up closure and bringing forward investment has clear environmental and social benefits, as well as the desirable consequence of generating investment at exactly the moment required to solidify and extend the UK economic recovery.

The mechanisms and incentives for closing coal Closing subcritical coal would need to be done in the most cost-effective way possible. Carbon taxes, emission performance standards, or tradable allowances are all mechanisms to internalise the externalities of coal combustion and could induce premature closure within the timeframe proposed here.

The EU Emissions Trading Scheme (ETS) is unreformable in the near term and structurally oversupplied – it is therefore almost completely irrelevant for the timely closure of coal in the UK. The UK carbon tax regime lacks certainty and there is unlikely to be the political appetite to raise this tax to the levels required to permanently retire UK subcritical coal by 2020 – the impact on energy intensive industries and the windfall for low carbon generators make this an unattractive option. Perhaps the most effective strategy, therefore, is simply to regulate away subcritical through an appropriately tough emissions performance standard, introduced at the start of the next parliament, with a 4–5 year grace period.

While the closure challenge in the UK is relatively modest due to the age of the remaining subcritical coal-fired power stations, in countries like India and China, where these assets are much newer, other options need to be explored. Regulating these assets out of existence might not be possible any time soon – asset owners and operators, often with significant political clout, will need to be ‘bought off’ through targeted compensation. Under these circumstances, compensating owners of coal assets for premature closure is both reasonable and necessary to ensure enough coal is decommissioned in time.

“ ”Speeding up closure and bringing forward investment has clear environmental and social benefits, as well as the desirable consequence of generating investment at exactly the moment required to solidify and extend the UK economic recovery.

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At the European level, a report for the European Commission74 estimates that European businesses could reap net benefits from resource efficiency measures based on current prices and technologies of €603bn. In the UK, a study for the Department for Environment, Food & Rural Affairs (Defra) estimated that resource efficiency opportunities related to energy, waste and water amounted to £55bn in 2009, of which £23bn had a payback of less than one year.

Moreover, there is good evidence that resource efficiency can result in lower costs through achieving lower levels of price volatility, which can have a substantial effect on profitability and therefore on company value. Reduced earnings volatility should increase value. A study of 1,000 UK companies over a 33-year period75 showed that the difference between the top and bottom quintiles of profit stability is a 25% to 30% share price premium for the most stable quintile. Investors also favour low profit volatility.

In summary, therefore, reducing waste can make both environmental and economic sense. This section now moves on to consider how it may be achieved.

Core proposalMoving towards a zero-waste economy in the UK, which is already an objective of the UK government76, will require a significantly more robust and binding suite of policies than are currently in place, building on the landfill tax success and other policies that have been put in place in the context of the European Union’s Waste Framework Directive, and the targets of the Landfill Directive.

Material movements through an advanced industrial economy like that of the UK are very complex. So too are the various classifications of materials that become wastes. It is therefore important that any policy proposals to retain the value of materials for longer, so that the flow of waste is reduced and ultimately eliminated, are adopted and implemented

in full consultation with the industries that handle these materials. Prime among these are the materials and waste management industries, including those involved in construction and demolition, manufacturing of different kinds, and the production of packaging materials. What follows is therefore a wide range of possible policy proposals, all of which could contribute to the objective of a zero-waste economy, but the precise mix, rate of introduction and level of ambition of which would need to be subject to detailed consultation with relevant industries and other stakeholders, such as waste collection and disposal authorities. However, the consultation should make clear that the objective is a zero-waste economy by a certain date (for example, 2040), and the purpose of the consultation is to identify the most cost-effective and material-efficient way of getting there. The centre-piece of such a policy package should be environmental tax reform (ETR), a more detailed description of which now follows.

“Wastes are expended resources. They represent materials to which value has been added, which have lost that value, and have become economic liabilities and/or environmental costs. Reducing waste therefore reduces these liabilities and costs.

Increased outputHigher employment

Higher humanwell-being

Green innovationGreen technology development

Less pollutionLess resource useEnvironmental impacts

Economic impacts

Box 1: The potential contribution of environmental tax reform to human wellbeing.

Source: Ekins and Speck 201177, Figure 1.6, p.15

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Summary proposal The next government should create a new coal closure programme to retire remaining UK subcritical coal-fired power stations by the end of 2020. This would generate significant environmental and health benefits, and help induce new investment into the UK energy sector, helping to solidify and extend the economic recovery into the next parliament. It would also send an important signal to other countries, especially those with coal generation assets that have the ability to ‘make or break’ our climate future.

Why this mattersThe UK and partner countries should support pragmatic options for addressing the most significant contributors to anthropogenic climate change. One such option, presented by Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), is the premature closure of subcritical coal-fired power stations.55

Retiring these coal plants quickly can help the world deal with the multiple scourges of coal – the millions of deaths caused globally from air pollution, the thousands killed in mining accidents each year, the local environmental impacts from both mining and combustion, and the staggering amounts of carbon pollution that makes the major contribution to anthropogenic climate change. The case for abandoning coal in a timely manner, starting with the least efficient power stations using the most polluting coal, is overwhelming.

Coal provides 40% of the world’s electricity, or 1,627 GW of global capacity.56 Of total global capacity, 75% is subcritical, 22% supercritical, and 3% ultracritical.57 Subcritical is the least efficient and most polluting form of coal-fired generation – it requires more fuel and water to generate the same amount of power, and creates more pollution as a result.The average subcritical power station generates 1.7558 times as much carbon pollution as the average advanced ultracritical – the most up-to-date form of coal-fired power station – and uses 1.6759 times more water. While the average age of all coal-fired power stations globally is 21 years, ultracritical power stations are considerably younger, with an average age of just 5 years.60

To limit global emissions to a level consistent with a 2°C future, the IEA estimated in 2013 that it will be necessary to close 290 GW of subcritical generation worldwide by 202061. Subcritical coal accounted for a staggering 8.6 GtCO2 of emissions globally in 2009.62 For context, in 2010 annual gross greenhouse gas emissions globally totalled ~50 GtCO2-equivalent, with ocean and land sinks absorbing just over 50% of these emissions, resulting in net atmospheric emissions of around 22 GtCO2 per annum, or a ~3 ppm increase of atmospheric CO2 concentrations.63

Because of their age and inefficiency, subcritical are vulnerable to regulation and a logical first step in any climate mitigation strategy. The premature closure of subcritical is a cost-effective way to reduce emissions, as they typically represent the oldest part of nations’ power generation fleet.

The United States (18%), EU (18%), China (13%), and India (10%) have the largest subcritical power station fleets. The US and EU with the oldest plants (with an average age of 40 and 37 years respectively64) should act quickly on early closure (within five years), paving the way for China and India (with much newer power stations) to follow suit. Owners of power stations can be either regulated out of power markets or in the case of new plants, compensated for premature closure.

Core proposalThe UK’s coal generation capacity in 2012 was 28 GW65 and this was entirely subcritical, accounting for approximately 18% of the EU’s total subcritical capacity66. Permanently closing this capacity would contribute 10% to a 290 GW by 2020 global closure target. Fortunately for policy makers, since 2012 approximately 9 GW of this capacity has already closed, leaving the UK with nine subcritical power stations with 19 GW of capacity67. The rapid pace of recent closures shows how a 2020 coal closure programme is doable and this would undoubtedly make a significant contribution to international climate change mitigation efforts.

––––––– ––––––––––––––Low carbon ––––––– ––––––––––––––Retiring subcritical coal-fired power stations

Ben Caldecott, Programme Director

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22

Summary proposal The UK government has an aspiration for a zero waste economy, but current policies are far too tentative to realise this. What is required is a bold package of policies that includes ambitious environmental tax reform. Whilst not the subject of this paper, this should be accompanied by a wide range of other policies to increase resource efficiency (including at EU level), including other economic instruments, regulations on waste and energy efficiency, facilitation of industrial symbiosis, review of waste definitions and product specification, and intensification of green public procurement. These should be complemented at the EU level by policies to increase resource efficiency through harmonisation of environmental taxes, further application of the principle of extended producer responsibility, and more stringent regulations on waste exports and eco-design.

Why this mattersWastes are expended resources. They represent materials to which value has been added, which have lost that value, and have become economic liabilities and/or environmental costs. Reducing waste therefore reduces these liabilities and costs.

A major component of wastes in most economies is the emission of greenhouse gases (GHGs) that are discharged into the atmosphere from burning fossil fuels, from deforestation and land use change, and from agriculture and other sources of methane emissions where they contribute to potentially dangerous levels of climate change. Reducing these waste emissions is something to which all countries are committed in principle, while the UK has statutory targets for such reduction through to 2050.

Ongoing population growth is likely to take human numbers to 9 billion by 2050, while economic growth will enable an extra 3 billion people by 2030 to consume at the present levels of the middle classes in the old industrial countries. On current consumption patterns, this would lead to resource depletion and environmental damage on an unprecedented level, with inevitable negative knock-on effects on lives and livelihoods in all countries.

The operation of markets will be crucial in addressing these challenges, but they will only be able to do so if they are guided by public policy that enables them to take account of the liabilities and costs entailed in waste, which are currently external to the pricing system through which markets operate.

Pricing externalities through market-based instruments has been shown in many circumstances to be the most efficient way to reduce environmental damage and lead to the more efficient use of resources. However, with few exceptions such instruments have so far not been applied at a sufficient level to lead to a step change in waste reduction, whether this be the necessary reduction in emissions of GHGs, through carbon taxation or emission trading, or the reduction of other forms of waste, both solid and liquid.

One means of introducing market-based instruments is through environmental tax reform (ETR), which is described in more detail below.

The economic benefits of increased resource efficiencyThere are now many calculations that strong actions and investments to increase resource efficiency can generate economic benefits over the short, medium and long terms, rather than costs. One estimate puts these benefits at USD 2.9tn in 2030, of which 70% have an internal rate of return on investment of more than 10%73.

Zero wasteTax reform to boost resource efficiency

Professor Paul Ekins OBE, Director of Institute of Sustainable Resources

An economythat works better growth beyond GDP

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