Down to business
Nick Molho is a leading advocate of the business case for strong environmental regulation. The Aldersgate Group executive director tells Huw Morris about the major opportunities in moving to a low-carbon economy.
On one level, Nick Molho sees the transition to a low-carbon economy as a fascinating debate of ideas. On another, he sees a firmer objective. For the executive director of the Aldersgate Group, it is a major opportunity for business.
Aldersgate is an alliance of leaders from across the business community, as well as politics and civic society, which lobbies for a sustainable economy. It is quietly gaining more and more clout behind the scenes. Increasingly, alarming climate change warnings from the world’s scientists are the global backdrop for its work, but the UK context for Aldersgate is the government’s 25-year environment plan and crucial forthcoming legislation.
With a background as an energy lawyer at CMS Cameron McKenna, and as head of climate and energy policy at the World Wide Fund for Nature UK (WWF-UK), Molho is steeped in the challenges posed by climate change, low-carbon growth and international development. These roles were fertile ground for what he does today.
“As a lawyer, I was doing very interesting work for investors and energy companies, learning a lot about how an industry works, the considerations that make or break investment in a project, and how regulation and policy can impact on a business negatively or not, depending on how it’s done,” he says.
“A lawyer supports clients in developing projects, but you don’t take part in the debate of ideas that ultimately shapes policy, goals, targets and regulation. I was keen to help a wide range of businesses shape what should be the governmental, environmental and climate priorities and see if you can meet them in a way that is economically sound while creating opportunities.”
The transition to a more resource-efficient, low-carbon economy is a golden opportunity, he argues, reeling off sector after sector where the UK is particularly well-placed to make an international mark – from supply chains and offshore wind manufacturing to green finance and more efficient building engineering design.
Strength in breadth
At first glance, Aldersgate’s membership is an unlikely alliance. A random sample of supporters reveals Aviva Investors, Bank of America Merrill Lynch, BT, Michelin and Tesco rubbing shoulders with Friends of the Earth, the RSPB and Woodland Trust. It is a hybrid organisation that is part campaigner, part forum, part thought leader and part lobbyist, all while publishing original research on environmental policy and its implications for business. Its strength is in its different members, Molho argues.
“We are ultimately about making the business case for strong environmental policy,” he says. “We do that by having a cross-economy membership, with a few members across each sector. We are not trying to be as big as possible, because we are more interested in breadth. The more breadth we have, the more authoritative and thought-through our policies will be.”
“Everything we do is across the economy. We would never advocate in favour of one sector”
Aldersgate goes about its work by regularly publishing an array of policy briefings, research reports and opinion pieces, using this material to engage policymakers. Each year, it holds around 100 critical meetings with MPs, peers, ministers and civil servants across Whitehall, as well as the business community. All this is backed up by roundtables and various other events to debate its latest research findings and ram home key messages.
“Everything we do is across the economy,” says Molho. “We would never advocate in favour of one sector against another. It’s the subject matter we are focused on – we are not driven by the considerations of one sector or company.
“Our work is very driven and targeted on policy input, but based on evidence and business case studies. We are always thinking about the environmental integrity of what we say while ensuring it is combined with an astute economic perspective on how you can deliver environmental gains in the most sustainable way.”
A global example is the Paris Agreement, signed in 2016, which aims to keep the world’s temperature rise this century to less than 2°C above pre-industrial levels, and to pursue policies to limit the temperature increase even further to 1.5°C. Molho says this opens the door for UK exports, whatever the presidents of the US and Brazil may think. He cites estimates by the International Finance Corporation, part of the World Bank, that up to $23trn of investment will be needed in low-carbon technology to deliver the Paris Agreement during the next 15 years.
“The UK is well-placed to compete in these markets and already employs around 470,000 people,” he says. “We have multiple strengths in areas such as electric vehicles, offshore wind manufacturing, information and communications technology to help customers cut their energy use and carbon emissions, as well as smart energy installation and energy-efficient building design. We also have many big consultancies with a lot of expertise. Then there is renewable, wave and tidal energy, green finance and battery storage – all areas where we can develop industrial strength.
“It’s a growing market and it’s only going to get bigger in the next 15 years. We have a strong foundation for this market as we have made an early start in developing policies and innovation in those areas.”
The importance of legislation
“The 25-year plan sends important policy signals to business, but it is just a plan and a piece of paper”
Closer to home, the government’s 25-year environment plan and forthcoming environmental bill offer an immediate agenda. Molho welcomes some aspects of the plan, particularly its key goals for the natural environment and the principle of reversing the damage done to it. The prime minister’s presence at its launch alongside the environment secretary was a noteworthy statement of intent. However, Molho has a stinging caveat.
“The 25-year plan sends some important policy signals to business, but it is just a plan and a piece of paper. If you’re in business, you might be sympathetic to what the plan says about improving air and water quality or restoring soils – but there is only so much you are going to do on the back of a plan that may be completely overturned or modified by the next government. It sets a good vision, but for it to be credible it needs to be accompanied by legislation. That’s why the environment bill is so important.”
Molho was one of the key stakeholders behind the Broadway Initiative’s recent blueprint for the forthcoming legislation. This must have two key functions, he argues: “The first is that we maintain the same level of regulatory enforcement on environment law after we have left the EU. We need an independent watchdog that is able to take legal action as a last resort against government departments or public bodies if there is clear and persistent non-compliance or improper application of environmental law.
“Second, we should use the environment bill not just to ensure we stand still, but to go beyond the status quo and deliver the natural environment improvements envisaged by the 25-year plan, making them a legal requirement.
“Once you have that, you have a structure that businesses can invest in. You know the goals, you know there is an independent body scrutinising the government’s progress against them and you know policies will be in place to make it easier for you to invest your money and get a return on it.”
His message to any government is robust: well-designed, properly implemented and rigorous environmental regulations deliver significant economic benefits. Yet Molho also acknowledges the problems. Consistent and complementary policies are vital. He was particularly annoyed by the government’s cancellation of the zero-carbon homes requirement in 2016, arguing that “businesses work on long-term timescales, they don’t work well in a chopping and changing landscape”.
Molho is also concerned about potential gaps between policies and the goals they aim to achieve. “A target with a policy undermining it does not take you very far,” he says. “We need policies that support innovation in key sectors such as agriculture and energy-intensive sectors like cement, steel, aviation and shipping. But we need to ask what the transition risks are.
“As we move to a heavily decarbonised economy, are there industries where the changes will be quite tricky in the short and medium term, because the effects on service levels and equipment are significant? What support can we give to industries while they make those changes?
“For policies that encourage growth in renewable energy or electric vehicle manufacturing, you need to invest in skills to make sure the UK workforce is supported by what they are taught in the education system. Are we equipping younger generations with the skills they need in a low-carbon economy when they hit the job market? And what do you do for the people who might need to change industries?”
Despite the scale of the challenge – and the disastrous consequences that await if we fail to meet it – Molho is optimistic.
“During the next 30 years we need a revolution in transforming the economy, and it has to happen at a scale and pace that is more pronounced than anything we saw in the 20th century. That requires multiple actions on multiple fronts, but also a very coordinated approach so that one area does not adversely impact another.
“There are big changes ahead but the UK is well-placed to develop innovation. There are a lot of reasons to believe the UK can turn this into a concrete industrial opportunity.”
A career pushing for change
2014 - Executive director, Aldersgate Group
2013 - Head of climate change policy and energy, WWF-UK
2010 - Head of energy policy, WWF-UK
2004 - Energy law solicitor, CMS Cameron McKenna
2003 - Oxford Institute of Legal Practice
1999 - Studied English law and German law at the University of Kent at Canterbury/Philipps Universität Marburg
Huw Morris is a freelance journalist