The Net-Zero Innovation Portfolio & The Budget’s ‘Green’ Theme:
It’s no secret that the Pandemic has highlighted environmental, social and governance factors. So, it was little surprise to see a ‘green’ theme heavily reflected in the Chancellor’s latest Budget. First came the announcement of the National Infrastructure Bank planned for Leeds. Then came the news that the Bank of England’s remit would be revised. It would be brought in line to reflect the Government’s commitment to move to ‘net zero’ by 2050. Finally, the Chancellor confirmed plans for a new Net-Zero Innovation Portfolio – and this is the point at which most people seemed to start saying ‘what’s that?’ and ‘what will does it mean for the economy.’
So, without much further ado, let’s take a look!
The Net-Zero Innovation Portfolio
It’s an almost universal fact that the unknown causes anxiety where there needn’t be any. So, in answering what the ‘Net-Zero Innovation Portfolio’ is, we need to start with the basics…
What is ‘net-zero?’
We like to think of ‘Net-Zero’ as ‘Green’ equilibrium. It basically refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. We reach ‘net zero’ when the amount we add does not exceed the amount taken away.
The UK has committed itself to reach ‘net zero’ by 2050. Many initiatives designed to achieve this are already in place. Banning the sale of new petrol and diesel cars from 2030 is probably the most obvious (current) example. And, the Net-Zero Innovation Portfolio is simply another. The idea is that it will provide funding for low carbon technologies and systems.
The Chancellor’s Proposal
Alongside the Net-Zero Innovation Portfolio, the Chancellor announced separate funding to support Scotland’s transition away from oil and gas. “If we want a better future,” he said, “We have to do things that have never been done before.” Sustainable businesses would have a “key role” to play in his “investment-led recovery.”
Naturally, the idea has been met with mixed reviews. Critics have been keen to point out the large-scale construction in developing economies such as China and India. The UK’s commitment to net-zero, they argue, will make little practical difference and may come at a considerable cost.
Supporters, though, see it as an integral part of the UK Government’s industrial strategy. They believe it could put the UK firmly at the forefront of global markets for clean technology.
Take Away (not the edible kind!)…
The surge in ESG initiatives we are currently seeing look set to stay. It is likely we’ll be seeing even more offshore wind farms in the coming years. It is also likely that we’ll see even more battery technology to store clean energy and carbon capture. The Government’s briefing paper detailed in no uncertain terms that as much carbon as possible should be captured and returned to under the North Sea. So, they seem to be pressing very much full steam ahead.
Naturally, this will all be reflected in new and exciting opportunities within the financial world. So, whether you are new to investing, or already a seasoned investor, ESG opportunities are definitely worth some thought. And we can help you there!
At Lewis Brownlee Financial Services, we are committed to a sustainable future. As a business, we believe that for us to ignore the opportunities arising from this movement is a failure not only to our clients but society in general. As such, we actively speak to our clients about our ‘responsibly managed’ portfolios and how they can make a change to do good with their money. So, if this is something that interests you, please call us on 01243 767469. We would be more than happy to talk you through! Alternatively, you can find out more about our response to ethical investing on our designated web page.
Written by Ian Barnett
Ian is an experienced Chartered Financial Planner as well as being a Fellow of the Personal Finance Society, with over 25 years’ experience in the financial services industry. With a broad range of client experience and expertise, Ian specialises in financial matters from Pre-Retirement Planning to Inheritance Tax Planning and all points in between.