One point raised in the letter mentioned a ban on new petrol and diesel cars by the end 2030. Doubt has been cast on this policy by Prime Minister Rishi Sunak in recent weeks, while cabinet minister Michael Gove subsequently described it as “immovable”.
Confusion around this and other green policies could stop the finance sector from investing the £50bn to £60bn a year needed to hit the emissions goal, the fund houses said, according to the Times.
The letter, sent to the prime minister, has been signed by 36 financial institutions that are members of the UK Sustainable Investment and Finance Association (UKSIF) including Jupiter Asset Management, Royal London and Scottish Widows.
James Alexander, CEO of UKSIF, said: “The global competition to capture billions of pounds of private investment in the clean industries of the future is intense. Ministers’ recent remarks are undermining investor confidence and putting the UK’s net zero head start at risk.”
The group of investors wants the government to provide a more reliable stance on long-term policy areas such as building energy efficiency standards, carbon-pricing mechanisms and the transition to electric vehicles.
On electric vehicles, Kemi Badenoch, the secretary of state for business and trade, has previously poured cold water on incoming targets, telling cabinet colleagues they will harm investment in Britain, repeating a warning from car manufacturers.
From January, at least 22% of new car sales in the UK must be emissions-free models, increasing yearly until 80% is reached by 2030. Rule-breaking manufacturers will be fined £15,000 for each non-compliant car sold.
UKSIF’s Alexander said institutional investors need consistent messaging to invest confidently in new, green-focused areas.
“The problem is, as soon as the government starts making comments or noises suggesting that might not actually be the direction of travel after all, it saps the confidence of private investors and we need that money to make this transition possible,” he said.
In another example in July, Sunak announced the government would award more than 100 new licences for North Sea oil and gas exploration before the next election, though he said these will slow the decline in UK production levels rather than see them increase above current levels.
A spokesman for the Department for Energy Security and Net Zero, said: “We are fully committed to our legally-binding target of achieving net zero by 2050. In fact, between 1990 and 2021 we cut emissions by 48% while growing our economy by 65%, decarbonising faster than any other G7 country.
“Our determination to reach net zero, while we strengthen energy security and grow the economy, is unwavering and we will continue leading efforts at home and abroad on climate change.”
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