John McDonnell’s tough message likely to trip City alarm bells as party puts climate battle at heart of agenda
— UK companies failing to tackle climate change would be delisted from the London Stock Exchange under radical plans for greening the economy being drawn up by Labour.
John McDonnell, the shadow chancellor, said he would consider changing the law if necessary to force UK-listed firms to take adequate steps to fight the “climate emergency” facing the planet.
In an interview with the Guardian, McDonnell said much of the City was already aware of the need to make faster progress towards a zero-carbon economy, but his proposals were about “weeding out those that are not taking it seriously”.
“We’ve got to signal now that we’re being serious about tackling climate change. And we’re going to use every level of government we possibly can to enable that to happen,” he said.
The shadow chancellor said that as a backbench MP he had proposed that the criteria for a listing a company on the stock exchange should include human rights, trade union rights and environmental policy.
“We’re now going to discuss how we can insert tackling climate change as one of the criteria for listing on the London stock market.”
Asked whether he would delist firms without climate change plans that are already quoted on the stock exchange, McDonnell replied: “Yes”.
Labour’s proposals are likely to set alarm bells ringing in the City, home to some of the world’s biggest natural resource companies. But the shadow chancellor said the measures were justified by the scale of the climate change challenge.
“It’s not about threatening or penalising, it’s saying here’s the steps we need to take to save the planet, it’s as simple as that,” he said.
The shadow chancellor’s tough message to the finance sector followed meetings with the Extinction Rebellion group that staged protests last month – including in the City of London. Activists glued themselves to the entrances of the stock exchange, wearing LED signs saying “Climate emergency”, “Tell the truth” and “You can’t eat money”.
The steps to banish egregious polluters from the City form part of wider Labour plans to place climate change at the heart of its agenda for government, as the party readies for a possible autumn election.
Should an election be called and the party win power, McDonnell said he would help form a “red-green” government and help push Britain to a low-carbon economy. “There’s a sweeping understanding, right the way across, that our administration has to tackle this issue in a way that no one else is taking that seriously,” he said.
Labour has a target to reduce greenhouse gas emissions to zero by 2050, or earlier if possible, while Jeremy Corbyn has acted to declare a formal climate emergency. The party has held a series of internal meetings to explore how government departments can pull together on the issue, while also discussing ways to reform the Bank of England’s powers.
McDonnell suggested that if he became chancellor before a successor was chosen for Mark Carney, the Bank’s outgoing governor, he would seek to install someone who could lead the fight for greening the economy.
“We do need someone fresh. We need someone who’s got an understanding of the challenges and climate change is a key one. And we need someone who is willing to be radical,” he said.
The shadow chancellor said he had been impressed by Carney’s attempts to drive climate change up the agenda and that someone was required to push the issue to the next stage. “That does need some radical thinking,” he said.
Carney used an article in the Guardian last month to warn that the global financial system faces an existential threat from climate change and needs reform. The governor is set to leave Threadneedle Street early next year. The search for his successor is due to conclude by October.
McDonnell has previously said the Bank’s powers to tackle climate change risks in the financial system could be overhauled, as well as measures handing Threadneedle Street a target for raising productivity growth in the UK economy.
As part of those reforms, the shadow chancellor suggested Threadneedle Street could be given a climate change target. It could also be told to apply its policy toolkit to green the economy, including potential measures to penalise carbon-linked assets.
Possible measures could include forcing banks to increase the financial reserves they hold to protect against losses for carbon assets.
McDonnell said he thought the finance sector was ready for the changes, as growing numbers of investment management firms signal they will alter investing rules to take account of climate change.
“The debate is beginning to change. The writing is on the wall and they’re going to see opportunities in the mechanisms for tackling climate change as well,” McDonnell said.
“We want to signal change is coming and we’re serious about climate change.”
by Larry Elliott, Richard Partington | The Guardian