Expert comment: Climate Change Committee report

Law and finance experts from the University of Reading have offered their insights on the Climate Change Committee’s 2023 report to Parliament, published today (29 March), which assesses the UK’s progress in adapting to climate change.

The Committee examines climate risks facing a range of sectors including buildings, health, nature, and food security. It also identifies key ‘outcomes’ in terms of climate resilience for each sector and highlights policy measures needed to ensure those outcomes.

The aim of the Committee is to assess the progress made under the relevant UK National Adaptation Programmes (NAPs). In its 2023 Report to Parliament, the Committee states that the 'second National Adaptation Programme [covering 2018-2023] has not adequately prepared the UK for climate change.' The next NAP (NAP3), it argues, must involve a 'step change', with greater ambition and a greater focus on the delivery of effective adaptation across government.

Professor Chris Hilson

Commenting on the report’s findings, Professor Chris Hilson, who is a Professor of Law at the University of Reading and Director of the Centre for Climate and Justice, said: “The Report comes after a year when events have all too clearly shone a light on the UK’s vulnerability to climate change, ranging from a housing stock poorly designed for heatwaves, to a food supply chain that lacks resilience to extreme weather events abroad.

“The key message from the Report is that while progress on policy and plans is often not too bad, work on delivery and implementation leaves a lot to be desired. Problems with the latter are often compounded by a lack of reliable data.

“It is hard to sum up the range of substantive measures that the Report identifies. However, there are two worth highlighting. The first is that climate adaptation policy must be joined up with policy on mitigation. With homes overheating in summer heatwaves for example, there is little point spending money on this without at the same time tackling poor insulation and energy efficiency to cope with cold winter temperatures.

“The second is that climate adaptation may offer business opportunities and not just new costs. The Report highlights in particular that climate adaptation services are likely to develop into a rapidly growing global industry, including in financial services, where adaptation responses can be better built into products like insurance. For a Government focused on growth, this is an important message.”

Professor Simone Varotto

Professor Simone Varotto, Professor in Finance at Henley Business School and the ICMA centre, commented on the conclusions drawn in the Committee's chapter on finance. He said: "The report calls for education to “embed climate adaptation skills within companies”. The tripled accredited Henley Business School and the top ranked Meteorology Department at the University of Reading have recently launched a new MSc Climate Change, Sustainable Business and Green Finance precisely to address shortages of climate expertise by training professionals with leading-edge knowledge on climate adaptation, mitigation and climate finance. 

"The focus of the report on adaptation may detract attention from the competing objective of mitigation. Many companies, particularly SMEs, may face a trade-off between the adoption of climate change mitigation strategies aiming at reducing emissions, and adaptation strategies that increase the firm’s chances of survival. Without government support, limited financial resources may force small businesses to direct their efforts to the more urgent adaptation challenges rather than invest in sustainable green solutions. This short-term behaviour, which may result from policies with a narrow remit, could impair the country’s ability to meet its longer-term net zero targets. 

"For the financial sector, adaptation will mean higher capital requirements to increase the ability of financial institutions to absorb climate related losses. This poses serious political challenges as the banking lobby has been very determined to dilute regulators’ efforts to capitalise the sector. But higher capital charges may encourage banks to divert lending to retail and corporate borrowers that are less prone to climate risk. The Government should protect these categories of borrowers to avoid a credit crunch in large sections of the economy. 

"The report emphasises adaptation to physical risks. But a more pressing issue for many businesses is adaptation to transition risks. Quantification of transition risks is a big challenge that may present bigger unknowns than physical risks."

Richard Nunes

Richard Nunes, Associate Professor of Planning and Sustainability at Henley Business School, said: "The Climate Change Committee (CCC) report highlights long-standing debates and policy coordination gaps. These policy gaps or opportunities are centred on the inconsistent implementation and delivery of climate resilience measures, which the existing National Planning Policy Framework is unable to address as a normative guidance document. 

"However. the CCC report does not go as far as to stress the need for a national spatial plan to help address several of its specific recommendations e.g., flood mitigation and financing the retrofitting of existing neighbourhoods. As a strategic coordinating mechanism, a national spatial plan can enable a scale of strategic implementation and coordination required to address our spatially varied climate risk priorities - with the necessary urgency required. 

"Examples include our ability to effectively link the offsetting of legally mandated on-site biodiversity net gain with coastal management and flood mitigation in a nationally strategically coordinated fashion. 

"A national spatial plan would hold the potential to effectively address climate resilience in way that can generate value uplift for new (re)development, while also reducing the costs of preparing planning applications and the time to process them."