Smart regulation crucial to deliver environmental improvement and net zero

• New report from the Aldersgate Group and Frontier Economics outlines four key principles required to ensure that the UK’s regulatory landscape enables nature restoration and net zero. It proposes a system that drives environmental improvements and emissions reductions while supporting economic growth.
• To effectively address climate and environmental concerns, regulation must consider the whole of the environment from a multidisciplinary and cross-sectoral perspective. It must also target outcomes and be supported by a full cost-benefit analysis which considers the cost of inaction as well as societal and environmental benefits.
• The report also calls for regulators to be provided with the funding and expert resources they need to ensure effective enforcement.

Today, the Aldersgate Group publishes a new report, commissioned from Frontier Economics, that outlines how the UK’s regulatory landscape can deliver climate and environmental benefits while supporting economic growth.

While the UK has set high ambitions for tackling climate change and restoring the natural environment domestically and internationally, progress towards delivering climate and nature recovery goals is too slow. Well-designed, implemented and enforced regulation has a crucial role to play in unlocking progress on the ground. This new publication outlines a practical framework to place the environment and net zero at the heart of good regulation design, supporting the UK to achieve its ambitions and boost the economy.

The research draws on extensive engagement with Aldersgate Group members, including major businesses and NGOs. It builds on case studies from the water and transport sectors to understand the UK’s current regulatory system, its drawbacks, and how these can be addressed effectively.

Its conclusions call for a system that considers the whole of the environment in regulatory review and design, takes a multidisciplinary and cross-sectoral approach, and embeds fairness at its core. It proposes that incorporating these principles into the UK’s regulatory framework will maximise environmental benefits while minimising societal costs and supporting the net zero transition.

Good regulation can drive economic growth across the UK, by providing businesses with a level playing field and the signals needed to incentivise investment. This can in turn support the creation of markets and jobs, and increase the UK’s competitiveness internationally.

Rachel Solomon Williams, Executive Director, Aldersgate Group, said: “The UK’s regulatory framework requires genuine systems thinking if we are to deliver on our climate and environmental targets. This publication provides a set of principles that policymakers should embed in the process of creating regulation in order to meet these goals. Through our engagement with businesses across a range of sectors we’ve found that well-designed regulation can drive economic growth and encourage innovation, while also improving climate and environmental outcomes. By adopting this approach, the UK Government can bolster efforts to deliver on our environmental pledges while also growing the economy.”

Matthew Bell, Director, Frontier Economics, said: “Economic growth that is consistent with reducing greenhouse gas emissions and restoring nature sits at the heart of much debate. Evidence increasingly suggests we are in danger of failing in all three areas:  too little growth, failing to live up to targets to reduce emissions or to restore nature. Traditional regulatory approaches of treating each topic in its own silo have not worked. The framework outlined in our report encourages policymakers and regulators to capture the complexity of these issues and, in doing so, provides a practical step forward for regulation to meet this triple challenge.”

Robin Price, Director of Quality and Environment, Anglian Water, said: “Our ability to deliver a healthy ecosystem must be underpinned and enabled by a strong regulatory framework. The ever-worsening climate and biodiversity crises mean that the scale and urgency of this challenge are bigger than ever. Industry, regulators and government must collaborate to develop a holistic approach to protecting and restoring the environment. This report provides a groundwork for a new approach. We commend it to Government as a framework to drive meaningful regulatory reform to secure and enhance our natural world.”

Sue Riddlestone OBE, CEO, Bioregional, said: “Our nation urgently needs a joined-up response from Government, where policy creates a fair framework and that ‘level playing field’ for business to operate within, which adds up to net zero carbon and nature positive in line with our national commitments and what the science tells us is necessary. We have a historic opportunity to re-build our juddering economy in a truly sustainable form. This report sets out principles to help the incoming Government to begin to go about doing just that.”

Steve Andrews, CEO, Earthwatch Europe, said: “Earthwatch Europe endorses the call for holistic environmental regulation. By adopting the report’s guiding principles, policymakers can help reconcile economic development with environmental stewardship, unlocking innovation and bringing us closer to a net-zero nature-positive world.”

Caroline May, EMEA Head of Environment, Health & Safety, Norton Rose Fulbright, said: “To accelerate the benefits of decarbonisation and nature restoration across the whole of the economy, regulation has a crucial role to play in providing a framework against which actions can be evaluated and judged. If those taking the correct action can see rewards (and conversely those who do not are penalised) then the greener economy can prosper. In this way more certainty can be provided for longer term investment and innovation. The role of law and lawyers in advising in this area has never been more urgent or important as we stand at a tipping point towards net zero by 2050. It is welcome to see this report from Aldersgate Group provide a practical framework against which policy makers and politicians can design more holistic regulation which can help unlock delivery on the ground.”

Dr. Márcia Balisciano, Chief Sustainability Officer and Global Head of Corporate Responsibility, RELX, said: “The Aldersgate Group and Frontier Economics four key principles of environmental regulation – considering the whole of the environment, with a multidisciplinary and cross sector focus, and always fair – is an enlightened approach that should be the foundation for legislation to combat climate change that stimulates the economy with green investments to benefit people and the planet.”

Katie-jo Luxton, Executive Director of Global Conservation, RSPB, said: “The future health of our economy and communities relies both on the restoration of nature and tackling climate change. This new report adds to the wealth of evidence that shows the vital role of well-designed, implemented and enforced regulation in protecting and restoring nature. Done correctly it also drives economic growth and innovation. We have the evidence, we now need to see urgent action to make sure that the existing regulatory framework is used effectively and improved when and where the need arises.  Nature can’t wait.”

Andrew Wilson, Director, Corporate Communications and Responsible Banking, Santander UK, said: “To accelerate the decarbonisation of the economy and restore nature, it is vital that we have a proportionate regulatory system which incorporates and acknowledges the UK’s climate and environmental ambitions. Regulation at its best should support the UK’s strategic growth goals and competitiveness while also aiding the transition. Today’s report should provide politicians and regulators with a clearer understanding of how regulation can be designed in a way that is consistent with these aims while driving economic growth. In particular we would welcome further considerations on how regulation can work across sectors and consider the whole of the environment.”

Dr. Adam Read, Chief Sustainability and External Affairs Officer, SUEZ recycling and recovery UK, said: “The principles outlined in this report challenge the common approach to environmental regulation in the UK which has often been oversimplified, and urges policymakers and regulators to consider the complexity of the environment and nature. To deliver on its net zero and nature goals the UK needs to adopt a holistic, cross-sector approach that considers all aspects of the environment. The reality is, good environmental regulation is better for economic growth as it has the potential to create the conditions to unlock investment, incentivise innovation and allow the economy and people to prosper.”

Guy Thompson, Group Sustainability Director, Wessex Water, said: “There is a pan-economy opportunity for the UK to shift to an outcome-based collaborative model of regulation to deliver its environmental targets.  We know there is a finance gap to meet our nature recovery targets and that private investment is essential to close this gap.  Changes to the regulatory framework could unlock private investment in environmental outcomes without significantly adding to cost of living pressure and reducing the affordability of housing and utility bills.  This Aldersgate Group report provides the basis of a policy framework that could level the regulatory playing field across all sectors and enable a fair and efficient transition to a net zero and nature positive economy.”

Joan Edwards, Director of Policy and Public Affairs, The Wildlife Trusts, said: “The economy is a wholly owned subsidiary of nature. From our food security and soils, to climate resilience and flood protection; restoring our natural world is the foundation of the vibrant and growing economy of the future. Smart regulation and properly funded enforcement are essential to give businesses the confidence to invest in the innovative practices to achieve net zero and drive nature’s recovery across the UK. Continuing with business as usual, investing in the polluting infrastructure of the past and stripping back environmental protections, will erode the very foundation on which our economy sits.”