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What the landslide Labour win means for ESG pledges

Landslide. Historic. Renewal.

Sobering. Crushing. Armageddon.

I think you know what I’m talking about. Labour’s enormous victory in the General Election has seen a seismic shift in British politics.

For UK businesses, many of which have spent the past couple of years being courted by Labour and preparing for what became the increasing likelihood of an election victory, it also brings onto the near and further horizon changes that will impact their strategic plans, transformation targets and ESG programmes (whether they now call them that or not).

The focus of that has become clearer over recent weeks after manifestos were eventually published. The new government will set its sights, it says, on economic growth, a reset of the UK’s net zero agenda and delivering green jobs. It has already been hailed as a major step forward for sustainable investing ambitions that will bring clarity and stability for businesses which have committed to long-term environmental and social targets.

ESG in for big change?

It is an astounding win, considering Labour’s drubbing in the 2019 election. But it does not come without some warnings, given the fracturing of the political right and the fact that the overall Labour share of the vote does point to polls that the Conservatives have lost, rather than their successors have won. Vocal challenges to those investments and pace of change should only get louder.

Political glee or despair aside though, the reality is that the UK continues to battle economic uncertainty and has a hole to dig itself out of. The bigger picture for business though is that the outcome is set to see UK companies attract greater investment again, and sectors likely to have most to gain from policy reforms, like housing, may receive a boost.

Across the ESG spectrum, the incoming government is set to bring most change around environmental areas, many of which could impact corporate goals and commitments. This Edie piece summarises which green policies may now go forward, headlined by £28 billion of promised investment. Many businesses have already signalled their desire for greater government support to enable their own transitions to gain greater traction.

Workforce protections and rights

Looking at social factors, there are several employment-focused pledges including strengthening trade unions, pushing for bigger minimum wage increases, and banning zero-hour contracts and ‘fire-and-rehire’ methods.

And then there’s business governance, not least the ethical choices that companies make. Unsurprisingly, that hasn’t been a mainstream news factor in recent weeks, but as this Financial Times article from last year outlines, the incoming government intends to press forward with “long-delayed reforms to the UK’s audit and corporate governance regimes, which were first promised years ago after a rash of scandals”. Expect that to produce ample opportunities for businesses to make their positions clear and underline their own practices.

On the home front, Labour has a very busy to-do-list, but in all of that there will be many changes that ESG programmes will want to take heed of. On the foreign policy front, there will be many choppy waters to navigate, many of which also stand to be a consideration in some corporate ESG goals.

Elections typically don’t have the market-moving impact that might be expected. This one may be a little different over the longer term, given the warm words about investment, growth, employment fairness and the green transition that initial media reports suggest will be well-received by businesses which have already been investing in their own long-term change.

Written by

Steve Earl, partner at Boldt Partners

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