Charlene Cranny: Tipping-Point Year on the Road to Net-Zero Reality, with a Transition Truly Under Way

Future generations will look back on 2020 as a year defined by the Covid-19 crisis, but Charlene Cranny believes it will also mark the tipping point in which “the European transition to net-zero became unstoppable”.

Cranny is the communications and campaigns director at the UK Sustainable Investment and Finance Association (UKSIF). UKSIF membership is open to financial firms and stakeholders — such as asset owners, advisers, and civil societies — who are committed to growing a more sustainable economy that works for people and planet as well as prosperity.

UKSIF aims to influence public policy, raise industry ambitions and standards, and increase acceptance and demand from investors. Cranny has seen remarkable progress over the past two years. The UK put net-zero targets into legislature, the European Commission proposed a legal framework to become net-zero by 2050, and big commitments were pledged by leaders in the aviation, oil and gas, mining, steel and cement industries.

More governments and businesses will continue to come on board, Cranny insists, because the sustainability transition has become inevitable. Nearly 200 countries and over 1,300 organisations — including numerous financial firms — have signed the 2015 Paris Pledge. But now, a new private finance agenda launched by UK COP26 should provide signatories with concrete measures to uphold that promise.

“Set against the backdrop of a European climate law and consultation on a renewed sustainable finance strategy — and mobilisation around a green and fair recovery from Covid — now might be a good time for firms to think about their own net-zero transition. Perhaps to announce ahead of the COP26 climate change conference in November next year?” Cranny wrote in an op-ed for the business strategy magazine, Funds Europe.

“In any case, the transition to a healthier economy is wonderfully underway. Together, we are building back better.”

Responsible investing and green finance will play a huge role in driving that change. Cranny scoffs at any lingering misconceptions that assume ethical investing would compromise returns.

“Morgan Stanley compared the performance of 11,000 sustainable and non-sustainable funds over 14 years (2004-2018). They found no statistically significant difference in total returns, but sustainable funds proved lower risk and outperformed in periods of volatility. A quality that held true during the pandemic,” she said.

“There are thousands of studies that in aggregate tell the same story. Sustainable investment adds value financially, socially and environmentally.”

She argues the case for ESG integration into the investment decision process of each and every investor — whether they care about sustainability outcomes or not.

“Corruption, boycotts, strikes, legal challenges, tighter regulation, droughts, wildfires, failed crops … These all have an often-huge impact on company value and ability to operate,” Cranny warns. “ESG analysis gives a heads-up in a way last quarter’s financial statement cannot. Then, if you are looking for improved ESG outcomes, you’ll engage with at risk companies to rein in those damaging behaviours.

“Companies are trawling, drilling, mining, burning, polluting and chopping vast areas of the earth’s surface. Wildlife populations are down 60 percent since 1970, 40 percent of plants threatened with extinction and 46 percent of the planet’s trees have been felled. And that’s before we even look at carbon emissions or the fair treatment of people and communities.
“But it doesn’t have to be this way. We can redirect capital to healthier, more sustainable companies and projects to protect people, places and prosperity. We still have time. Just.”

Consumers must also assume some of the responsibility to achieve global sustainability goals. Cranny has served over the past four years as the director of UKSIF’s Good Money Week, an annual awareness campaign that challenges people to think about money in a more responsible manner. The annual event takes place in October, but the resource-rich website is open all season long. Cranny encourages visitors to explore the site to find the most sustainable and ethical solutions for banking, pensions, savings and investments — options that work for people, planet, health and wealth.

The campaign has helped move “ethical money stories from niche to normal”. Cranny is a frequent guest on national TV and radio programmes and a regular contributor to newspapers and magazines. While grateful for the shift in public perception, her next personal challenge will be “to see this growing acceptance translate into increased demand and ‘good’ money options becoming the norm”.