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7 July 2020updated 12 Oct 2023 10:58am

Why the UK needs a Green Recovery Act to transform its economy

The current legal framework enables and rewards the behaviours that are driving the climate emergency. 

By Mathew Lawrence

We are at a momentous juncture. On the eve of his set piece economic statement tomorrow (8 July), Chancellor Rishi Sunak is being urged to act with the ambition the current crisis demands. Across the world, a vital movement is demanding justice long denied, seeking to dismantle interlocking forms of oppression, state violence and systemic racism. And looming over everything is the mounting climate and environmental emergency – an emergency that reflects the accumulated effects of an extractive and unequal global economy that is bound up with ongoing histories of the empire and colonialism. These outcomes are not aberrations. As signs at recent Black Lives Matter demonstrations across the world spelt out, “The system isn’t broken, it was built this way.”

The case for a new settlement emerging from the Covid-19 crisis is, therefore, compelling. If we can secure a transformative and green economic recovery, this could be a watershed moment, a break with an unsustainable present and unjust past towards a reparative and equitable future. But there is no guarantee this moment will not deepen and accelerate the conditions of our long crisis: economic inequality, social injustice and mounting environmental breakdown.

In this context, a transformative green stimulus is vital. There is both the urgent need and unprecedented opportunity – given the historically low cost of public borrowing – to deliver the scale and quality of investment required to rapidly decarbonise the economy, create the good green jobs and industries of the future, and maximise public affluence. From a retrofitting revolution that guarantees everyone a decent, secure home and beautiful environment to enjoy, to centring and valuing care work in all its dimensions, the opportunities are as varied as they are transformational. The Chancellor must grasp them.

But a green stimulus, however urgent, is not enough. Polls repeatedly show overwhelming public support for a new economic model. To seize this moment, we need an ambitious reordering of the legal frameworks governing the UK’s economy. We should use the law to reimagine our foundational economic and political institutions and hardwire a new purpose and governing logic into the economy so that it is democratic, equitable and sustainable by design.

The law powerfully constitutes the economic order, shaping who gets to make decisions within the economy and define its purpose. Our current legal regime allocates a near-monopoly on co-ordination rights within the economy to capital, and stacks bargaining power in favour of employers and asset-owners against labour. It also shapes our interaction with the environment. As the US legal scholar Jedediah Britton-Purdy argues, the law does not just manage a pre-existing and untouched nature; it is itself a mechanism for active world-making, shaping everything from the design of our energy and transport system, to agriculture and the built environment. But the law too often treats the environment as an external, inexhaustible source of value, falsely separating the economic from the environmental, and enabling unsustainable levels of emissions and extraction.   

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In doing so, the law both enables and rewards the behaviours that are driving the climate emergency while consolidating deep inequalities of power and resources within society. Our current crises are inseparable from the law and the outcomes it generates. 

We cannot, then, “build back better” without a transformative and durable reconstruction of the law, one that recognises the “economy” is not a separate, autonomous zone, prior to politics, but rather one that emerges as a result of legal and political decisions. This transformation must both decarbonise and democratise economic activity, joining environmental and economic justice together. In contrast to the near-monopoly on decision making-rights currently enjoyed by property-holders, we need the law to disperse and pluralise economic control and association. Rather than the naturalisation of inequality and unequal power, legal frameworks must create the space for social participation in economic and social life. And instead of enabling activity that is driving us deeper into crisis, we must approach environmental law as a form of public provision. That requires treating social and environmental needs not as external to the economy, but as central to its operation and purpose.

To that end, today, Common Wealth – the think tank of which I am director– has published its Green Recovery Act, a draft act of parliament that would help drive economic recovery while securing 100 per cent renewable energy; ending climate damage from coal, oil and gas; creating employment, and ensuring clear skies, clean cities, a prosperous countryside and a thriving planet. 

The act would radically overhaul the primary legal framework currently governing these issues: the UK Climate Change Act 2008. While the 2008 act was rightly hailed as an ambitious attempt to fight global warming, it is no longer adequate for our economic and environmental needs. To take one recent example of the scale of the challenge, the Bank of England’s corporate bond holdings – which broadly reflect the distribution of the market – are consistent with average temperature increases of 3.5°C above pre-industrial levels by 2100, a future in which, in the words of JP Morgan Chase – one of the largest funders of the fossil fuel industry – “we cannot rule out catastrophic outcomes where human life as we know it is threatened.” Yet, that is the world we are hurtling towards, driven by the design and operation of our economic and financial systems.

The Green Recovery Act, by contrast, would put in place legal mechanisms to accelerate the fairly managed transition of our economy to clean energy and transport systems, scaling up renewable energy and green jobs while guaranteeing full employment, incomes and training for affected workers. It would give local authorities the power to deliver local Green New Deals, from reviving clean and free public transport, to upgrading building stock and green pension investments. And it would reshape financial and corporate governance, replacing GDP with a 21st-century set of indicators, ensuring democratic participation rights for workers and savers, and requiring company directors to invest in a clean transition. Finally, it would embed principles of climate and global justice in international agreements, helping repair past and ongoing harms.

This may seem a radical set of measures, but in an era of environmental breakdown and structural inequality, transformative action is the safest and fairest path forward. A dogged defence of the status quo will only guarantee the acceleration of environmental breakdown and entrench corrosive inequalities. In this context, incrementalism – or worse, inaction or the embrace of a fossil fuel-powered future – is a dangerous false comfort, while bold action is a modest proposal. 

This week, the scale and ambition of the Chancellor’s actions will rightly dominate attention. But if we are to meet this systemic crisis with an agenda for systemic change, we must go much further. A double movement – transformative investment and a rewriting of the rules governing the economy – is required to decarbonise and democratise our futures. We need a green stimulus and a transformative greening of the law.

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