Public or private sector: who has the most important role in driving climate action?

In May 2023, we asked a panel of six early career professionals working in water and environmental management, who has the most important role in driving climate action. But they didn’t get to choose who, out of the public and private sector, to ‘fight’ for. Here is what happened next, Chloe Goode reports

CIWEM’s Early Careers Network and Climate Change specialist panel wanted to find out whether the public or private sector has the most important role in driving climate action. So, they chose six early career professionals in the water and environment sector to debate the topic, at a live online CIWEM event. But there was a twist. They didn’t get to choose which side they were on.

The audience’s preliminary views were on the side of the public sector. The private sector panel had a tough job to do with over 76 per cent of the audience voting against them before the debate took place. Were the speakers able to convince them otherwise? Here’s what they said.

“The public sector has the most important role in driving climate action”

Atkins Consultants hydraulic modeller and project manager Ashleigh Brown

The public sector has a vital role in raising awareness for climate action in the UK. They act as a catalyst and advocate for ambitious climate action plans across all sectors, including buildings, transport, waste, water, and energy.

And they set an example to the public on best practice. They can also get the private sector on board who are large purchasers of good and services. The promotion of green procurement practices is therefore important to incentivise more sustainable supply chains.

Public companies are more visible to the public so can promote sustainable solutions and behaviours. There are many mechanisms to do this, predominantly with educational tools for schools and communities.

The water sector is a good example of this. Scottish Water’s online education hub engages with young learners on water use and Welsh Water’s secondment opportunities, for teachers to work in their education team, delivers educational provisions to schools across Wales.

The promotion of social value concepts by public companies is also important. The social value model moves beyond using money as the main indicator and emphasises on engaging people to understand impact.

Public sector companies are including this model in their procurement lifecycle, mandating that 10 per cent of evaluation weighting in tenders must go towards social value, including a delivering zero carbon policy.

It’s clear to see the public sector taking on a leadership role by encouraging best practice and providing support to the private sector.

Environment Agency flood risk advisor Sophia-Harri Nicholaou

The public sector is the planner and regulator of change.

The Climate Change Act 2008 is the legislation that underpins the UKs commitment to addressing climate change, with initial targets of an 80 per cent reduction in emissions by 2050. In 2019, the UK government declared a climate emergency and amended the target to be net zero, a 100 per cent reduction. The UK was the first major economy in the world to pass laws to end its contribution to climate change.

The public sector is adopting climate change as a strategic risk, setting the agenda, and enforcing legislation for private companies and society to follow. Whether that’s through planning policy, carbon budgets and pricing, energy company obligations or international climate action. The list goes on.

An example of this is Schedule 3 of the Flood and Water Management Act 2010, which has now been implemented by the government. Sustainable Drainage Systems (SuDS) will now be mandatory for all new housing developments in England from 2024. This has been a huge breakthrough in the sector.

Rising urbanisation, a growing population, and more intense weather patterns are causing our sewer systems to be overwhelmed. For the past 12 years, SuDS have only been compulsory on schemes with more than ten dwellings. For individual houses, there has been no formal requirement to implement SuDS within the design. Now that the government has mandated its provision, we will see positive change.

The public sector is recognising the need to accelerate the green transition. It will require long-term commitment, increased investment and collaboration between government organisations, the private sector and society.

Mott MacDonald graduate environmental hydrologist Kieran Murnane

The private sector is primarily driven by profit, whilst the public sector provides services principally aimed at societal benefit.

Apart from not-for-profits, private sector companies generally create revenue to pay their taxes, compensate their employees, and invest in their business. Profit generated should not be demonised, it is simply necessary to survive and thrive.

As profit is the primary driver, it means that investments in climate and biodiversity focused initiatives are usually a secondary consideration, and something which can be a luxury rather than a necessity.

Whereas the public sector has more flexibility to invest in climate-focused policies. An ambitious administration with a long-term plan can focus its investment on decarbonising energy production, restructuring public transport, and increasing climate resilience.

The ability to borrow for long-term climate investment is also key to this, which is more accessible to the public sector. Recent figures from the Climate Policy Initiative show that public sector climate financing is growing at almost double the rate of the private sector, globally.

The obvious rebuttal to this is that countries such as the UK with a relatively high debt to GDP ratio, there is a limit to how much the markets will allow you to borrow at one time.

However, whilst the public sector cannot solve this problem on its own, it can take a leading role. In the UK, the private sector dominates the economy, with less than 20 per cent of workers being employed by the state, something which broadly corresponds with general economic activity.

How can we mobilise this part of the economy for climate action? Public sector bodies and government departments can set clear and binding long-term policies and frameworks.

And lessons should be learnt from recent past mistakes such as the slashing of solar panel subsidies, the dragging of feet on nuclear and back-and-forth policy changes on onshore wind.

Whether it be awareness raising, policy interventions or strategic investment, there are clearly roles for both sectors. However, the public sector takes the lead, and the private sector follows.

“The private sector has the most important role in driving climate action”

Balfour Beatty FCERM business development manager Sian Platt

The private sector has a mostly commercial focus, driving research, development, funding allocation, resource allocation, innovation, and collaboration.

The private sector is reliant on government legislation and best-practice documentation, however, the speed of implementation and the race to net zero is often not quick enough.

This legislation is in some cases driven by the public sector. For example, the Construction Playbook, was written in conjunction with the private sector and details best practice for the construction sector.

The private sector also often has a more flexible approach as processes and governance which are likely to be regularly reviewed and updated to drive efficiencies. This includes the flexibility to incorporate climate action into processes.

A report from PWC in 2018 highlights that over 70 per cent of private companies had mentioned Sustainable Development Goals in their annual reporting, a figure that has surely increased since.

Considerable investment is needed to tackle the climate crisis and innovative solutions often have high upfront costs.

In the public sector, projects may be dismissed that require time to required receive the funding, resulting in slower investment. Yet private sector organisations have greater funding allocation flexibility.

According to the European Union, nearly 75 per cent of global climate finance is from the private sector. This shows the private sector has the most important role and greater possibility to drive climate action.

Arup environmental scientist Sophie Preston

The commercial framework of the private sector gives rise to a 'solutions focus'.

In terms of climate action, this means that the private sector is oriented around delivering specific products and services, which is measured by clear goals and outcomes.

The private sector can also be motivated to move faster than public sector with innovation that goes 'above and beyond' legislative and policy frameworks.

Businesses can showcase their commitment to Environmental, Social and Governance (ESG) goals by showing that they’re doing more than the 'bare minimum' if they surpass legal requirements.

There is also the potential to unlock more funding directed towards investing in nature than government schemes alone.

Historically nature-based solutions in the UK have been funded by government schemes (local municipalities and nationally via Countryside Stewardship and now ELMS).

Biodiversity net gain credits, nutrient credits and carbon credits are financial services that facilitate investment in nature. This can unlock new sources of capital for investment into improving biodiversity and carbon sequestration.

Binnies project engineer Alex Powell

Innovation is the backbone to driving climate action.

The private sector has a culture of innovation, which allows for quick adaptation to changing markets and emerging opportunities. This agility enables companies to respond rapidly and develop innovative solutions to mitigate environmental impacts.

The private sector operates in a competitive market, driven by consumer demand and profitability. This encourages the development of products and services that cater to environmentally conscious clients.

Private sector companies have the financial resource to invest in research and development, enabling them to explore and create innovative solutions. These include renewable energy technologies, energy-efficient systems, carbon capture and storage, and sustainable transportation options.

A good example of this in the water sector is KenWave leak detection technology. For use in pipelines, the Tonal Pipe Assessment (TPA) is an innovative and patented acoustic-based solution to collect pipeline condition data.

It is non-invasive and non-destructive and can be applied with no disruption to service. Its application across various industries is crucial for achieving sustainability goals, mitigating climate change, and ensuring responsible management of resources and infrastructure.

Private sector companies also have the capacity to scale up innovations and deploy them on a larger scale, investing in infrastructure, production facilities, and distribution networks. This accelerates the transition to a low-carbon economy.

To reach climate action at scale, with a long-term perspective, we need solutions that can thrive from the commercial framework found in the private sector. And innovation will provide the breadth and depth of ideas required to meet the magnitude of the climate challenge in front of us.

We need climate action now and there's no time to lose.

Results

After many convincing arguments on both sides, the second vote took place, showing a slight shift towards the private sector, but by only 3 percentage points. Considering the preliminary views of the audience, it was a tough crowd for the private sector panel to sway.

It is clear that the public and private sectors have important roles to play in the face of the climate crises. But if you had to pick, which do you think has the more important role?