In a wide-ranging interview with AIQ, the former UK minister of Energy and Clean Growth explains why the private sector needs a seat at the negotiating table if the world is to solve the climate crisis. Words by Miles Costello.

The former cabinet minister campaigned for tougher online safety measures

A conversation with Claire O’Neill on her career barely two years ago might have focused on how this former cabinet minister waged a highly public campaign over the need for tougher online safety measures, particularly to protect children.

It might have lingered on the fact that David Cameron’s one-time rail minister admitted to being “ashamed” to be in the job while tens of thousands of commuters endured chronic disruptions because of strikes on Govia-owned Southern trains.

It would certainly have explored how a president-in-waiting of the forthcoming UN climate change conference in Glasgow, for which she put together and led the cross-government bid, was summarily sacked for deciding not to stand for re-election as an MP at the last general election. 

And, particularly stingingly, it would have covered how it felt to be on the receiving end of a hostile media briefing from Dominic Cummings, the UK prime minister Boris Johnson’s now-departed chief of staff that came as a fact-free surprise to those who had worked with her.

The climate emergency is intensifying

Almost two years later, each of these subject areas is still highly relevant. Debates about the availability of potentially offensive or abusive material on the internet rage on; there are still strikes on the trains and infuriating delays to journeys remain commonplace. The Glasgow summit, or COP26, for the Conference of the Parties, is just four months away and now has the former business secretary Alok Sharma at the helm. The climate emergency is intensifying.

Moving on

It’s not that O’Neill is unprepared to talk about her past. This often outspoken, sometimes pugnacious, politician has a wily tactician’s grasp of the narrative and is as happy chatting about how she “loved my trains” as she is reflecting on the significance of Joe Biden's arrival in the White House. (Enormous, as you might expect.)

Time is ticking for the world and O’Neill just wants to get on with it

But what quickly emerges, in this far-from-everyday conversation with a woman whose movement from public life to the private sector has been almost seamless, is a picture of someone who has clearly moved on. Time is ticking for the world and O’Neill just wants to get on with it.

Perhaps the perfect example lies in her thoughts on Cummings, who might well expect to be close to the top of her hit list. Not a bit of it.

“Let’s get Dominic Cummings back to ‘get net zero done’ – a bit like Brexit,” she says, knowing full well that her comment might make mischief. “Let’s work out how to really sell this. [He] is a great tactician who did a lot of very good stuff around big data at Number 10 and arguably that was one of the real ways we strode out of the pandemic.

“I just think that level of fearsome focus on something is missing in the climate space. And that is the problem with the whole-of-government thing. If you are convinced that you need to harness consumer attitudes and change behaviour, and [asking] how’re you going to do it – we don’t have those people having that conversation in government.”

Now away from Westminster and widely acknowledged as a leader in the field, O’Neill has been busy pursuing her own vision for how to make change happen. Her main job, for example, is serving as the managing director for climate and energy at the World Business Council for Sustainable Development.

This influential Switzerland-based organisation, set up 26 years ago as the place where the world’s most ambitious companies work together on sustainability action, is now considered to have an ambitious member-led vision and plan for sustainable capitalism, led by the chief executives of more than 200 companies.

The world can only really tackle the climate problem by harnessing the power of the private sector

She also advises the influential global institute Public Policy Projects on COP and climate action and has just taken on a one-day-a-week job as a senior adviser to the business advisory firm FTI Consulting, in whose central London office she is sitting for this conversation with AIQ

All these positions shine lights on a conviction that accompanies her pragmatism and permeates so much of O’Neill’s pronouncements: that the world can only really tackle the climate problem by harnessing the power of the private sector, companies and the financial community, alongside the authority of governments.

COP out

As it stands, the issues with this year’s Glasgow COP are as much about what is not going to happen as what is.

“If you were going to design a global system for decarbonisation you probably wouldn’t start with what we’ve got, but we have to make it work,” O’Neill says. “COP’s challenge is that it’s based on the Montreal Protocol, based on what delivered a pretty successful solution for the removal of chlorofluorocarbons, in terms of its framework, in terms of the government participation, in terms of its negotiation structure.

The problem is that no one economy is dependent on the manufacture of chlorofluorocarbons

“The problem is that no one economy is dependent on the manufacture of chlorofluorocarbons and so, when you’re dealing with something as existential as reforming every aspect of the economy, this intergovernmental process is really difficult. COP has been bedevilled since day one with much bigger questions over equity, over common but differentiated responsibilities, over big structural and developmental questions, which of course are really important when you’re basically telling countries they have to do things very differently.”

In shorthand, that means governments can be harder to herd together than cats, internecine rows break out over who pays what and when, and individual agendas quickly spring to the fore. The result all too often is treacle.

But, of course, then came the landmark Paris Agreement struck in 2015, when 196 countries came together to commit to keep the rise in the world's temperature to below two degrees above pre-industrial levels and take whatever steps possible to limit the increase to degrees. This should have smoothed the wheels and made the forthcoming COP considerably easier. 

“Before Paris, we had made attempt after attempt to have some form of serious breakthrough, some form of global legally binding structure, something that would enable us to move forward collectively, and it just ran into the sand,” O’Neill goes on.

“Paris turned that on its head and said, basically, we’re not going to try and mandate a global outcome, we’re going to have a global target but the activities are going to be individual, so each country will do its thing. It is classic devolved responsibility.

The COP presidency in Paris broke all the rules

“The COP presidency in Paris broke all the rules; for how important this was, for how much the whole of government would be involved. This was not just a conversation about climate; it was a full-court government process and activity, which worked. They mobilised business leaders, they mobilised financial leaders, they mobilised world leaders. It was an amazing effort.”

Getting back on track in Glasgow?

That seems more like the set-up as O’Neill would want to see it: industry and the public sector in tandem. Fast forward to a looming Glasgow meeting, though, and some of the more obvious cracks at an intergovernmental level are beginning to show.

There is the promise countries will set out ever-more ambitious targets to reduce emissions by 2030, but there are also tensions, not least over the commitment by the world’s leading nations to provide $100 billion in funds each year to ensure developing nations can play their part.

“What are we expecting in Glasgow? We’re expecting a text that says the Paris rulebook was completed, countries brought forward their nationally determined contributions; we’re looking at a two-degree outcome and we have a framework to deliver it in.

The problem is that financial institutions, companies and consumers don’t have a formal role at COP

“That doesn’t feel as urgent as it should be when you’ve got Lytton temperatures [Lytton, a village in British Columbia, in July recorded Canada’s highest ever temperature of 49.6 degrees Celsius, 20 degrees higher than the historical average], the Arctic on fire and carbon dioxide (CO2) at levels not seen in 4.5 million-years.

“I see urgency in the protestors, in NGOs [non-governmental organisations] and in the boardroom. I see companies every day who just get this – it’s in the corporate DNA now. It’s not a sustainability nice-to-have over in the corner.

“The problem has always been that those who actually hold the strings in the real economy – financial institutions, companies, consumers – don’t have a formal role at COP.”

In terms of actually getting things done, this is compounded by the fact that the environment ministers who usually act as the delegation leads at COP are, to use her words “in most cases quite far down the totem pole in government pecking orders”.

“What we’re starting to see now, and this was part of [my] action plan for Glasgow, is: if we are serious about tackling global warming, how do we build on top of what is actually quite fundamentally a difficult structure to make it work; what more do we need to do?”

Wading through treacle

So, how would she make the treacle flow a little more freely? 

If she had the chance to reinvent COP, O’Neill would get the world’s most engaged companies and their investors around the negotiating table and ensure they had a say. She’d also get subjects on the central agenda that are currently nowhere to be seen, such as methane, coal, hydrogen, and biodiversity.

She’d democratise the event; live-streaming it for the world to see, and ensure more women were in positions of negotiating clout. She’d centralise emissions data gathering, analysis and reporting.

And she would make sure there was more money on the table for the world’s most important project, rattling the collection box, not just at governments, but also at the private sector and philanthropic organisations such as those backed by Amazon’s Jeff Bezos and Microsoft founder Bill Gates.

There are clearly governments who are saying: we absolutely get this

“There are clearly governments, and I’d put the UK, Germany and much of the EU, the US, Argentina in this category, who are saying: ‘we absolutely get this, we’re going to increase our ambition and come up with policies and plans to show it’. But it’s all falling on deaf ears without the cash.

“So, deal with the problem and put more funding in place. And why not use the International Monetary Fund? The IMF’s come up with its new special drawing rights programme [assets designed to supplement the reserves of member countries]. As we did with debt relief in the 90s, let’s put that into the clean transition.” Let’s not forget, she adds, that when government funding starts to flow, private capital more happily follows suit.

To be clear, the $100 billion a year in funding commitments agreed by developing countries and reaffirmed recently at the G7 summit is nowhere near enough, she says.

“The $100 billion number of how much money the developed world should transfer to the developing world has been floated around for six years. But it’s never been agreed how much of that is private finance. It’s underfunded,” O’Neill says.

“When you talk to the action team at COP, they’re very keen to show there is huge public and private momentum, focused on the big issues. [But] how do we get rid of methane; how do we make coal history; how do we have a massive ramp up in carbon removals in a way that is very nature positive; how much money is the private sector going to commit to innovation? These big questions have got to be asked, and they’re not on the agenda at COP. The challenge is that no-one is quite sure what good looks like when it comes to the core negotiations.”

UK: Leading or lagging?

It may be that the private sector is clearer about “what good looks like”, or at least how to establish it, but we’re not quite finished with the climate-related shortfalls at government level.

The targets keep moving and the “easier stuff” has already been done

O’Neill is complimentary about the overall ambition and historical action of the UK on climate, and recounts how in her former role she got used to pointing out to disbelievers that the UK had decarbonised more deeply than any other industrial economy. The challenge now is that the targets keep moving and the “easier stuff” has already been done.

The Johnson administration has come up with some new extremely ambitious targets, including to slash carbon emissions by 78 per cent by 2035 (against 1990 levels) as part of a drive to become net zero by 2050. Again, the scale of this leaves many concerned, especially as the plans tend to be long on big targets but short on details and committed cash.

The UK has a strategy to foster the world’s first low-carbon industrial sector, a clean energy plan, including backing renewable projects in the North Sea, and it has recently floated the idea of widening its emission reduction scheme. However, in its latest progress report, the independent Climate Change Committee made clear its view that there was a woeful shortage of concrete policies.

“The UK government is in a uniquely visible position, partly because we put in place a governance structure few countries have. We have the Committee on Climate Change, which is an amazing institution, and we have carbon budgets, so ministers have to defend a carbon budget which is 20 years in the future. There is a level of scrutiny and governance structure that is world class.

“As much as we can look at the ten-point plan [the so-called Green Industrial Revolution] and say it’s long on ambition and short on funding, there is a real consciousness of the need to fill the gap. What we need is just a dose of boosterism almost.”

Is this where Cummings comes in, perhaps?

“If I was still involved, I’d be saying: how do we combine the levelling up and green agendas? You can see on Teesside; we’ve got conversations about the Gigafactory [a battery factory for Elon Musk’s Tesla car manufacturer]. Let’s think about how we convert some of these towns and cities to be net zero now.

Let’s be bold about what we want to do and spend some of that money very specifically.

“Let’s be bold about what we want to do and spend some of that money very specifically. If we’re going to do a home refurbishment [initiative], rather than trying to spread out the jam to 35 million householders, let’s focus in on 100,000 homes and make them great and drive down the cost of the technology at that point. What we need now is proof points.”

O’Neill denies she is letting the government off the hook, even though the Committee, which made 200 policy recommendations, made clear that with every month wasted it was looking increasingly unlikely to meet its target.

“It needs more money. It needs a whole-of-government approach, which is difficult for all sorts of reasons. You have ambitious departments, like the Treasury and Transport, but for others it’s just not in their DNA. But I genuinely think the government is very committed to this decarbonisation agenda. We can quibble with the details, but I think it’s more than skin deep.”

Asked about whether it might be possible to have a minimum global price for carbon, as has been suggested by Janet Yellen, Christine Lagarde and other policymakers, she is categorical.

“Global carbon pricing is never going to happen – there’s no mandate. But why can’t we have a G7 voluntary carbon price, as they started to talk about with tax rates? Let’s have a convergence zone for carbon pricing in the G7, which could then be really interesting.”

Public-private partnerships

What could work globally, though, is an agreed set of standards, including on disclosure, as well as pooled data and a co-operative approach in designing models for climate change partnerships.

Let’s pick a solution and fund it together

“There are some interesting examples, things like the P4G Partnership, led by Korea, Denmark, Germany and some others, which is focused on public-private partnerships. Let’s pick a solution and fund it together. That for me is a very good way of doing it, rather than arguing about what are essentially transfers of aid which, truthfully, are often not well targeted.”

And here it is again, the view that the only real way forward is to combine the forces of governments, the private sector and the financial community. So, what is it that companies have that governments lack?

“I work with the most ambitious companies and am struck by how compelling it is when you hear CEOs – of Unilever, or Olam, or Bank of America – making this case; that this [dealing with climate change] just isn’t an option, it’s how it’s going to be.

“Only 20 per cent of the Fortune 200 have set a net-zero target, so I have to slightly temper my enthusiasm. But there is clearly something happening in corporate boardrooms. It’s partly through conviction, partly through an assessment of risk – the private sector is really good at discounting risk and return in a way government isn’t. And they are realising this will fundamentally change the way they do business, as COVID-19 did. But there is no insurer of last resort sitting around – we’re going to have to deal with this.”

There are pitfalls, naturally. Not all parties want to go at the same pace; some companies pay lip service to an idea they are not entirely invested in, and others think they can strike out single-handedly and win the day on their own.

Investors: Don’t cut and run

This is perhaps where institutional investors come in. When companies don’t commit to improving their practices, or even for the big fossil-fuel polluters, O’Neill will have no truck with institutional investors just dumping their stakes and buying only solidly green investments. That, to quote a colleague, would just be “lazy investing”.

CEOs look at the share price, who’s investing in them, and their employee feedback

The role investment institutions can play is “massively important”, she says. “If you think about what CEOs look at: they look at the share price, at who’s investing in them, and at their employee feedback.

“One of the nuances that’s emerging is how investors can help companies who are already on the journey go faster. At the moment, there’s black or green; you’re in one camp or the other and you’re not on the continuum. It’s particularly true in the heavy-emitting industries. It’s just not helpful. If you look at the demand for fossil fuels, for example, it continues to go up. And, as much as we talk about how we’re going to crack that demand with massive investment in renewables, it doesn’t feel like that’s going to happen in Africa very quickly.”

To cut and run as investors “just drives assets out of the hands of the publicly-traded companies into the state-owned enterprises, where they’re harder to influence”, she says.

A central part of the process is ensuring companies are providing clear, detailed and up-to-date data, not just about emissions, but also targets, risk assessments, and the impact of changes in their working practices on the rest of their supply chains.

“The financial community has to start demanding this disclosure; it’s in companies’ interests to do so, because at the moment we don’t have enough granularity to price good versus bad.

“If you’re BP, it’s galling that you are being treated like Exxon, to pick two names. Bernard Looney [BP’s chief executive] is convinced this is a complete transformation he has to go through and yet, until recently, his share price is tarred with the same brush as the others. It’s in everyone’s interests to disclose, create and coalesce.”

Exxon Mobil has given a broad-brush commitment to cut the “intensity” of its emissions by as much as 20 per cent by 2025 but hasn’t gone into great detail. BP, on the other hand, has promised to cut its oil and gas production by 40 per cent this decade and lavish investment on renewable energy projects such as solar power and wind farms.

Central to the problem then, for O’Neill, is that there is simply detail, not enough data or analysis.

For institutional investors this is a time for bold but more nuanced conversations

“For institutional investors this is a time for bold but more nuanced conversations [with their investee companies]. And also to price, not just net zero, but all the other good stuff that goes around it. We don’t price nature – destruction or positivity – and we’ve got to start doing that too.

“If you wanted to offset a tonne of carbon now, you could go and do that for $5 a tonne by reforesting. You can reforest in a way that is monocultural and doesn’t create any value or jobs; or you could do it in a way that is incredibly eco-sensitive and creates lots of jobs. They’re not differentiated: one is worth a lot more than the other.

“Again, the destruction of habitat is free, and we don’t put a price on that. As we have done with greenhouse gases, we have to start finding out ways to price or value the natural world. If you couldn’t get insurance for a particular operation in 20 years’ time because of climate change, that might start to focus minds. We don’t have the data to do that yet, so the role of those that are good at analysing risk has never been more important.”

Rip it up and start again

The more we talk about the state of intergovernmental climate negotiations, the level engagement of the multinational corporate and investment world, specific green initiatives, the clearer it becomes there are plenty of places where this conversation might have darted off to.

We could have talked more about specific projects, where her views are suffused with climate logic. The UK’s HS2 high-speed rail link is undeniably a good thing and a third runway at Heathrow airport bad because train travel looks relatively clean environmentally against airplanes.

We could have talked about her more technical ideas. On climate data, and information coordination, for example, where she believes we need a global operations centre and a global reporting system. “You’d go to someone like the Bezos Foundation and say: it’s $100 million a year to do this, are you in? At the moment, we’re fiddling around with numbers going 165 different ways, we’ve got some very good carbon data analysts but there are dozens of the damn things.

We could have talked more about gender. “The fact women and young girls are both in the firing line from climate change and also can benefit disproportionately from well-designed mitigation and removal schemes is a point that is made year in, year out at COP and in fact there was a good gender package agreed in Madrid.

We’ve been really successful with the 30 per cent ratio of women on UK company boards

“Amber Rudd [the former home secretary] and I wrote a letter saying one of the ways would be to have gender equality in the negotiating teams, because a very significant number of negotiating teams at COP are all male.

“I’d love to see a global initiative. This isn’t government or the private sector, this is both. We’ve been really successful with the 30 per cent [ratio of women on UK company boards], how about if we have a private sector initiative on this that says we are going to do things that are equity and gender positive in terms of our climate action; that’s going to be part of the scoring mechanism.”

The reason we don’t segue off into many of these prescient and fascinating avenues is that the bald force of her overall argument just takes over.

There is her grasp of the facts and the debates. In many ways, that’s to be expected of a politician who will be all too aware that an appearance on Newsnight will not go well unless she’s completely up to speed on her brief.

There is her impressive breadth of knowledge – we talk about numerous projects, from the Taskforce on Climate Related Financial Disclosures and Sustainability Development Goals to Science-Based Target initiatives, and she never misses a step.

But in truth, it’s her unremitting willingness to aim high, to be prepared to tear things up and start from scratch if it gets the job done that draws you in, as well as a real-world resignation that sometimes you just have to work with what you’ve got. As she says, “let’s not make perfect the enemy of good”.

When the talking stops

So, can someone who is this in touch with how much harm to the environment has already been caused realistically be optimistic?

“I’m always asked, how confident are you that we’re going to hit net zero by 2050, and nobody is,” O’Neill says with the air of someone who is about to say something hopeful. “I think most of us think we’re going to overshoot, and we’re complacent about that. We’re not going to go extinct as a species, but the world’s going to look very different, very quickly.

We’ve got to find a way of getting urgency into this

“We’ve got to find a way of getting urgency into this. You’ve got to accept that people are slow to change, this is very complicated and we’re out of time. We need big solutions. Business as usual is not going to cut it.

“My hope is that some of the big foundations will say: right, we’ve got to halve methane by 2025, we’re just going to do it. We’re not going to ask permission; we’re just going to do it. That’s what we’ve got to do, because we’re just not going to get there in a 198-way conversation.”

And, then, this conversation, which could have become lost – in government failings, in planes, buses or trains, in quotas, targets or taskforces – comes to an end.

It’s not every day that you get the chance to talk to someone like Claire O’Neill. She makes a compelling case, however, that the issues she sees as being of such importance should be discussed the world over at least as often as that.

Miles Costello is a multi-award-winning writer and journalist.

Want more content like this?

Sign up to receive our AIQ thought leadership content.

Please enable javascript in your browser in order to see this content.

I acknowledge that I qualify as a professional client or institutional/qualified investor. By submitting these details, I confirm that I would like to receive thought leadership email updates from Aviva Investors, in addition to any other email subscription I may have with Aviva Investors. You can unsubscribe or tailor your email preferences at any time.

For more information, please visit our privacy notice.

Related views

Important information


Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable, but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. Some data shown are hypothetical or projected and may not come to pass as stated due to changes in market conditions and are not guarantees of future outcomes. This material is not a recommendation to sell or purchase any investment.

The information contained herein is for general guidance only. It is the responsibility of any person or persons in possession of this information to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. The information contained herein does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it would be unlawful to make such offer or solicitation.

In Europe, this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK, this document is by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: 80 Fenchurch Street, London, EC3M 4AE. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.

In Singapore, this material is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited (AIAPL) for distribution to institutional investors only. Please note that AIAPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIAPL in respect of any matters arising from, or in connection with, this material. AIAPL, a company incorporated under the laws of Singapore with registration number 200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act (Singapore Statute Cap. 289) and Asian Exempt Financial Adviser for the purposes of the Financial Advisers Act (Singapore Statute Cap.110). Registered Office: 138 Market Street, #05-01 CapitaGreen, Singapore 048946.

In Australia, this material is being circulated by way of an arrangement with Aviva Investors Pacific Pty Ltd (AIPPL) for distribution to wholesale investors only. Please note that AIPPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIPPL in respect of any matters arising from, or in connection with, this material. AIPPL, a company incorporated under the laws of Australia with Australian Business No. 87 153 200 278 and Australian Company No. 153 200 278, holds an Australian Financial Services License (AFSL 411458) issued by the Australian Securities and Investments Commission. Business address: Level 27, 101 Collins Street, Melbourne, VIC 3000, Australia.

The name “Aviva Investors” as used in this material refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom.

Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is based within the North American region of the global organization of affiliated asset management businesses operating under the Aviva Investors name. AIC is registered with the Ontario Securities Commission as a commodity trading manager, exempt market dealer, portfolio manager and investment fund manager. AIC is also registered as an exempt market dealer and portfolio manager in each province of Canada and may also be registered as an investment fund manager in certain other applicable provinces.

Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas is also a commodity trading advisor (“CTA”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.