Climate Change Risk: National Audit Office Guidance

Question

Tabled by

To ask Her Majesty’s Government what steps they have taken to ensure government departments and other public bodies have regard to the latest National Audit Office guidance Climate change risk: A good practice guide for Audit and Risk Assurance Committees, published on 5 August.

My Lords, on behalf of my noble friend Lord Browne of Ladyton and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

My Lords, the National Audit Office is the primary distribution channel for this guidance, publishing directly on its website to maintain its independence from the Government. The NAO presented its findings to officials at the heads of risk network event on 7 September and will present the guidance at the government internal audit agencies event for audit and risk assurance committee members on 4 November. The Government Finance Function promoted the guidance through news articles on its digital platform, OneFinance.

My Lords, I thank the Minister for that, but this NAO report examined the audit and risk committees of public organisations and found that over half of them do not have a climate or sustainability risk policy. Does he agree that it is an urgent issue that this gap in public governance is at odds with the Government’s net-zero strategy? Also, the NAO reported in early August. How many audit and risk committees have adopted such policies since then?

I am aware of the noble Lord’s question to the extent that the Government are very conscious of the importance of climate change risk and governance. In April 2021, the Government’s internal audit agency published its cross-government insight on sustainability, which offered recommendations on governance structures having accountability for climate change risks. The Treasury publishes the Orange Book and the Managing Public Money guidance on risk management for central government. Further support is offered by the risk management centre. I will write to the noble Lord regarding his specific question on the take-up.

My Lords, following the recent Dasgupta review, then Government committed to incorporating nature into the national accounts and improving guidance for embedding environmental concerns into policy-making processes. Can the Government provide an update on the timescale for this work?

The right reverend Prelate will know that Defra leads on environmental matters and on the greening government commitments, or GGCs, the UK Government’s ambitions to improve the environmental performance of its own estate and operations. We expect the greening government commitments to be published in the very near future.

The noble Lord, Lord Berkeley, is not present, so I call the noble Baroness, Lady Kramer.

My Lords, many Members here sit on boards and know, as I do, that however good the risk assessment process, change is driven only where a named senior executive is responsible. How many government departments and other public bodies have a named senior executive responsible for action on climate change and climate change risk?

The noble Baroness is right. I assure her that Managing Public Money and the Orange Book require the board of each central government organisation actively to recognise risks and direct the response to these risks, but it is for each accounting officer, supported by the board, to decide how. The board and the accounting officer should be supported by an audit and risk assurance committee to provide proactive support in advising. Regarding the question asked by the noble Baroness on the numbers involved, I will write to her.

My Lords, I have been privileged to head a couple of nationalised industries and I have always believed that all public bodies have a general duty to enhance the general good. Surely there is no greater general good than the achievement of net zero. Does the Minister believe that the NAO guidance recognises this and, if so, where in the guidance is the cross-government co-operation sufficiently mandated?

Notwithstanding the NAO guidance, the Government continue to publish their own guidance on climate change risk, including digital articles and blogs and cross-government insights, as well as updates to existing guidance. The Government remain alert to climate change risks when publishing new or updating existing guidance. I assure the noble Lord that the Treasury requires all departments to adhere to the Green Book guidance when providing a business case.

The Treasury is one of the two government departments that is excluded from climate change commitments. I wonder if that is part of the problem with it understanding the whole issue of the climate emergency. When I talk to people who sit at the other end of the building, from all sides they say that the Treasury is the biggest block to putting in climate change measures that will help to preserve people’s health and the planet’s health. I am wondering whether the Treasury is unable to calculate the cost of inaction, because that is the big problem. If it does not understand that inaction will cost more than taking the right actions, it is unable to do its job properly. I would like to offer the Treasury some Green Party help. We have superb economists who can explain it very simply to the Treasury so that it can understand that doing nothing is the worst possible option.

I am always happy to listen to the noble Baroness. Regarding the Government’s actions, she will know that it is completely the opposite of doing nothing. We have an enormous agenda. The Government have stated their ambition that we should be the first generation to leave the environment in a better state than we found it. I referred earlier to the GGCs. She asked about the role of the Treasury. We are mobilising £26 billion of government investment directly from the Treasury into the green industrial revolution. We have worked closely with the other departments to develop the net-zero strategy, with which she will be familiar, and our own net-zero review, published alongside this, highlights the factors to be taken into account.