Are UK Businesses Ready to Meet the Carbon Neutral Target?

Before Theresa May left office in March this year one of her final acts as Prime Minister was to commit the UK to becoming a net-zero economy by 2050. However, many companies are doing nothing to prepare. The new carbon emissions targets require that as much as possible of the UK’s carbon dioxide emissions are cut by 2050, and that those remaining should be offset with new technology such as carbon capture and storage. But are businesses actually acting on this?

A report from the Intergovernmental Panel on Climate Change was published last year looking into how the British government could deal with the growing issue of global warming. It exposed some of the challenges and opportunities that businesses will face. The report disclosed the fact that the world is running out of time to deal with global warming. The research warned of heat waves, rising seas and a “shocking rise in hunger” if warming is not limited to 1.5C (2.7F) above pre-industrial levels.

The UK Committee on Climate Change issued a report in May this year offering advice to the government on how to meet environmental targets. This advice will have far-reaching effects on business in the future.

A new YouGov B2B poll in October showed that only 46% of businesses in the UK have set in motion plans to go carbon neutral by 2050. One in eight businesses are set to kick their carbon emissions in the next year while one in ten people in business say their company is already carbon neutral.

Despite the new rules 31% of businesses said that they had no plans to be carbon neutral at all. Though, contrary to this 59% of people in business think that business and industry can play an effective part in the battle against climate change.

Although a third of businesses are not planning to go carbon free, a great majority (92%) of people in business believe that climate is changing and that it is at least in part induced by humans. Just 2% said that they did not believe that climate was changing at all.

The Climate Change Act means the UK government has committed by law to reduce emissions by at least 100% of 1990 levels (net zero) by 2050. This includes reducing emissions from the devolved administrations (Scotland, Wales and Northern Ireland), which currently account for about 20% of the UK’s emissions. In this way the UK will contribute to global emission reductions in order to limit global temperature rising as little as possible above 2%.

So that these targets can be met the UK government has set five-yearly carbon budgets which currently run until 2032. Each budget restricts the amount of greenhouse gas that the UK can legally emit in a five-year period. Currently the UK is in the third carbon budget period (2018-2022).

Godrun Cartwright, environment director at Business in the Community, said earlier this year that British businesses hope for a stable, clear path on climate change regulations.

Godrun Cartwright said:

“The UK has rightly been seen as a world leader on climate change since the Climate Change Act. However, the lack of a stable policy environment in the UK has made it challenging for business to plan and take decisive action with certainty.”

The Committee on Climate Change (CCC) report proposed long-term measures to limit global warming and presented businesses with an opportunity to be leaders in environmental thinking.

Back in June Professor Jonatan Pinkse, of Alliance Manchester Business School said:

 “Companies could have a huge influence on customer behaviour if they manage to sell the more climate-friendly alternatives.”

Kirsty Britz, director of sustainable banking at RBS, said at the time:

“I think the CCC report is important. It builds on the urgency of the IPCC report, and gives a relatively optimistic, pragmatic approach. The report suggests that net-zero is not going to be easy, but it is possible.”

Kirsty Britz went on to say:

“Everyone needs to be thinking about it. For us, as a big business, what is our role? How do we use our reach to accelerate that change? We know it can’t be one part of society alone: it has to be a combination of individuals, government, business and NGOs.”

The report suggested that the supply of low-carbon electricity must quadruple by 2050 and that efficient buildings and low-carbon heating must become standard.

Suggested measures for businesses included choosing product designs that last longer, along with increased reuse and recycling and switching to renewable power sources.

Mike Thompson, the CCC’s head of carbon budgets said:

“The reaction from businesses in particular has been very positive, with organisations such as the CBI, Aldersgate Group and the TUC coming out strongly in support of our recommendations.”

Mike Thompson said:

 “Almost all sectors will need to reduce their greenhouse gas emissions to zero in order to end the UK’s contribution to global warming by 2050. This means doubling the size of the electricity sector (and quadrupling the low-carbon supply); switching all our cars and vans to run on electricity; creating a new low-carbon hydrogen industry and using that hydrogen in ships, industry, some HGVs and perhaps for heating and power generation; delivering infrastructure for carbon capture and storage technology across the country; and transforming how we use a fifth of our agricultural land.”

Mr Thompson said that companies will see benefits in the form of cost savings, improved technology and the health of their workers. There are also brand benefits to be had, particularly with companies such as Apple already using 100% renewable electricity.

Ms Britz said that companies engaging with climate change have begun to clearly understand their own influence.

She said:

“It’s about how to manage your own impact. Think about where, as a business, your influence lies. Is it services, supply chain, your employees? That can be the foundation of your approach to climate change.”

She said that in the long-term consumers will increasingly want the companies they use to be climate conscious. Banks are already seeing increased interest in climate change issues and greater demand from customers.

Ms Britz said:

“It has affected the way we interact with customers. How can we support them to manage their costs? We’re one of the UK’s leading lenders to the sustainable energy sector, including renewable energy, energy efficiency and low-carbon vehicles. It’s really a positive thing. At a group level, we’re having many more conversations about climate change – and it is accelerating month on month. I think the Attenborough effect is at work. There certainly appears to be an increased interest and demand in how products are made, as well as what happens to them at the end of the cycle and I think we’ll see more demand for this in the future.”

A more holistic way of thinking is going to be important as Britain moves towards 2050.

Ms Britz said:

“We need more joined-up thinking. What does decarbonisation mean for businesses and jobs? Where are the new jobs coming from? “What is happening to the old sectors that are more exposed? We have to think about the benefits in a connected way – for instance, how reducing air pollution will improve people’s health and well-being.”

The good news is, that many businesses are leading the way, making strong commitments and rapid progress towards a net zero carbon future.

More and more businesses are committing to net zero carbon targets. The Water Industry has committed to net zero by 2030 as a sector, whilst John Lewis PartnershipCentrica and Tesco have committed to achieving net zero by 2050. Initiatives include greening the fleet (JLP), increasing renewable production (Centrica) and working across the supply chain (Tesco). Switching to renewable energy is playing an important part in increasing demand. Nestle entered into a Power Purchase Agreement that enabled the creation of a new windfarm in Scotland, whilst Bentley implemented a solar carport of 10,000 panels, which, added to the 21,000 panels on their factory roof means that all of their energy is now produced onsite or purchased renewables. More and more companies are collaborating to reduce their carbon emissions. Drax and National Grid Ventures have teamed up with other companies in the Humber to create a net zero carbon cluster that aims to enable the region to lead the way in delivering net zero carbon and develop hydrogen as a fuel. Capgemini has committed to helping their clients save 10 million tonnes of CO2 equivalent by 2030. 

The next 10 years are crucial in determining the world that we hand over to future generations. The time for talking is definitely over, businesses now need to take action. There are opportunities for businesses to save money, build great reputations and develop new products, services and business models at the same time as tackling climate change head on.

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