Businesses in the UK will be heavily reliant on government policies to achieve net-zero. That’s a problem, says David Burrows.
YouGov has just quizzed 702 CEOs and businesses leaders from seven countries about net-zero. This threw up an intriguing finding among UK companies. Some 82% believe government policies will be required to bring about the changes required to tackle climate change, but only 48% think businesses will drive the necessary change. This was lower than in any of the other six countries involved (Brazil, Japan, Germany, US, South Africa and India).
“It is great to see businesses across the world supporting the regulation needed to transform global economies and national sectors,” explained Clare Shine, director and CEO at the University of Cambridge Institute for Sustainability Leadership (CISL) which commissioned the study. “These findings point to a situation where many large businesses feel they have the investment and plan to get them to net-zero, now they need the right government policies.”
But is this wishful thinking?
The UK government’s policies on the environment are in chaos. Liz Truss, the prime minister who resigned last week, didn’t appear convinced of the need to reach net-zero, nor of the urgency with which change needs to start happening. Looking to dig up more fossil fuels is surely folly. There is an argument, noted by NGOs and think-tanks I’ve spoken to recently, that this is simply (or hopefully) a noisy distraction given that the overlying Climate Change Act and legally-binding net-zero targets remain untouched.
Will Rishi Sunak, the new PM, pick up on his predecessor’s anti-green, deregulatory agenda? He has signed the Conservative Environment Network pledge, which commits the prime minister to halt nature decline by 2030, deliver net-zero by 2050, to use Brexit freedoms to support sustainable farming and “turbocharge” green growth. But so too had Truss. Sunak also wants to rip up EU red tape faster than Truss, which will further alarm green NGOs.
The world is watching Sunak’s first moves, economically and environmentally. The UK’s reputation as a leader on climate change has been damaged of late. At this moment, there is “nobody I know who could watch this building who doesn’t think we’re in a perilous position with this administration”, Ed Matthew, campaign director at E3G, a think-tank, told me earlier this month. The incoming COP27 president had been moved to publicly call for some reassurance that the UK is not “backtracking from the global climate agenda after presiding over COP26”. It’s not yet in reverse but the brakes have been slammed on and Sunak’s first manoeuvre will be telling.
The government did at least accept its net-zero strategy is unlawful; a letter last week confirmed that it won’t be appealing against this year’s High Court ruling that the strategy failed to show how the country will meet legally-binding carbon budgets. A revision must be produced by July next year. This will likely incorporate the findings of the review of the strategy commissioned by energy secretary Jacob Rees-Mogg. Many are confident the evidence will show the economic benefits of net-zero.
Policies, please
But none of this leaves a clear path for businesses. Indeed, whether there is a need to start delivering on reductions towards net-zero now is a live topic of conversation across businesses in food and other sectors. Some will undoubtedly see the cost of living crisis as an opportunity to let investment in tackling the climate crisis slide. But every moment lost makes the challenge greater. “[…] in a world of competing pressures and crises, voluntary action can only progress us so far,” said CISL’s Shine.
Research earlier this year by AlixPartners showed food businesses are worried about scope 3 reductions in particular. Recent work has shown manufacturers and supermarkets are struggling for direction, guidance and, to a certain extent, policy prodding.
Harmonisation of reporting is one area that crops up time and again in conversations about net-zero regulation. The Competition and Markets Authority wants to see the UK government create standardised definitions of commonly-used environmental terms like carbon neutral and net-zero (the French environment agency, Ademe, has recently stated that carbon neutrality and net-zero are concepts ill-suited to companies).
One of the big UK announcements at COP26 was the requirement for listed companies to publish net-zero transition plans. A ‘gold standard’ for these is to be developed to help tackle some of the misleading claims and greenwashing, but it won’t be mandatory and there appears little chance of the new government introducing any of the ‘guardrails’ campaigners want to see when it comes to climate reporting.
Meantime, plans are being unpicked and strategies scrutinised. Some corporates are reportedly ignoring 75% of their emissions, misleading consumers, investors and policymakers alike. The Better Food Index, compiled by Tortoise Media, shows 10 out of Britain’s 30 largest food companies do not report any scope 3 carbon emissions, for example. Tortoise researcher Maddy Diment said these companies have a duty to report information like scope 3 emissions but it is largely voluntary. She found food companies were “drastically under-reporting emissions from their supply chain”. Mars UK reported just 56 tonnes of CO2e as their scope 3 emissions. United Biscuits, which produces McVitie’s Digestives, reported their scope 3 emissions at 76 tonnes.
Many of the major supermarkets have measured their scope 3 emissions (which account for over 90% of their total emissions) but just two of the biggest 10 have published details of scope 3 reductions (Asda, with a 2% drop versus a 2020 baseline, and Coop with an 8% fall against a 2016/17 baseline), according to The Grocer.
“I think some net-zero commitments have been made in good faith with a desire to achieve that goal, but without a really robust view of what it was going to take to deliver it,” Susan Thomas, senior director for sustainability at Asda, told me recently. CISL’s survey suggests businesses need a hand from government and policymakers but even as COP27 looms, they are very unlikely to get it.
