More than nine in 10 UK business leaders want more government policy support and financial incentives to help accelerate their transition towards net zero emissions, with many citing green policy uncertainty and costs as major barriers to their decarbonisation efforts.
That is the headline finding from a new survey based on interviews with over 1,000 senior decision makers at UK businesses of all sizes and sectors carried out by the British Standards Institution (BSI). It found 96 per cent of respondents want the government to offer greater support for their net zero strategies, including through fresh financial incentives.
The standards body’s annual Net Zero Barometer survey also found 92 per cent of respondents want all political parties to demonstrate their strong commitment to the UK’s net zero emissions goals by offering targeted policy measures ahead of the upcoming General Election.
It comes amid significant concern and uncertainty surrounding the UK’s net zero policy regime, after the government last year watered down or ditched a number of key green policies on electric car sales, gas boilers, and energy efficiency standards for rented properties.
Energy Security and Net Zero Secretary Claire Countinho recently warned against a “net zero leviathan of central planning”, arguing it is better for businesses to “live with some uncertainty” than suffer from strict government planning.
The government was considering a request for comment on the BSI survey findings at the time of going to press.
However, BSI’s latest survey findings found 38 per cent said their ability to decarbonise had been hampered by government policy uncertainty, while 35 per cent cited uncertainty over what the next government might do with regards to the net zero transition.
Over 80 per cent of respondents said they were committed to supporting the UK’s 2050 net zero emissions target, but 92 per cent said a number of barriers to decarbonisation remain in place.
In addition to policy uncertainty, cost was cited as a major barrier to business net zero strategies by 47 per cent of survey respondents, while two-fifths said cost was the biggest single barrier, followed by 31 per cent who cited supply chain issues.
Just over half also said the challenges posed by the cost of living and energy crises had hampered their net zero efforts over the past 12 months.
Moreover, 84 said net zero initiatives had been pushing up the cost of doing business and 74 per cent said it was adding pressure to their industry.
However, at the same time the survey findings indicate firms are increasingly aware of the financial benefits of driving towards net zero, with 48 per cent citing cost reductions as a key incentive, up from two-fifths in last year’s survey.
A quarter of respondents this year also saw preparation for new government policies that might emerge after the next General Election as a key incentive for accelerating the push towards net zero, according to BSI. The Labour opposition is more than 20 points ahead in some polls and has signalled that it will prioritise efforts to accelerate the UK’s transition towards net zero.
Climate related risks were cited as the primary driver for action on net zero by 23 per cent of all respondents, with 20 per cent citing regulatory changes, 10 per cent citing reputational risks, and 15 per cent citing pressure from clients and customers.
Over half – 53 per cent – of respondents at large firms cited regulatory changes as the strongest driver for taking action to achieve net zero compared to 36 per cent of those at smaller firms. Another 32 per cent of respondents at large firms said liability and legal risks were a key driver for action, compared to 21 per cent of those SMEs, according to the survey findings.
“After all the upheaval, elections and uncertainty of the past few years, businesses are still committed to net zero,” said Sebastiaan Van Dort, director of energy and sustainability at BSI. “Now businesses are looking for a long-term stable policy direction and regulatory framework that will encourage investment and support SMEs to take action and invest in net zero.”
Despite the policy uncertainty and concern over costs, the survey signals strong confidence among companies in meeting climate targets, with 77 per cent of respondents either fairly or very confident their firm will achieve net zero by 2050, and 74 per cent at least fairly confident they know how to get there.
Yet at the same time, that means almost a quarter – 23 per cent – of those surveyed were not confident of achieving their net zero goals, and 28 per cent said their firm does not plan on taking any action on decarbonisation in the coming year.
Overall, 35 per cent of respondents said their company had set a target to achieve net zero by 2050 at the latest, while 25 per cent have already met some of their interim climate goals, the survey found.
Just 15 per cent publish data on their carbon emissions in their annual reports, however, and only 18 per cent said they had a team at their company dedicated to corporate net zero policy.
Corporate emissions do not actually appear to be tracked by many firms, either. Just under a quarter of respondents said their firm measured its Scope 1 emissions, 22 per cent said the same for Scope 2, and just 18 per cent said they measured their Scope 3 emissions. However, the proportions were higher for larger firms, and lower for smaller firms, BSI said.
“Investing in the sustainability edge of your company might have a competitive advantage on the market, but that doesn’t necessarily translate into increased profits or lower costs yet,” said Abbey Dorian, BSI’s energy sector lead. “Tackling Scope 2 and 3 emissions is a significant investment. It costs businesses a significant amount of money to even understand what these emissions are.
“Without a clear indication that they’re going to have to meet some regulatory requirements or even procurement requirements, smaller companies with tighter budgets are choosing not to make that investment.”
Perhaps unsurprisingly, therefore, larger firms were also more likely to have a 2050 net zero target in place, with 54 per cent of respondents at larger firms saying their company had such goals in place, compared to just 35 per cent of those at smaller firms, the survey found.
Clarity and understanding may be playing a role in preventing action on net zero, however, with 23 per cent expressing uncertainty as to what net zero means and a lack of guidance on how to take action.
Scott Steedman, director-general for standards at BSI, said the survey findings showed many businesses were starting to turn net zero ambition into action, but stressed that “we need to go further and faster”.
“Non-financial reporting will soon force businesses that don’t show leadership in their supply chains to become followers,” he warned. “From government, now is the moment for a clear policy environment that encourages organisations to invest and innovate towards net zero.
“We have made great progress in the last 12 months in aligning international standards with the net zero transition and disclosure requirements and we now have the opportunity to press ahead to scale up the implementation of best practices for decarbonisation across all sectors. First movers have the potential to benefit most through enhancing their own performance, building the confidence of their stakeholders and helping to accelerate our common progress towards a sustainable world.”
You can now sign up to attend the fifth annual Net Zero Festival, which will be hosted by BusinessGreen on October 22-23 at the Business Design Centre in London.