UK businesses call for more support to meet net zero targets

As World Environment Day approaches, Australia is intensifying efforts to achieve its climate targets, as highlighted in the recent federal budget which includes a substantial investment of AU$399 million to establish the Net Zero Economy Authority. This move aims to support an economy-wide transition towards net zero. New research from the British Standards Institution (BSI) sheds light on the challenges faced by businesses in the UK and the need for substantial government support to meet these ambitious goals.

According to BSI's latest findings from the Net Zero Barometer, nine out of ten UK businesses are calling for greater government support to help meet their decarbonisation targets, with 50% citing cost as a significant barrier. The research, which surveyed over 1,000 senior decision-makers, reveals a landscape where political uncertainty and financial constraints are major roadblocks. Thirty-eight percent of respondents said their decarbonisation efforts were hindered by uncertainties surrounding the government's green commitments, while 35% were concerned about potential changes under future administrations.

As the UK gears up for its general election, 96% of surveyed businesses have stressed the importance of government support, including financial incentives, to assist with the cost of transitioning to net zero. This overwhelming consensus for a clear and committed approach from all political parties signals the urgent need for stable and supportive policies to drive the net zero agenda forward.

The BSI's fourth annual Net Zero Barometer highlights that a substantial portion of UK businesses are committed to achieving net zero by 2050, yet significant barriers remain. Despite 83% of businesses showing commitment to these goals, 92% acknowledge the presence of obstacles, and 23% are not confident in their ability to achieve net zero by the 2050 deadline. Alarmingly, 28% of businesses indicated that they have no plans to take action in the next 12 months.

In a similar vein, findings by KPMG reveal that while Australia is making progress towards net zero, further acceleration is necessary for businesses to meet these targets. This underscores the imperative for the Australian government to bolster incentives and establish clear policy frameworks to facilitate investments in green technologies and sustainable practices.

Financial concerns remain a dominant theme, with 47% of UK businesses identifying cost as a barrier to decarbonisation and two-fifths citing it as the main obstacle. The cost-of-living and energy crises have also impacted businesses, as 51% reported that these factors have affected their ability to take action on net zero over the past year.

Despite these challenges, businesses are increasingly aware of the financial benefits of pursuing net zero goals. For nearly half of the respondents, reducing costs was the key incentive to accelerate decarbonisation efforts. This marks an increase from the previous year, reflecting a growing understanding of the economic advantages tied to sustainability measures.

Only 35% of businesses have set an overall target to achieve net zero by 2050, and a mere 25% have met some of their interim targets. Additionally, just 15% have published annual reports with information on carbon emissions, and only 18% have teams dedicated to implementing net zero policies. Measurement of emissions also needs improvement, with only 23% tracking Scope 1 emissions, 22% Scope 2, and 18% Scope 3, particularly among smaller firms.

Scott Steedman, Director-General of Standards at BSI, commented, "While many businesses are starting to turn net zero ambition into action, we need to go further and faster. A clear policy environment is essential to encourage investment and innovation towards net zero." He emphasised the need for robust standards and best practices in decarbonisation to ensure that businesses can lead the transition and benefit from enhanced performance and stakeholder confidence.

Clarity and understanding also pose challenges, as 23% of organisations reported a lack of clarity on what net zero entails. Guidance on taking action remains a significant hurdle. Notably, internal skills and knowledge gaps were highlighted by 19% of respondents, and only 15% felt assured about how the offsetting market operates.

Supply chain issues add another layer of complexity, with nearly a third of businesses citing difficulties in finding suppliers with net zero credentials as a barrier. This issue underscores the need for a comprehensive approach to engaging and educating supply chains as well.

The report findings underscore the need for continued and enhanced government support, clear policies, and a comprehensive approach to facilitate businesses in overcoming barriers and achieving their net zero targets.