16 May 2024: Progress towards net zero could be at risk of being held back, as nine in ten of UK businesses call for greater government support to help their organizations meet decarbonization targets, and half cite cost as a barrier, new research from BSI shows. This is despite firms increasingly recognizing the financial benefits of decarbonizing.
With the general election confirmed to be taking place this year, businesses said that both their organizations and industries have a responsibility to help the country achieve net zero, but also called for greater government support to help with the cost of transition, with 96% urging the next government to focus on offering greater government support, including financial incentives.
Political uncertainty was deemed a key challenge. 38% said their ability to decarbonize was hampered by uncertainty over the government's green commitments, while 35% said they were impacted by uncertainty over what the next government will do. Notably 92% said that pre-election they wanted parties to show a strong commitment to the UK meeting net zero goals via targeted policy measures.
BSI, the UK National Standards Body, today publishes the fourth annual Net Zero Barometer. Drawn from a survey of over 1,000 senior decision makers from UK businesses of all sizes and across sectors, it finds that the majority (83%) are committed to achieving the UK’s legally binding net zero emissions target. Despite this, 92% say barriers remain in place and a fifth of organisations remain hesitant and are unable to commit to achieving net zero by 2050, indicating minimal progress since BSI’s first barometer in 2021, when 18% had not made a commitment to net zero. Overall, one in four (23%) are not confident of achieving net zero by 2050 and 28% say their organization will be taking no action in the next 12 months on this.
Similarly, 38% are not confident net zero can be achieved without significant cost to their business. In fact, nearly half (47%) said cost was a barrier to decarbonization and for two-fifths it was the main barrier. 51% said the cost-of-living/energy crisis had impacted their organization’s ability to take action on net zero in the past year, down only slightly on 2023. Furthermore, 46% put this as the top factor.
The barometer suggests that firms are increasingly cognisant of the financial value of accelerating progress towards net zero. For one in two (48%) reducing costs was the key incentive, an increase on the two-fifths who suggested this last year, suggesting a growing understanding of the economic impact of sustainability measures. Nearly one in four saw a key benefit as increasing business preparedness for new government policies after the next election.
The research finds that only 35% of businesses have set an overall target to achieve net zero by 2050, and only 25% have met some of their interim targets. Just 15% have published an annual report which includes information on carbon emissions and only 18% have a team dedicated to implementing net zero policy. When turning to how firms are measuring their impact, less than a quarter measure Scope 1 emissions (23%), 22% Scope 2 and 18% Scope 3. This is higher for larger businesses, again following the trend that larger firms are more advanced in their net zero practices.
Scott Steedman, Director-General, Standards at BSI said: “I am pleased to see from this research that many businesses are starting to turn net zero ambition into action. However, 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. From government, now is the moment for a clear policy environment that encourages organizations 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 decarbonization 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.”
Clarity and understanding play a further role in preventing action on net zero, with 23% of organizations citing a lack of clarity on what net zero means and guidance on how to take action was preventing both SMEs and larger firms alike from taking steps. This shows an improvement on last year’s barometer where just a third of SMEs were extremely confident on how to reach net zero with 11% citing clarity as the main barrier. Notably, issues over internal skills and knowledge were also revealed to be preventing organizations from knowing how to take action (19%) and only 15% cited clarity on how the offsetting market operates, suggesting there is still a knowledge gap in the overall understanding on how organizations can take action.
Meanwhile, for nearly a third (31%) challenges stemmed from supply chain issue. Organizations across all industries said the second largest barrier to acting on net zero after cost was due to difficulties in finding suppliers with net zero credentials or a lack of awareness / lack of information about the action that their suppliers are taking.
Further findings from this year’s report include:
- Over half (53%) of large firms cite regulatory changes to be the strongest driver to taking action to achieve net zero compared to 36% of SMEs and 32% of large firms listed liability and legal risks compared to 21% of SMEs.
- Climate related risks (23%), regulatory changes (20%), reputational risks (10%), and pressure from clients/customers (15%) were also cited as prevalent drivers to take net zero action
- 84% say taking steps to reach net zero is pushing up the cost of doing business and 74% say it is adding pressure to their industry.
- Confidence was lower amongst SMEs than large firms, with large firms (54%) more likely to have a 2050 target in place than SMEs (35%).
- 38% say they are not confident net zero can be achieved without significant cost to their business
- Mining, Quarrying & Utilities firms are consistently most likely to be measuring their Scope 1, 2, and 3 emissions (at least ‘partly’). Whilst retail firms are least likely to be doing so.
Businesses generally do have steps in place, but they tend to be more accessible measures like energy reduction (54%), switching to LED lightbulbs (50%), and waste reduction or using recycled materials/feedstock (49%).
To read the full version of the BSI Net Zero Barometer Report 2024, visit here.
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