Regulatory uncertainty limiting UK firms’ plans for decarbonisation, finds report

Only 65% of UK firms have plans for achieving net zero carbon emissions, according to a new report surveying over 2,000 businesses.

The Net Zero Business Census, published by the UK Business Climate Hub, found that smaller organisations in particular “often struggle with financial and informational barriers” to decarbonisation.

Uncertainty

As noted in the Guardian’s coverage of the report, the survey was the largest ever conducted on UK companies’ preparations for decarbonisation. It was supported by the Confederation of British Industry (CBI), the Institute of Directors (IoD) and the British Chambers of Commerce (BCC).

Only half of those surveyed were found to be measuring their carbon emissions, while 46% said they had received requests for data on emissions from customers or tender applications in the last 12 months. This number falls to 37% for SMEs.

Among the recommendations in the report is a call for the government to ensure greater regulatory certainty for firms after the UK’s exit from the EU. It states that government should set out “clear, long-term regulatory timelines and policies to provide stability and confidence for investment in net zero initiatives”.

Policy uncertainty was identified by 50% of respondents “as a moderate to significant hindrance” to preparing for net zero.

“This should be aligned with key international markets, particularly the EU, to facilitate low-friction trade.”

Costs

The high costs associated with addressing carbon emissions should be addressed through “targeted financial incentives and schemes”, the report also suggests.

The financial cost of decarbonisation was the most frequently cited “moderate to significant barrier” to achieving net zero.

The authors propose that new schemes “might include improving the take up of existing grant schemes and initiatives such as the introduction of “Help to Green” vouchers”. This, it says, echoes a suggestion by the Federation of Small Businesses (FSB) and UK Finance, to offer “tailored support to SMEs to kickstart their carbon reduction projects”.

On SMEs, the report notes that many are “indirectly in-scope” for disclosure policies on emissions, with requirements of larger firms affecting smaller ones down the supply chain.

“It is therefore critical,” the authors say, “to establish clear expectations, boundaries and protections in policy specifically for SMEs, ensuring they are equipped and supported to meet the demands placed upon them.”

Support

A total of 92% of respondents said more government support would be helpful in achieving net zero, whether that be financial, regulatory or in the form of advice and guidance.

The report also notes that some industries are better-prepared than others for the transition to net zero. IT and communications are the most prepared, with 68% of firms having a plan for the transition. The financial services sector fared poorest on this measure, with only 52% of businesses committed to net zero.

Less than half (48%) have targets set for the next ten years, the report’s authors note in their conclusion. “Critically,” however, they add that “the vast majority are united in prioritising, planning and actioning meaningful steps to decarbonise in the near-term”. A total of 73% of those surveyed said net zero was “at least a medium priority or higher” over the next year.