Majority of UK's biggest firms lack net zero strategies, report finds

Fewer than one-in-six of the biggest companes on the London Stock Exchange have a realistic strategy to achieve net zero emissions by 2050, despite 45 per cent having committed to the target.  

That is the top finding from analysis by environmental consultancy EcoAct, which today released its 10th annual study of the sustainability reporting performance of companies on the FTSE 100, the listing of the largest corporates on the London Stock Exchange by market capitalisation.

For the second year running, consumer goods giant Unilever has secured the top spot in the rankings, having featured in the top 20 since 2013, according to EcoAct, while BT sits in second place, remaining in the top three for the eight consecutive year.

Companies operating in the banking, utilities and real estate sectors also tended to fair particularly well in the rankings. Among those ranked in the top 20 for environmental disclosure were financial giants Barclays, NatWest Group, Lloyds, and HSBC; energy firms SSE, United Utilities, and Centrica; and developers Landsec, British Land and Barrett Developments.

But EcoAct warned that best practice on climate and environmental sustainability reporting was not being shared effectively between corporates, pointing out that 65 per cent of FTSE 100 businesses do not have science-based targets in place for reducing emissions, yet those with science-algined climate goals were more likely to be on track with their ambitions.

Moreover, the analysis found three-quarters of FTSE 100 companies are now calculating and disclosing emissions from their wider value chain, including use of products and services - also known as Scope 3 emissions - but that only one-in-three actually have a target in place to tackle these emissions.

Stuart Lemmon, chief executive of EcoAct in Northern Europe, said that while the rankings continued to demonstrate year-on-year improvements in performance from FTSE 100 firms, overall performance on the rankings was still being pulled upwards by the high performers at the top, exposing the need for urgent action from the majority of UK companies to ramp up their climate efforts.

Scores allocated to the companies in the report range from zero at their lowest, all the way up to 92 per cent at the highest, demonstrating a highly disparate mix of sustainability performance and indicating that adequate climate-related reporting is still not a given in large companies, he saidsaid.

"Although we are encouraged to see an uplift in company commitments to Net Zero this year, if we are to succeed in this goal, it is imperative that commitments are backed by sound and achievable strategy," urged Lemmon.

The report also highlighted the need for businesses to take a closer look at their value chains when assessing risks posed to their business posed by climate change. While the report reveals that 81 per cent of UK companies are assessing risks to their operations from climate change, yet only 64 per cent are doing so across their value chain, and only 56 per cent have plans in place to mitigate these risks, according to EcoAct.

There has, however, been growing support from FTSE 100 companies for the risk reporting guidelines of the Taskforce on Climate-related Financial Disclosures (TCFDs), with more than half - 56 per cent - now disclosing in line with the TCFDs, rising from just 15 per cent in 2018. EcoAct highlighted increasing pressure in recent years from investors demanding clearer data on risk as a key driver for rapid TCFD uptake. 

Welcoming BT's high ranking in EcoAct's report today, Andy Wales, chief digital impact and sustainability officer at the telecoms giant, setting ambitions science based climate targets were crucial for driving action on emissions. BT is targeting net zero emissions by 2045.

"We're working with our customers, colleagues and suppliers to help them drive down their carbon emissions and it's time for others to follow our lead by setting their own science-based targets and to become net zero by 2050," he said. "BT has pledged its support for a green recovery, but to truly build back better, the government and business must work together to introduce policies that prioritise investment in green technologies and infrastructure - helping to create decent jobs and sustainable growth for the future."

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