Putting a net zero plan in place makes commercial, environmental and reputational sense - but businesses need policy support from the next PM, writes npower Business Solutions CEO Anthony Ainsworth
The government's Net Zero Strategy has recently come under scrutiny, with a landmark ruling in the High Court stating that it is "unlawful". It put in place an order for policymakers to flesh out the Strategy, with new details set to include stronger, time-bound sector-specific emissions reduction targets.
The Court has given the government eight months to make the necessary changes, meaning it will need to be one of the first jobs the new Prime Minister tackles when they come into office. It is no easy task, but it is a very necessary one.
That is because, for businesses, having a clearly defined and achievable route to net zero is crucial to give them the confidence to invest in the necessary measures to not only realise their own ambitions, but to also contribute to the UK's wider net zero targets.
This is becoming even more urgent amidst the ongoing energy crisis, where confidence among businesses in net zero is starting to wane, particularly among major energy users, where it is increasingly becoming a case of ‘survival first and net zero second'.
This was echoed in our recent Business Energy Tracker report, which revealed that almost half of businesses think that the current energy crisis will harm net zero progress.
The report gathered the views of 200 large businesses and includes several in-depth interviews with senior representatives from both public and private organisations. One of the topics we focussed on was net zero.
Firstly the good news. Are businesses still backing net zero? Broadly, yes, they are, with many seeing the benefits of adopting robust and long-term sustainability strategies.
Two-thirds (67 per cent) of businesses believe that net zero by 2050 is achievable, although this is down from 75 per cent when we asked the same question in 2020 as part of our Your Business Blueprint - the Road to Net Zero report.
Nearly three quarters (72 per cent) also say that they feel clear on the role they can play in the transition, with the same number believing that their business will benefit. When asked about the main positives of embedding a more sustainable approach, greater resiliency through saving money and carbon is seen as the top benefit for a third (33 per cent), while one in five (20 per cent) believe there would be reputational benefits. One in eight (12 per cent) also believe that a strong approach to net zero will help them attract the next generation of talent.
However, the cost of funding the transition is a major concern, with a huge 93 per cent saying they were very or a little concerned about the potential economic impact on their business. Many industrial and commercial companies have already made great strides in lowering their emissions, and now they are being asked to do even more at a time when budgets are stretched.
That is why it is so important that businesses have the right support mechanisms in place and clear policy direction to help them deliver on their own decarbonisation objectives, survive the current energy crisis, and help them become more resilient in the long term.
This is where the recent Energy Security Bill unfortunately fell short. It is undoubtedly a welcome step in the right direction but, by focussing on the supply side, it only paints half of the picture of what is needed to successfully decarbonise.
For example, National Grid ESO's latest Future Energy Scenarios (FES) highlighted that improving energy efficiency is a ‘no regrets' policy action - something that was echoed in the Business Energy Tracker. Many respondents told us that increasing energy efficiency was their top way of managing energy risk caused by price volatility, so the need to double down on areas that can have an impact now, that will reduce both costs and carbon, is a real no brainer.
At nBS we also recognise our role in helping businesses right now and in the future. That is why we are committed to continued support for both our industrial clients and policymakers to drive the best outcomes for business. As such, we have submitted the Business Energy Tracker to Government and we will update when we receive a response.
In short, putting a credible net zero plan in place makes commercial, environmental and reputational sense. Businesses just need the policy to support them - something the next Prime Minister will need to focus on if the net zero ambition is to stay on track.
Anthony Ainsworth is CEO at npower Business Solutions.
You can download your copy of Business Energy Tracker here
This article is sponsored by npower.