Why firms can no longer risk inaction on net zero

With humanity’s impact on the warm­ing of the plan­et now deemed unequiv­o­cal by the UN, the pres­sure is on every busi­ness to cut its car­bon foot­print. How­ev­er, the prob­lem can seem so over­whelm­ing that it leads to the oppo­site result – no action at all.

It’s a para­dox. While cus­tomers increas­ing­ly pres­sure firms to blaze a sus­tain­able, car­bon-cut­ting trail, progress is too often con­found­ed by a range of obsta­cles: fears over poor invest­ment deci­sions, per­ceived con­cerns of a lack of knowl­edge, or wor­ries about engag­ing some­one with­out the gen­uine exper­tise demand­ed.

There are always risks when change is need­ed. But when it comes to cli­mate change, it’s rapid­ly become unvi­able to do noth­ing.

Making the net zero transition step by step

For many busi­ness­es, par­tic­u­lar­ly small­er firms, it can some­times seem that only trans­for­ma­tion­al and rad­i­cal change will do. But think of it like run­ning: if you’re new to the exer­cise, it’s best to stick with 5km jogs than attempt­ing a marathon.

Nico­las Lefevre-Mar­ton is a man­ag­ing direc­tor, sus­tain­abil­i­ty solu­tions at Engie Impact, which helps pub­lic and pri­vate organ­i­sa­tions – includ­ing its sis­ter ener­gy firm Engie – to plan and imple­ment sus­tain­able strate­gies.

“Net zero is not a switch,” he says. “There are mile­stones and steps. The most reward­ing and eas­i­est thing to do is to get a grip of your data and start to under­stand emis­sions – where they come from and how they can change – rather than drown­ing in the con­cept.”

Lefevre-Mar­ton acknowl­edges that even with the afford­abil­i­ty of renew­able ener­gy falling and the likes of elec­tric vehi­cles becom­ing cheap­er, cost is one of the biggest risks for com­pa­nies in achiev­ing net zero.

“There’s the eco­nom­ic risk, but there’s also the reg­u­la­to­ry risk. If you don’t pre­empt these actions then it’s pos­si­ble you get caught out as the reg­u­la­tions can move faster [than expect­ed], and if you’re not ready to act, that’s an issue,” he says.

Pre­pared­ness there­fore seems cru­cial. Even with improved knowl­edge, enact­ing change can be chal­leng­ing.

“Mobil­is­ing organ­i­sa­tions at the scale net zero demands has not been done before,” he says.

Grasping the opportunity

With ener­gy pro­duc­tion rep­re­sent­ing close to 75% of glob­al green­house gas emis­sions, it’s intu­itive that large ener­gy firms, in par­tic­u­lar, are pri­ori­tis­ing the prob­lem. But for small­er busi­ness­es and organ­i­sa­tions, com­pre­hend­ing the issue and iden­ti­fy­ing the actions required can be a demand­ing task.

Mike Robin­son is chief exec­u­tive of the Roy­al Scot­tish Geo­graph­i­cal Soci­ety (RSGS), which launched a Cli­mate Solu­tions course two years ago to help dis­til the vast quan­ti­ties of infor­ma­tion avail­able on cli­mate change into man­age­able chunks and to help firms devel­op action plans.

“We’re try­ing to reas­sure busi­ness­es that some things they can do are clear-cut,” he says. “While some busi­ness­es might feel they want to wait, a lot of what we’re try­ing to do is say that ‘this is the direc­tion of trav­el’, so it’s not about whether to do it, but when.”

The RSGS thinks there is a lot of oppor­tu­ni­ty in act­ing now, he says. “While there might be risks if you are a real­ly ear­ly adopter of a new tech­nol­o­gy, there are plen­ty of things most organ­i­sa­tions can do now to make a dif­fer­ence.”

Robin­son thinks many organ­i­sa­tions that have tak­en steps to reduce their emis­sions sel­dom pub­lish their efforts, believ­ing their work will be crit­i­cised as insuf­fi­cient. How­ev­er, Cli­mate Solu­tions has “acci­den­tal­ly cre­at­ed a safe space where peo­ple can ask daft ques­tions and feel con­fi­dent, which has been an impor­tant thing”, he says.

Breaking down barriers

Help­ing organ­i­sa­tions to bridge the knowl­edge gap is one of the key aims of West Yorkshire’s Man­u­fac­tur­ing Task Force, estab­lished by May­or Tra­cy Bra­bin, the for­mer Labour MP for Bat­ley and Spen.

Fiona Conor, man­ag­ing direc­tor at Trust Elec­tric Heat­ing, is chair of the task force’s net zero group. It’s work­ing to help busi­ness­es under­stand how to mea­sure and cut their emis­sions, iden­ti­fy how to get fund­ing to help imple­ment changes, and pro­vide firms with com­pre­hen­sive but man­age­able amounts of infor­ma­tion.

Conor acknowl­edges that because small com­pa­nies do not have the reg­u­la­to­ry imper­a­tive to report their car­bon reduc­tion plans like their larg­er coun­ter­parts, progress could be slow. She has a mar­ket­ing back­ground, she says, so sees it as an oppor­tu­ni­ty for firms to pub­lish details of what they want to do, where they want to go and how they want to do it.

“But not all small busi­ness­es will believe there is a ben­e­fit unless there’s lots of pres­sure to report it or demand from their cus­tomers,” she says.

There’s a major issue for some firms, Conor acknowl­edges: if they spend mon­ey improv­ing the ener­gy effi­cien­cy of their build­ings, their busi­ness rates will rise, which can feel like they’re being penalised for try­ing to do the right thing.

While a busi­ness rates relief for green improve­ments to build­ings is due to begin in April next year, many think the gov­ern­ment can do more to encour­age the tran­si­tion to net zero, although this doesn’t mean com­pa­nies can entire­ly abdi­cate their respon­si­bil­i­ty to par­lia­ment.

First Wealth adopt­ed a net zero com­mit­ment by 2030 as part of its B Corp cer­ti­fi­ca­tion, a scheme that cer­ti­fies com­pa­nies that pri­ori­tise sus­tain­able and eth­i­cal prac­tices.

Antho­ny Vil­lis is the firm’s man­ag­ing direc­tor. He says the com­pa­ny was ini­tial­ly weak in terms of under­stand­ing its envi­ron­men­tal impact when secur­ing B Corp sta­tus, but that mea­sur­ing its car­bon foot­print in terms of scope one and scope two emis­sions was “fair­ly straight­for­ward to get your head around”. Scope one cov­ers direct emis­sions, while scope two means the emis­sions that come from things like elec­tric­i­ty and heat­ing bills.

More chal­leng­ing are scope three emis­sions, which are in a firm’s sup­ply chain. First Wealth invests in rough­ly 10,000 com­pa­nies through a range of funds. Quan­ti­fy­ing that car­bon foot­print is vir­tu­al­ly impos­si­ble, but the qual­i­ty of report­ing around emis­sions is improv­ing, mean­ing that wealth man­agers like Vil­lis may soon be able to iden­ti­fy ‘green­er’ funds via ver­i­fi­able data.

Galvanising support

While that will be a slow process, Vil­lis is pleased with what his firm’s already done and hopes to encour­age oth­ers to fol­low suit.

“We all have a role to play and every­one has a respon­si­bil­i­ty to do some­thing, whether as a fam­i­ly or a com­pa­ny,” he says. “It’s about how busi­ness­es want to run: is it all about the bot­tom line and prof­it for share­hold­ers or, like us, do you see an oppor­tu­ni­ty to grow a busi­ness that does good things too?”

For busi­ness own­ers and man­agers daunt­ed by the prospect of tack­ling their car­bon foot­print, engag­ing employ­ees on the top­ic is a wide­ly pro­mot­ed strat­e­gy.

Vil­lis says his firm has a shad­ow board with var­i­ous sub­com­mit­tees, includ­ing one focused on the firm’s envi­ron­men­tal efforts. Robin­son, mean­while, thinks the “sin­gle most impor­tant thing man­agers can do is to give per­mis­sion for their peo­ple to make changes”.

Lefevre-Mar­ton adds: “Hav­ing a mis­sion is huge­ly empow­er­ing for teams to work on, and there are few greater things that they can get hold of than decar­bon­is­ing the world.”