Net zero means achieving a balance between producing and removing Greenhouse Gas (GHG) emissions within a system. Achieving net zero requires significant reductions in GHG emissions, of which the most prevalent is carbon dioxide.
At present, the amount of GHGs in the atmosphere is increasing global average temperatures, causing climate change; 2020 was the hottest year on record. This has and will continue to negatively impact economies.
Climate change increases the likelihood of extreme weather phenomena, such as storms and heatwaves.
This disrupts and damages business operations, and causes supply chain shortages, impeding the manufacturing of goods and ultimately leading to increased costs. For example, experts recognise that storms such as Ciara in 2020, are exacerbated by increased global average temperatures. Storm Ciara impacted many UK businesses, and cost approximately £1.8bn in damages across a number of countries.
This demonstrates how failing to tackle climate change presents a significant risk to our local business communities. Consequently, the UK Government has set a legally binding target to reach net zero carbon emissions by 2050. A green recovery will contribute to meeting those targets, provide reduced business risk from future climate change impacts, and will provide opportunity to increase competitive advantage. Thus, it is important for businesses and policy makers to capitalise on the benefits of the net zero transition.
What does net zero mean for business?
Government and private sector investment in low-carbon innovation, technology and practices, for transitioning to net zero by 2050, could improve GDP by 2 to 3% between 2020 and 2050, supporting around 300,000 jobs. This, along with the high predicted growth in the low-carbon technology sector, will provide business certainty and new business opportunities. This economic growth will continue to build upon regional strengths and opportunities in manufacturing, transport, electric vehicles, waste recovery and recycling.
Environmental performance will increasingly be a key factor in selecting supply chains, procurement, implementing strategy, attracting investment and new customers. Consequently, local business should consider how to meet the commercial and environmental requirements of new opportunities, in order to maintain and improve future competitiveness.
Reducing businesses’ environmental impact increases competitiveness through reduced cost, increased sales, investment and differentiation, improved process efficiencies and preservation of resources, and enhanced reputation.
Stakeholder expectations towards environmental activity (such as investors and customers) continue to demand increased action, transparency and compliance on environmental matters. As such, sales could be lost to more environmentally proactive competitors. In Bedfordshire, many businesses are planning to take, or are taking, action on energy, waste and resources, transport and wider business management, namely:
Energy: installing LED lights and insulation, changing boiler/heating systems, renewable energy generation.
Waste and Resources: reducing paper and/or plastic use and recycling.
Transport: reducing car journeys (e.g. through car sharing, public transport, cycling, walking, remote working), and investing in low-emission vehicles (electric/hydrogen).
Business Management: shortening supply chains, carbon offsetting, and measuring carbon footprint.
Ultimately, businesses embracing the net zero transition can address the risks of future policy change and so improve future competitiveness. Many businesses recognise this and it shows that despite pandemic impacts, a focus on a Green Recovery for businesses can increase competitive advantage by reducing environmental impact.
To help support reducing your carbon footprint and energy usage you can apply for a Low Carbon Workspaces grant. Grants are available to SMEs in Bedfordshire and can be applied for at: https://www.lowcarbonworkspaces.co.uk/eligible-projects/
Legal and compliance obligations
There are, and will continue to be, many policy and legislative changes to achieve net zero at local, regional and national scale. Examples include:
Plastic Packaging Tax (from April 2022). Plastic packaging with less than 30% recyclable content will be charged at £200 per tonne. This is likely to impact those obligated to meet the current packaging regulations i.e. producing or handling over 10T packaging or in excess of £2m annually.
The Environment Bill (from October 2022) will set a framework for long-term legally binding targets for the UK post-Brexit, covering air quality, water, biodiversity, resource efficiency and waste reduction.
Minimum Energy Efficiency Standards (from April 2023). A minimum Energy Performance Certificate (EPC) rating of E will apply to all commercial leases. By 2030 EPC minimum targeted is B.
What do businesses need to do?
Every business can start considering how climate change will impact their strategy and operations. Taking early preventative and/or mitigative action will minimise future costs and disruption. Building on the aforementioned benefits to business, you can:
Assess and understand environmental impact within a defined scope and boundary. For a full assessment consider your direct (i.e. owned and controlled sources) and indirect emissions (i.e. purchased energy for electricity, heat or cooling, business travel, supply chain).
Assess how the external environment and stakeholders may influence the need to take action. For example, if your supply chain is susceptible to disruption from severe weather, could a greater percentage be sourced locally to reduce risk? Are your customers increasingly affected by environmental legislation? Will they increase environmental stipulations in the products/service you provide?
Assessments will highlight the areas where you can reduce environmental impact most significantly, efficiently and/or effectively, and identify areas most at risk to climate related and socio-economic changes.
Plan and action your activities
Plan and detail the measures you will take to reduce environmental impact, and the actions required to mitigate the risk of climate and socio-economic changes, such as consumer pressure.
All businesses can improve their environmental impact through implementing simple measures such as switching to a renewable electricity supplier and implementing measures referred to in the Competitive Advantage section.
For maximum effectiveness, we recommend businesses build a clear Action Plan for improving environmental impact, rather than implementing measures individually. The plan should consider how to engage and manage relevant stakeholders, risks, legal and compliance obligations and seek available support and adopt low-carbon technologies. After evaluating these influences, set SMART targets underpinned by Key Performance Indicators (KPIs) on environmental impact and integrate them into business functions. Review the measures within the plan to ensure consistency with the organisational vision and goals. Allocate responsibility and accountability for executing the Action Plan to a senior manager.
Many businesses will be affected by the transition to the national net zero goal but it also presents a range of opportunities for businesses. Given the wide-ranging difficulties businesses are currently facing, environmental action may be taken at different speeds. Nonetheless, the Chamber will support businesses with relevant guidance, best practice and advice through our network.
For further information contact 01582 522320 or visit www.zerocarbonbusiness.uk/