Energy and net zero have been talked about a lot by the Government and other political parties lately. Quite possibly the topic is being used as one of the levers to appeal to secure voters for the next election.
However, Rishi Sunak recently presented a big U-turn on some of the energy policies that feed into the UK’s net zero target. As it stands now, you could be right to wonder whether there are enough policies for net zero to actually happen. Our Head of Consultancy, Timothy Holman, discusses whether this should impact UK businesses.
The latest changes to the Government’s green commitments (that may prompt us to question whether we are a nation committed to achieving net zero emissions), included a delay on a ban of new diesel and petrol vehicles to 2035, an exemption to phase out fossil fuel boilers by 2035 – pushed back from 2026, and the delay of changes to Energy Performance Certificates for domestic properties. Despite this, Rishi Sunak has pledged the party’s commitment to the 2050 target and has promised to set out the next stage in their “ambitious environmental agenda” at the upcoming COP28 conference.
However, since discussions and pledges that take place at COP28 may take time to become a reality, the rollback on green measures stands to amplify uncertainty for businesses and potentially knock business confidence and momentum in their own strategic approach to achieving net zero.
As a multidisciplinary energy consultancy, we work to help organisations lower their carbon emissions, reduce energy consumption and save money, supporting them in playing their part in the fight against climate change. We find that with many of the businesses we support they see net zero as a growth opportunity rather than a cost.
For many businesses ESG strategies or decarbonisation is not a sideshow – it’s core business. That is a discipline that we champion which is why we ask whether the Government’s approach to net zero should impact on or derail your business’s approach to net zero, emissions reporting or energy management.
Firstly, there is the increased requirements for emissions reporting that were introduced earlier this year. The International Sustainability Standards Board (ISSB) introduced accounting standards to provide a global baseline for companies to disclose climate-related financial information, which is critical for creating more transparent markets, helping achieve a smooth low-carbon transition, and building a more resilient and sustainable global economy.
This is not formal legislation in the UK, however this approach, influenced by the Task Force on Climate-related Financial Disclosures (TCFD), puts more obligations on larger businesses to publicly disclose how they are mitigating their impact on climate change. This in turn will affect other partners up and down the supply chain and how they decarbonise their own business operations.
Regardless of the Government’s current contradictory messages, becoming net zero is a legal requirement for the UK, and therefore all businesses and their supply chains play an important role in delivery. Securing new business or financial investment can now relies on organisations ability to meet green stipulations to demonstrate their carbon emissions reductions.
Net zero reporting is already gaining momentum across many businesses with others starting to follow suit. The Government had asked for net zero reporting to be added to the Energy Savings Opportunity Scheme (ESOS) which currently focuses on energy efficiency. This was set to come into effect for ESOS Phase 4 and will help organisations in scope for ESOS with emissions reduction opportunities and information that could help them put together a net zero plan or to meet their existing plans. However, this change has not currently been published.
This is not the only legislation change pending. Scope 3 emissions account for approximately 80-95% of total emissions for a large number of organisations. Reducing these emissions will make a huge impact on the 2050 target and Scope 3 disclosures are increasingly important to help adapt to a low carbon economy. There is potential change for Scope 3 reporting with a consultation currently in process. The Department for Energy Security and Net Zero seeks to gain information about the costs, benefits and practicalities of Scope 3 GHG emissions reporting and how they might complement existing reporting requirements under the Streamlined Energy and Carbon Reporting (SECR) Framework.
Keeping grounded in a changing environment
With licences being recently granted to drill in the North Sea, it feels like the Government has taken its foot off the gas with the net zero target of late. However, whilst we anticipate potential change as an outcome of the approaching COP28, there actually is quite a lot going on in the background for businesses to feel there is a benefit for keeping up their own momentum in the journey towards net zero.
In a landscape that is changing, it is important for businesses to check in on some of their fundamental practices towards energy management and reporting. Collating accurate data consistently and meticulously helps to future proof your response to legislation changes around net zero and emissions reporting, especially when it comes to improving purchasing strategies and collaborating with suppliers to ensure supply chain resilience. It will also give you more time to develop and flex your strategic approach along the way.
It is a much more timely and costly method to wait for legislation confirmation to then respond by collecting data retrospectively. Investing now in solutions that work across your business operations that aggregate energy, financial and emissions related data will place you ahead of the curve when it comes to being transparent with your sustainability ambitions and net zero trajectory. It’ll be the Government who has to catch up.
If you would like guidance about embedding a carbon reduction strategy, enhancing your emissions reporting, or meeting your compliance obligations, our Energy Consultants can help.