Net-Zero: How can businesses take advantage of the economic opportunity of the 21st century?

Initially, it may have seemed like the net-zero agenda could be off to a shaky start this year, certainly on the UK policy front, after Prime Minister Rishi Sunak failed to give the climate crisis a mention in his top five priorities for 2023. However, it wasn’t long before Conservative MP, Chris Skidmore’s Mission Zero Independent Review of Net-Zero report – which labelled net-zero as the “economic opportunity of the 21^st century” – hit the headlines to remind government ministers, businesses and our wider society of the value and urgent need to scale up on climate action.

Skidmore has urged government leaders to grasp the “historic opportunity” that net-zero can bring, pointing out that the UK is currently falling behind on some targets and that inconsistent and unambitious policies have resulted in missed opportunities for many businesses and households. Any further delay on climate action, he warns, will risk damaging the UK’s already precarious economic prospects and stifle key growth opportunities.

The findings of this review stand in stark contrast to those net-zero sceptics across government and certain media outlets who last year tried to argue that net-zero policies could increase the financial burden on UK citizens and businesses, even suggesting that net-zero was contributing to soaring energy bills. Of course, this could not be further from the truth, with analysis in Skidmore’s review actually indicating that the average household stands to save up to £6,000 by 2050 if current net-zero policies are implemented, with this rising to as much as £14,000 if more ambitious policies are enforced.

Furthermore, analysis referenced within the review calculates that the global market opportunity for UK businesses from net zero could be worth more than £1trn in the period 2021 to 2030, while the direct costs of decarbonisation throughout the next 30 years will amount to less than 1% of UK GDP. That’s before mentioning the approximately 2% additional growth in GDP that is anticipated when factoring in the indirect economic effects of the transition, through a combination of new jobs, increased economic activity, reduced fossil fuel imports and cost savings.

So, how exactly will these opportunities be realised? Skidmore’s report puts forward a total of 129 policy recommendations designed to seize the opportunities that will result from a green economy. Amongst the key recommendations presented are a number which are aimed at backing businesses to go green, including business tax incentives and capital allowances for decarbonisation investments, a “Help to Grow Green” campaign aimed at helping SMEs to plan and invest in the net-zero transition, and new legislation and funding for energy efficiency improvements in non-domestic buildings, to help businesses save on their energy bills. At IES, we always advocate energy efficiency as being the best approach to simultaneously address decarbonisation and cost savings, and this report supports that view, highlighting that untapped energy efficiency measures are currently costing UK businesses as much as £6bn per year.

While this review provides a much needed wake-up call on the need for stronger net-zero policies, it remains to be seen whether the government will follow through on the recommendations presented. Sadly, we know that the government has been historically slow to move on some of its net-zero pledges, and often schemes which may sound promising at first have failed to deliver anywhere near the level of action that is needed to protect our environment and economy from the risks of climate change.

Fortunately, at IES we believe that there is a lot that businesses can start doing now to bring the situation into their own hands. Recently, we produced our free Guide to Reducing Business Energy Costs to help businesses improve their energy management strategy and reduce their carbon impact; all while saving costs and improving employee comfort, productivity, and other ESG outcomes along the way. It’s worth taking a look if you have not downloaded your copy already.

Furthermore, IES recently partnered with edie to create a post-COP business report on how net-zero will evolve moving forward, summarising key developments, announcements and initiatives, as well as capturing the key messages of thought leaders.

Making it happen: The Net-Zero November 2022 Summary Report is designed to act as a blueprint for business leadership as we begin to move from ambition into action, and covers all net-zero facets from green policy to innovation, to the built environment and the energy crisis, to help businesses turn ambitions and targets into action and progress.

If you haven’t already, you can download your free copy now at: https://www.edie.net/the-net-zero-november-2022-summary-report/