Survey: 80% of business leaders say more regulation is needed to deliver net-zero

The survey was commissioned by the University of Cambridge’s Institute for Sustainability Leadership (CISL) and polled chief executives and other senior leaders in the UK, Germany, the US, Brazil, Japan, India and South Africa. All businesses represented had 250 or more employees, with half having 1,000 or more.

Of the businesses represented, around seven in ten have set a net-zero target supported by a plan to achieve it. Eight in ten of those surveyed said that government policies are necessary for national and global efforts on climate mitigation and adaptation.

Across all geographies, 70% of survey respondents said that regulation is important for their business to meet its own climate commitments. This sentiment was particularly strong in the UK, with more than 80% of survey respondents stating that government policy and regulation is needed, particularly in terms of delivering a rapid and just energy transition. Less than half of the UK-based professionals surveyed believe that business alone can bring about the necessary change regardless of the policy and regulatory environment.

Access to finance was found to be a key concern for UK-based businesses. Almost half (48%) said they do not yet have the investment required to achieve their net-zero ambitions. 43% said they are unclear to some degree on potential funding options open to them. This suggests that government incentive schemes are perhaps difficult to navigate, and that the UK could do more to move financial systems.

CISL has stated that the UK will need to invest £40bn annually in infrastructure, and £33bn annually elsewhere, to meet its Sixth Carbon Budget. There was already a funding gap here, but the organisation is concerned that it may have been widened amid the Covid-19 pandemic. The UK’s economic recovery package allocated only 17% of the funds to low-carbon measures, compared to 30% in the EU, according to CISL.

The Corporate Leaders Group UK’s (CLG UK) policy lead Beverly Cornaby said the findings should show that UK Plc wants new Prime Minister Liz Truss to “refocus and re-prioritise”, combining responses to the climate crisis, energy price crisis, and need for levelling up.

She added: “UK businesses have high ambitions when it comes to net zero and many are grappling with the urgent need to implement their strategies and action plans. The survey points to how businesses in the UK can see the potential benefits of a stronger and more directional regulatory environment to drive economy-wide and individual business responses to the climate crisis.”

Earlier this week, 116 businesses and financial institutions signed an open letter to Truss urging her to ensure that her Government develops and implements “robust” net-zero plans that also contribute to social and economic improvement. The Net-Zero Strategy, produced under her predessesor Boris Johnson, was ruled to be unlawful earlier this year. Truss has called for a “pro-business, pro-growth” review of the UK’s net-zero approach, with many concerned about her plans for fossil fuel expansion as part of this approach.

The letter was coordinated by CLG UK. Its signatories collectively represent £1.8trn of market capitalisation and more than 425,000 members of staff.

A world off track

In related news, PwC has this week published the latest edition of its Net-Zero Economy index, tracking decarbonisation rates globally and on a country-by-country basis.

The worrying conclusion is that no G20 nation is decarbonising rapidly enough to reach net-zero by mid-century along a 1.5C temperature pathway. This is the more ambitious of the Paris Agreement’s two temperature pathways.

PwC states that globally, emissions will need to drop by 15.2% each year through to 2050 if 1.5C is to be achieved. This is 11 times faster than the global average between 2000 and 2021.

Looking at 2021 specifically, the G20 nation which decarbonised the most rapidly year-on-year was South Africa, where a 4.6% decrease was recorded.

Of particular concern is the fact that several G20 members increased their emissions and their carbon intensity, with emissions ‘rebounding’ after lockdowns. Included in this cohort are the US, India, Japan, Germany and France.

Putting forward recommendations to change this trend, PwC stated: “While policymakers are under pressure to ensure a secure and affordable energy supply, there is an opportunity to use disruptors to strengthen the business case for net-zero investment. The rise in energy prices and threats to supply have created a rush to fossil fuels in the short term; but strengthen the case for investment in renewable energy capacity for the long term.”

It bears noting that the stated “rush” for fossil fuels predominantly concerns coal, as wholesale gas prices remain high.

The statement adds: “Similarly, the financial case for energy efficiency has strengthened, especially in high energy-consuming and hard to abate sectors. Businesses will be looking at ways to consume less, while using energy more effectively, signalling a possible turning point in how we think about energy.”

Earlier this year, the International Energy Agency (IEA) stated that fast-tracking efforts to improve energy efficiency could reduce global annual emissions by 2030 so significantly, that one-third of the reductions needed to deliver net-zero by 2050 would be achieved.