Net zero: reducing carbon emissions in your business

Following COP26, the UK Government’s HM Treasury has confirmed that by 2023, all firms will have to have created and published detailed plans for how they intend to hit climate targets to transition to net zero, in line with the UK’s 2050 target. While these commitments will not be mandatory, they will have to be published in an aim to increase transparency and accountability.

Explainer: Net zero is when a business or a country achieves an overall balance between the amount of carbon it is emitting and the carbon that it’s removing from the atmosphere.

During COP26, which addressed the phase out of coal, the transition to zero emission vehicles, increased finance to support clean energy access in developing countries and an end to deforestation, there were many commitments to mitigate climate change from across the world. In total, 450 firms controlling 40% of global financial assets – equivalent to £95 trillion – have agreed to commit to measures to limit global warming to 1.5°C. Read more about our response to COP26 negotiations.

Organisations’ net zero plans will need to outline the changes to their business model, including skills, financial expectations and how they plan to support employees. It should help safeguard against greenwashing, a term used to describe the activities of companies that provide a misleading impression of how their products or processes are environmentally sustainable.

Some of the world’s biggest companies have already valued their climate risks and are prioritising sustainability by implementing science-based net zero targets. These focus on rapid and deep emission cuts, near and long-term targets, no net zero claims until long-term targets are met, and making investments into value chain (Scope 3) emissions.

That’s not to say smaller businesses can’t make a big difference too. According to the International Energy Agency, small and medium-sized enterprises (SMEs) account for at least 13% of global energy consumption and play a fundamental role in world economies. However, 70% of SMEs are struggling to turn their ambition into action, despite the fact they could realise energy savings of up to 30% of their total consumption by using existing technologies and practices.

This is where the LEAP4SME consortium, of which Energy Saving Trust is a member, can help. It supports policymakers across Europe to create better policies needed to support smaller businesses to become more energy efficient. These policies can support energy efficiency improvements that will help SMEs save energy, such as reducing waste, water consumption, greenhouse gas emissions and improving a business’ working environment.

Successful organisations look towards the future. They’ll see that the future economy is grounded in sustainability. Currently, 70% of global GDP is covered by net zero targets, compared to just 30% when the UK took on the COP26 presidency in 2020. After two weeks of deliberations, the COP26 climate summit in Glasgow has resulted in some promising climate commitments, which demonstrate some progress. However, even with a commitment to revisit and strengthen national plans by the end of 2022, we cannot ignore the fact that emissions are projected to exceed the levels needed to limit the global temperature rise to 1.5°C.

It’s important to reduce business emissions to protect the planet and appease eco-conscious customers who are increasingly purchasing from brands that have good sustainability credentials and eco-friendly policies. According to research carried out by Energy Saving Trust, 87% of UK adults are either extremely concerned or somewhat concerned about climate change.

By showcasing how you’re playing your part in addressing the climate emergency, you can attract these customers to your brand and influence them to achieve more sustainable lifestyles. It also offers you an opportunity to identify areas ripe for both cost and carbon savings, which can help create a benchmark for future sustainability actions or a complete sustainability strategy.