In October 2021, the Treasury announced new sustainability disclosure requirements (SDRs) which meant that an investment product has to set out the environmental impact of the activities it finances. In addition, a company’s sustainability claims will have to be clearly justified and net zero transition plans properly set out.
As a result of these new requirements and global attention on the effect big businesses have on the environment, COP26 saw those based in the UK leading the way in the global transition to net zero, with over half of FTSE 100 companies committing to eliminating their contribution to climate change by 2050. As a host and convener of COP26, UK businesses chose to use this backdrop to demonstrate climate change commitments.
While the government has set the requirements, UK businesses are responsible for building strategies and targets they can deliver against. In order to reach net-zero, companies cannot wait for government authorised change but must instead adapt. This will be achieved by identifying, shaping and investing in opportunities to lower emissions and reduce carbon footprints. Once individual approaches are in place the task will then be to create systemic change by working in tandem with governments.
The incentive for UK businesses to operate more responsibly is not only from the government, but as recent surveys show 81% of UK consumers prefer to purchase goods from more sustainable sources and 86% said they had become ‘greener’ in their purchasing over the last five years.
In addition to consumer trends, according to the UK’s Department for Business, Energy & Industrial Strategy (BEIS), the businesses that are committed to reaching net zero are demonstrating that taking action to tackle climate change does not need to be at the expense of a growing economy – between 1990 and 2019, the UK’s economy grew by 78% while carbon emissions fell by 44%, the fastest reduction in the G7.
Sainsbury’s, the second largest chain of supermarkets in the UK started ramping up efforts in 2021 to reach net zero by 2035, five years earlier than its original ambition. To help achieve the modified target it has pledged to install 100% LED lighting across its supermarkets, reducing lighting energy consumption by 70% and store energy consumption by 20%.
In early January 2022, Sainsbury’s opened its first store of the year, fitted out with 100% LED lighting and with a chilled section that uses only natural refrigerants alongside sophisticated Aerofoil shelf-edge technology to help retain cool air throughout the store’s fridges.
Along with Sainsbury’s, other UK companies committed to eliminating their contribution to carbon emissions by 2050 include AstraZeneca, BT Group, Rolls-Royce, and Unilever. Together these firms represent a total market capital of over £1.2 trillion and combined annual turnover of £700 billion. With a global reach, these businesses are integral to the UK’s global climate change commitments. AstraZeneca will double its energy productivity; using 100% renewable energy for power and heat and sustainable product design and Rolls-Royce has adopted a circular economy approach to its manufacturing process meaning up to 95% of jet engines can now be recycled.
As the source of most of the world’s emissions, businesses are central to achieving the international 2050 net-zero target. The UK government has announced the requirements for UK businesses and will continue to alter policy as we edge closer to the agreed target date however, without adjusted company business models little impact will be had on the environment. Policymakers, businesses and consumers must all be aligned if we are to reach the proposed emission reductions, but it is ultimately up to businesses to lead the fulfilment of global climate change commitments by fostering the necessary innovations and modifications.