Disable your ad blocker to enjoy the full interactive features of this document.
Towards net-zero
As corporate entities embrace their responsibility towards the environment, a growing number are charting ambitious courses towards net-zero. Target setting has boomed in popularity in recent years and businesses are very much looking at the tried and tested solutions to deliver on their ambitions.
Many businesses know that the net-zero transition remains a daunting and unquantifiable challenge. Focuses on decarbonisation in the short-term are essential while businesses wait for government support mechanisms and new markets for revolutionary green solutions to develop. But just how are corporates approaching the net-zero transition?
The first thing businesses will need to address is the gap between ambition and transition planning on net zero. 61% of survey respondents confirmed they have made a public commitment to reach net zero before 2050. But just 45% of companies have developed a Climate Transition Plan to actually deliver on their commitment.
Additionally, 18% of businesses without a Climate Transition Plan stated that developing one is a “business-critical priority” over the coming year, with an additional 33% listing it as a high priority.
Combining the stats paints an interesting picture. Almost half of responding businesses have a Climate Transition Plan in place and of the 55% that do not have one, 51% view it as a high priority.
As such, we can expect the rollout of published Climate Transition Plans to continue at a pace over the coming months. However, the survey shows that not many businesses are turning to the guidance of the UK’s Transition Plan Taskforce (TPT). The TPT was initially introduced at COP26 in Glasgow in 2021, to implement new net-zero disclosure requirements for large businesses in high-emission sectors.
In April 2024, the TPT published its ultimate set of resources, including its widely recognised disclosure framework for transition plans, recommending how companies should develop plans and the key elements they should include.
edie’s survey found that the guidance is viewed as “business critical” in terms of non-financial disclosure by just 4% of respondents, and a high priority by just 15%.
Q. Has your organisation developed a 1.5C-aligned climate transition plan?
Scientific guidance calls for nations and businesses alike to reach net-zero emissions by 2050 at the latest, and this has led to differing levels of ambition (largely defined by size and sector) in terms of what deadlines corporates have set themselves to reach net-zero.
Seven in 10 businesses (70%) have set a net-zero target deadline for 2040 or later, compared to just 7% for 2035-2039. Almost a quarter of businesses surveyed (23%) have a net-zero target set for 2034 or earlier.
More companies are prioritising tackling Scope 3 emissions
According to PwC, between 65-95% of any one company’s carbon impacts are to be found within its supply chain. This is a big problem. Not only is the Scope 3 footprint large, but it is indirect and outside of the control of a company’s activities and operations. Tracking and reporting Scope 3 is tough enough; reducing supply chain emissions is even more difficult.
It is no surprise then that an increasing number of respondents say they are placing greater importance on addressing supply chain emissions as part of their decarbonisation activity. The issue is now ‘business-critical’ for 25% of businesses, compared with 16% that said the same in the previous edie Sustainable Business Tracker survey. Additionally, 30% of businesses view Scope 3 emissions as a “high priority”. No other decarbonisation approach ranks higher in terms of business-critical priorities than Scope 3 emissions and only energy efficiency upgrades (37%) rank above Scope 3 in terms of "high" priorities. The need to tackle Scope 3 various depending on the size of the business, and just 8% stated that this area was “not at all a priority”.
Q. How much of a priority is your organisation currently placing on each of the following areas of decarbonisation?
© 2023 edie