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Towards net-zero
As companies increasingly recognise their role in environmental stewardship, many are setting ambitious goals to achieve carbon neutrality. Net-zero targets, while demanding, offer numerous advantages, including driving innovation and fostering a competitive edge, compelling companies to re-evaluate their operations, invest in cleaner technologies, and reduce their carbon footprint.
However, achieving net-zero objectives demands substantial investments, technological advancements, and systemic changes.
Current implementation plans do not align with ambitions for reaching net-zero.
While 75% of survey respondents confirmed that their organisations has made a public commitment to reach net-zero carbon emissions by 2050 or earlier (88% of the biggest firms, with more than 5,000 employees), such ambitions are not being matched by sufficient action plans. For example, only half of businesses have developed a carbon transition plan that is aligned with a 1.5 degrees Celsius scenario, deemed to be enough to hold the planet’s long-term average temperature to below the 1.5-degree threshold.
Only the hospitality (62%), manufacturing (56%), IT (56%) and transportation (55%) sectors appear to be bucking this trend, albeit only marginally.
Q. Has your organisation developed a 1.5°C-aligned climate transition plan?
Businesses are at risk of falling behind the compliance line on climate reporting.
Reporting plays a pivotal role in meeting net zero targets by providing a transparent framework for accountability and tracking progress. Accurate and comprehensive reporting enables businesses to measure their carbon footprint, assess sustainability efforts, and identify areas for improvement.
In the UK, the incoming EU Corporate Sustainability Reporting Directive (CSRD) will require companies that operate or sell into the EU to report on how sustainability issues, such as climate change, impact their business and how their operations in turn affect people and planet. Around 50,000 companies will be affected by the regulations.
However, the survey results suggest that UK companies are not ready to comply with the CSRD. Just 27% of CSRD-qualifying businesses (25% of respondents) have not yet started compliance work. Worryingly, just 5% are compliant already, and 25% of companies don’t even know whether they fall under the CSRD regime at all.
Q. What stage is your organisation currently at with regards to CSRD compliance?
Clearly, a big focus over the next few months will therefore be on developing plans and ensuring compliance. This will involve determining the in-scope status of each business and understanding the disclosure requirements, ahead of the first reporting due in January 2025.
Tackling Scope 3 emissions is a top priority for all sectors.
With the large majority of any company’s carbon impact associated with its supply chain, it is no surprise that most companies want to focus their efforts on tackling Scope 3 greenhouse gas emissions. Right now, 60% of companies see Scope 3 or supplier emissions as being a ‘business critical’ or ‘high priority’ decarbonisation activity.
This is especially the case for bigger companies; 70% of firms with more than 5,000 employees say addressing Scope 3 is either ‘business critical’ or ‘high priority’.
However, there are some big hurdles to overcome if companies are to effectively address the emissions associated with links in their value chain to which they do not have direct control. Getting good data and finding ways to effectively engage with suppliers to encourage them to join in on their net zero journey remain the key challenges, as highlighted by the many comments received.
When asked to explain what the biggest challenges are when it comes to the implementation and/or delivery of their organisation’s decarbonisation strategy, ‘supply chain emissions’, ‘engaging suppliers’, or ‘supply chain data’ was mentioned in 21% of the responses received.
In a few words, what do you see as the biggest challenge when it comes to the implementation and/or delivery of your organisation’s decarbonisation strategy?
“All of our carbon sits with our suppliers in Scope 3, so we rely on their work.”
“Having an impact on suppliers and materials where 90% of our GHG is emitted. The industry needs to come together and have an agreed framework to influence all suppliers.”
“Influencing our suppliers to make the same commitments to sustainability as ours.”
“Scope 3 data availability to remove reliance on spend-based accounting.”
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