Businesses urgently need to break barriers to Net Zero, with credible transition plans crucial

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Large businesses are struggling with their Net Zero plans, with sustainability experts outlining the barriers they face in the Carbon Trust’s Net Zero Intelligence Unit’s latest report, including a lack of engagement from senior leaders, concerns climate change work will be unfairly scrutinised, and tackling supply chain emissions.

In Breaking business barriers to Net Zero, over 400 sustainability leaders from large businesses in the UK, Germany, Sweden, the Netherlands and Mexico have identified the issues slowing down or stopping their sustainability efforts.  

The research reveals that less than 50% of sustainability decision makers feel they have the organizational structure and leadership buy-in to deliver a transition plan and make Net Zero business-as-usual, with other business areas and stretching growth plans taking priority, despite the global economy moving towards Net Zero by 2050 at the latest.Concerns about external scrutiny of Net Zero progress was cited as another key barrier, with 26% of respondents saying companies are avoiding taking climate action due to the fear of being called out for getting their climate action work wrong, which the report calls “greenstalling”.To kickstart start their decarbonisation journey and stop “greenstalling”, the Net Zero Intelligence Unit urges businesses to refer to globally recognised best practices on Net Zero, including the International Organization for Standardization’s (ISO) Net Zero Guidelines, and the UN Integrity Matters report’s ten criteria for credible action.  

Simon Retallack, Director of the Carbon Trust’s Net Zero Intelligence Unit said:  

“It is no surprise that some businesses are nervous about how their actions to address climate change will be judged. However, that mustn’t stop them. Net Zero is all about actively reducing emissions from businesses and their supply chains, and we know the best thing businesses can do is get started on that journey today by creating a credible transition plan and implementing it."“Concerningly, our research reveals that many businesses just starting their climate journeys are caught in a state of paralysis on the best steps to take. It is critical that these businesses know that there is real consensus on corporate climate action, and the most important thing is to get started with credibility, honesty and transparency.”

Supply chain (or Scope 3) emissions, which typically account for over 70% of business emissions, were also given as a reason for inaction, with prohibitive costs and the complexity of managing and measuring carbon footprints given as barriers for progress. To tackle Scope 3 emissions effectively, the report recommends that large businesses take a hard line with suppliers who do not meet environmental expectations.

To break through these perceived barriers and to progress on Net Zero, the report sets out a five-step vision for Net Zero-aligned business transformation, including completing a ‘climate compatibility checkpoint’ for business models and ringfencing a percentage of revenue for investments in low carbon solutions. It also underlines the urgency required for businesses to bridge the gap between ambition and action, advising them to make a credible Net Zero transition plan as soon as possible.Marta Iglesias, Director at the Carbon Trust, leading Net Zero services for corporate clients, said:  
"The fossil fuel economy does not have a long-term future, so to survive and thrive, businesses need to decarbonise their value chains. This requires a fundamental and strategic assessment that goes well beyond optimising current operations and requires leadership, long-term vision, commitment, and calculated risk-taking."“Leading businesses have a clear opportunity to identify and exploit the opportunities that the transition towards Net Zero brings about for them.” 
 

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