UK businesses lack 'credible' net-zero plans

06 April 2023 Consultancy.uk 3 min. read
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As the UK government comes under scrutiny regarding the country’s lagging net-zero plans, new research suggest that only a fraction of top companies have actionable plans to drive down emissions. A study from EY notes that under the government’s Transition Plan Taskforce framework, just 5% of the FTSE 100 have ‘credible’ net-zero plans.

Earlier in 2023, internal rifts within the UK state finally came to light over the country’s net-zero pledges. While speculation had mounted for some time that the government might be far behind its net-zero pledges, a leak of official documents in February saw senior civil servants warn cabinet ministers that they faced court action, due to their failure to develop policies tackling climate change – including a lack of clarity over how it would reach net-zero.

Indeed, the government has already been forced to rework its plans after a ruling by the UK High Court in July 2022. It found that the government’s net-zero strategy had been unlawful due to a breach of the 2008 Climate Change Act, given the document did not outline how climate policies would meet legally binding carbon budgets. In response to this, the government has reworked its Transition Plan Taskforce framework, in a bid to boost its net-zero credentials.

UK businesses lack 'credible' net-zero plans

After analysing the new documents, however, EY has suggested that the new TPT will leave businesses well out-of-step with policy. Businesses need to transition to zero-emissions working by 2050, and are a crucial part of the national drive to net-zero as a result. However, while 80% of listed firms in the UK have said they are committed to going net-zero by 2050, 95% of firms have not publicly disclosed detailed or actionable transition schemes.

Of the FTSE 100, 78% have published partially developed plans which do not address strategy or execution. Meanwhile, 17% remain in early development – suggesting it will be some time before they are ready to actually be put into practice. Meanwhile, of the 5% which EY found to be ‘credible’ in line with the TPT, many still had work to do to fully align with the government’s guidance.

Rob Doepel, EY UK&I Managing Partner for Sustainability, commented, “The TPT’s draft Framework offers vital guidance around developing detailed, ambitious transition plans, but currently just a handful of the UK’s largest businesses appear to be on track. Businesses should now be clear about what credible, detailed plans need to look like, and should have a good idea about the direction regulation is moving in. There can be no excuse for being unprepared and the UK’s largest businesses need to push ahead with developing detailed, actionable plans.”

Either way, though, this lack of alignment is academic at present. While the government launched TPT to provide a gold standard for “detailed, credible, actionable” decarbonisation plans, it has not moved to mandate it. With a second TPT consultation now scheduled for later in 2023, any chance that this gold standard might become mandatory, enshrined by law, seems distant at present – meaning fewer will feel compelled to act quickly.

Doepel added, “While the government has previously said that listed companies will be expected to publish their transition plans this year, a final date hasn’t been disclosed. By setting a deadline, the government would give much-needed certainty to the UK’s largest businesses and would send a clear message that inaction is not an option.”