The path to net zero

The recent assessment of the planet's future by the UN's Intergovernmental Panel on Climate Change (IPCC), a group of scientists whose findings are endorsed by the world's governments, made for sobering reading. The first major review of the science of climate change since 2013 revealed a number of worrying statistics. Its release came in the lead up to the UK's hosting of a key climate summit in Glasgow, known as COP26.

The report and conference have pushed the UK's drive to reach net zero by 2050 back up the agenda. However, the route to net zero appears far from clear to both the UK government and businesses.

Although the Confederation of British Industry (CBI) acknowledges the urgency of the problem, a recent survey from the British Chambers of Commerce (BCC) shows that many businesses still don't measure their own carbon footprint. What do businesses need to do to make themselves fit for net zero?

Here, we take a look at the latest climate science and ask what businesses could be doing.

Code Red

The IPCC's report has been described as 'a Code Red for humanity' as it highlights how human activity is changing the climate in unprecedented and sometimes irreversible ways. The landmark study warns of increasingly extreme heatwaves, droughts and flooding and a key temperature limit being broken in just over a decade.

But scientists say a catastrophe can be avoided if the world acts fast.

There is hope that deep cuts in emissions of greenhouse gases could stabilise rising temperatures. The CBI says that the report must put to bed any remaining doubts as to the scale of the climate crisis.

It called for COP26 to be the trigger for more urgent action from countries around the world and says joint efforts by governments, businesses and consumers are required.

The CBI says that while the UK government must take the lead, by establishing the policy and tax frameworks to make it possible, businesses must play a vital role.

The carbon footprint mystery

However, a worrying recent survey conducted by the BCC found that carbon footprints remain a mystery to the vast majority of UK businesses. In fact, only 11% of businesses are measuring their carbon footprint.

The research also showed that only 13% of businesses have set targets to reduce their emissions – down from 21%, when firms were surveyed before the pandemic in February 2020.

The findings also show that 22% of businesses don't fully understand the term 'net zero,' and almost a third have yet to seek advice or information to help them develop a net zero roadmap or improve their environmental sustainability.

Similarly, a survey carried out by resource management firm Veolia has revealed that 83% of businesses polled were not aware of the Plastic Packaging Tax, which is due to take effect from April 2022.

The Plastic Packaging Tax is a new tax that will apply to plastic packaging manufactured in or imported into the UK that does not contain at least 30% recycled plastic. The government states that the aim of the tax is to 'provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging'.

The BCC described its research as a 'real eye-opener' and says change must come as climate challenge affects everyone.

Low carbon economy

The good news for businesses is that the UK's low carbon economy is now worth more than £200 billion according to research by kMatrix, and is continuing to grow.

Experts say the sector not only has the potential to help tackle the climate crisis but also create sustainable jobs and improve people's quality of life – with cleaner transport, reduced air pollution and better insulated homes.

But they warn that if the UK is to make the necessary rapid and fair transition to a low carbon economy, the government must mobilise all sections of society behind a national programme of transformation.

The kMatrix reports how low carbon schemes and projects around the UK are not only helping reduce emissions but also improving communities and creating jobs.

How can we help?

As the push towards net zero takes shape, tax laws may change, while new funding streams become available for eligible businesses and projects.

As your accountants we can help with both your tax and finance requirements: please contact us.

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