Net Zero: navigating what it means for your business

May 24, 2023 admin

Just a fifth of UK small firms have so far committed to a Net Zero agenda.  Immediately, most are at risk of falling behind both national and international competitors and falling foul of government guidance and even legislation. The key for SMEs is to act now to get a grip of what is in place already, and what will be coming in down the line not just as 2050 approaches, but in terms of key milestones in the interim.

There are a multitude of approaches to ensuring your business is Net Zero-friendly, including measuring and cutting down on carbon footprint, redefining business strategy internally to prepare for a Net Zero future or even just making your employees aware of the new rules in place that will require their participation even if the company doesn’t have a large carbon footprint.

So what is Net Zero?  It’s a frequently-heard phrase, but many people don’t really know what it means.  Put simply, it’s about offsetting the impact of climate change by preventing the build-up of such greenhouse gases, which lead to global warming, and ensuring sustainable energy for when fossil fuels run out.  It’s UK government policy that we will do this as a country, after Labour, in the 2008 Climate Change Act pledged to hit Net Zero by 2050.  In 2019, the Conservative government again committed to this and in the December 2019 election manifesto promised further work to realise the goal.

For small businesses, this is all very well for most in principle, but the resulting resetting of the economic conditions and framework will mean drastic change to working practices.  The fact that the UK emits only one per cent of global emissions have led some to question the wisdom of the policy, especially against the backdrop of a cost of living crisis.

But Net Zero is here and looks set to remain government policy, so navigating what it means for your business is an essential service Sovereign Strategy can offer.

Larger companies have paved the way to some extent, with two thirds of the UK’s FTSE 100 companies pledging to implement Net Zero by or before 2050 in line with these aims.  Leading forms such as the BT Group, Rolls Royce, Aviva, Sainsbury’s and Unilever believe decarbonisation will affect every part of our economy.  Large businesses have taken a lead that small businesses – whether they like it or not – will have to follow.

And the top-down nature of the initiative means a clear understanding of small businesses’ regulatory duties to ensure they don’t fall behind in this critical new requirement is essential.  The radical changes made by vast multinationals will not be on the same scale in terms of costs of logistics as those that smaller groups can undertake, but as the UK is the world’s first nation to implement Net Zero into law, the challenge of understanding and implementing Net Zero even for small structures will have to be met.  Sovereign can help navigate this minefield, with our deep understanding of sustainability, UK government policy, the 2030 agenda for sustainable development, the global goals and related targets, which we use as guiding principles in our work with clients across partners from across different sectors and continents.

It is absolutely clear that small businesses need to work and prepare right now to ensure their future competitiveness.  Most will need help navigating the regulatory and logistical labyrinths, with the aim of retaining profitability despite the significant change and expense that are ahead.

By Peter Cardwell, Senior Counsel, Sovereign Strategy

(Photo credit: Institute of Export and International Trade)