New research reveals that less than 3% of large UK firms have published plans that meet the government’s ‘gold standard’ for a credible net zero transition.
The analysis, conducted by progressive think tank IPPR, covered a broad scope of sectors including construction, real estate, utilities, manufacturing and transportation. It highlights the ‘dizzying’ and sometimes contradictory array of ways companies currently claim their progress towards net zero, which it says makes it easier for some companies to ‘greenwash’ their reputations.
Of the hundreds of businesses assessed, only 2.5% had set verified science-based targets – the route recommended by the government’s Transition Plan Taskforce. The Taskforce was launched by the Treasury in April 2022 to strengthen corporate climate disclosure requirements.
Clarity for investors
The report emphasises the importance of science-based targets for the sake of economic growth and investment, stating that, “With science-based targets, investors can aggregate individual targets of firms they invest in to determine the overall alignment and importantly direction of their portfolio.”
Consistency in measuring and reporting science-based targets will play a key role not only in investment opportunities, but also in transitioning energy intensive industries to more sustainable practices. The report states, “Without comparability there could be perverse incentives for investors to divest from high emissions firms like steel to remove them from their portfolio, rather than help steward them through an evidenced path to decarbonise.
IPPR recommends a new governing body
The report recommends that the government establishes an Office for Climate and Environment Targets (OCET) to support the private sector. This regulating body would support sectors and firms on their journey to net zero by setting ambitious targets and assessing environmental progress. In order to do this, IPPR suggests 3 components:
1. Consistent timelines: There should be uniform baseline years and target dates for targets, to make reductions comparable, supported by sectoral pathways established by the regulator.
2. Continual progress: Companies’ targets must be in line with sectoral reduction pathways and provide ongoing information on the progress against them. This is needed so that markets, policy makers, or the public can investigate and understand each company’s progress – and ensure that combined those targets are meeting the UK’s carbon budget.
3. Beyond climate: There should be targets for reducing companies’ wider environmental impacts, such as biodiversity or resource use.
Sam Alvis, an IPPR specialist in climate and the fair transition, said: “Transition plans shouldn’t just be a document slid out for investors that no one sees, but a tool that helps government and the private sector work closer together. Transition plans can and should inform the Government’s green industrial policy and in return for that support government should expect greater pace and ambition in emissions reductions from the private sector.”