The CBI (in partnership with Deloitte, Chapter Zero, The Prince’s Accounting for Sustainability Project, Dell Technologies and the Met Office) has undertaken climate research with respondents from c.100 companies to date. This forms part of the new Goal 13 Impact Platform: designed to accelerate the climate transition by sharing company progress from across the UK and beyond, inspiring further climate commitments and action, and facilitating collaboration between companies.
Interview respondents include those in strategy, sustainability, finance, and procurement leaders, executives, and board directors. Read this article for a summary of our findings or download the full report for more details.
Headline targets addressing emissions are becoming more widespread and ambitious, with 43% of respondents now having a net-zero or carbon neutral target. The net-zero commitments are typically more recent, longer-term, and represent bolder ambition than the absolute carbon reduction targets. But only approximately half of the headline carbon reduction targets appear to be science-based targets, and more than half of the companies define their targets within a limited boundary (such as their own operations rather than across their supply chain).
Drivers of change
More than half of respondents discuss broader societal shifts or implications for brand and reputation as drivers for change, reflecting the growing expectation for companies to be credible players in the climate transition. Customers are the strongest influence across both B2B and B2C companies, with consumers expecting brands to offer climate-friendly products and services as their own consumption behaviours change, and business customers looking to decarbonise their own supply chains.
Other important stakeholder influences include employee retention and acquisition, meeting investor expectations, regulation and policy, and clear direction from executive and board members who view this as a strategic opportunity. External reporting requirements are driving both the need for transparency and more cohesive responses to emerging risks and opportunities.
Climate programme positioning
65% of companies are in the earlier stages of programme maturity. While there is clearly some way to go in fully integrating climate activities into businesses, most respondents are making climate action more central and integrated with their strategy, broadening the scope across both mitigation and adaptation, involving more of their business, and improving the level of cross-functional coordination.
45% of initiatives mentioned impact a company’s own operations, such as energy efficiency in buildings and production, fleet efficiency and waste reduction. But there is growing recognition of opportunities to market and monetise low-carbon products and services, with 40% of initiatives impacting customer or consumer-facing activity. There is also recognition of the need to focus on closer engagement with suppliers, with 27% of initiatives impacting sourcing. But significant barriers remain to implementing these initiatives, including supply chain fragmentation and issues with data transparency and consistency.
Nearly three-quarters (72%) of all initiatives also have a directly attributable payback period, largely through OpEx reduction. But initiatives are increasingly creating opportunities for revenue growth: 24% of the initiatives carry revenue upside that strengthens the existing business, and 41% of initiatives enable access to new market opportunities.
The most frequently cited external barrier is an uncertain policy and regulatory environment. This leads to concerns including who will pay for the significant costs of upgrading assets to meet new regulations, and the future cost scenarios for different energy types. Coherent policy across jurisdictions is also an issue for those with international footprints. Industry structure often creates challenges, and there are concerns about factors such as a lack of shared responsibility across the value chain, and a lack of consistency in measuring emissions.
Internal barriers include climate competing with other company priorities, lack of employee behavioural changes due to existing performance management, incentives and culture, lack of quality data to support decision-making, and gaps in capabilities such as climate scenario modelling and green product and service innovation.
The importance of collaboration across the supply chain, and with policy makers, customers and peers, cannot be overstated. This has proven to be invaluable for sharing learnings, developing joint projects and propositions, innovating existing and nascent technologies (e.g. in hydrogen, EVs), and adapting existing technologies for climate actions. Many respondents also raise the importance of educating customers and openly debating the realities of sectoral challenges and trade-offs. Leadership buy-in is unsurprisingly critical in unlocking the required company focus and resource, and employees play an important role in mobilising the whole business to deliver on commitments. The more advanced companies we have interviewed use data and learnings captured through pilots to communicate progress, secure buy-in and build credibility.
Momentum is building to deliver large-scale climate action. But as we progress towards COP26, we require more ambitious company commitments, extensive collaboration across value chains, clear policy decisions and roadmaps, consistent standards across industries, as well as strong organisational capabilities in areas such as data & technology, new product innovation and green procurement.
There is an opportunity to increase collaboration within sectors, cross-sector and internationally, and agree the clear policy asks that will accelerate progress. The CBI will continue its efforts through the Goal 13 Impact Platform to capture and share insights, as well as identify matchmaking opportunities. If you would like to get involved in an interview, please get in touch.