Net Zero Guidance: Our Top Five Tips | Deloitte UK has been saved
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Longer-term challenges like climate change may feel less important in the midst of the COVID-19 pandemic, however, the urgency of the transition to a zero carbon economy has not gone away. Business and governments alike have made bold promises to create fundamental shifts in how to cut carbon emissions and increase resilience against the disruptive potential of climate change. Mike Barber, our UK climate change lead, explores the implications of net zero, and shares tips to make it happen.
In June 2019, the UK government became the first major economy to legislate to reach net zero greenhouse gas emissions by 2050. This ambition will deliver on the commitment made by signing the Paris climate agreement. We’ve also seen businesses start to mobilise and get their heads around what a future with zero carbon could look like.
Corporates will play a key role in decarbonising the economy. And while responding to COVID-19 is understandably taking up the world’s attention at the moment, the companies that get ahead of this challenge are likely to build competitive advantage. When thinking about recovering from the pandemic, organisations have a real opportunity to redesign their business with reduced dependency on fossil fuels.
Reaching net zero is a crucial step in the fight against climate change. The greenhouse gases added to the atmosphere by human activity largely determine the extent of global warming. To prevent catastrophic climate change, emissions need to be decoupled from economic growth and reduced to near zero per unit of GDP.
Central banks recognise that greening the financial system will catalyse economy-wide action to decouple carbon emissions from growth. And investors realise that inaction on climate change will affect the value of their investments. Both stakeholder groups recognise a stable climate directly informs the stability and resilience of our economy. The short-term net zero cost will be nothing compared to the long-term benefits of shifting to greener energy sources.
BlackRock, the world’s largest investor, announced that it will increasingly vote against directors that fail to act on climate change and is endorsing standards that mandate better climate-related disclosure. It has confirmed that its position is unaffected by the COVID-19 pandemic. BlackRock has also joined Climate Action 100+, a global coalition of more than 370 investors acting together to drive change.
Larger corporates from a broad spectrum of industries - from manufacturing to medicine - are starting to role model the changes that need to happen and household names, from Microsoft to AstraZeneca, have set ambitious net zero targets. As well as bold goals, however, progress needs a plan. Businesses now have to follow through on their commitments with well-thought-out actions – for us, this is the fun part!
Here are our top five tips to get started on your net zero journey.
Finally, remember that inaction is our greatest threat. The cost of doing nothing vastly outweighs the investment needed to decarbonise the economy. Action will need to be taken by every company, everywhere, if we’re to prevent the worst impacts of climate change. We encourage all of you to engage with this journey to transition our economy to one that decouples carbon from growth.
Mike has more than 25 years’ experience in risk management, controls and governance. He leads Deloitte UK’s sustainability practice, which helps clients achieve their sustainability goals by developing, measuring and reporting on corporate responsibility strategy. Mike works with many large and listed organisations, helping them on sustainability issues ranging from decarbonisation to internal audit and assurance.