Busy city illustration with pollution.

Organisations’ directors urged to look at net zero carbon strategy: Are businesses ready for Net Zero Carbon?

By Dr Alessandro Merendino, Centre for Business in Society

Net Zero Carbon is a national and global goal that includes reducing greenhouse gas emissions by 2050. Net zero carbon means achieving a balance between emissions produced and emissions removed from the atmosphere.

As a result of COP26 and the sixth Carbon Budget set up by the UK Government, businesses must demonstrate how they will meet the net zero carbon target by 2030. The UK government wants to make companies accountable for their net zero carbon plan, and allow the market to decide whether companies’ strategies and objectives are credible. In other words, as the BBC reported, there will be no strict regulation of businesses’ net zero commitments; the government has adopted a laissez-faire approach where it encourages transparency while allowing the market to solve issues including net zero carbon. This, of course, has attracted ferocious criticism against the government for doing too little and preferring “financial carrot than […] regulatory stick”

Are businesses ready for this?

Net zero carbon is perceived to be presenting an opportunity for some businesses, as they can diversify their products and services, hence attracting new customers and becoming more resilient to market changes (ICAEW). But it also represents a significant threat for other organisations, because they are not currently equipped to reach net zero carbon by 2025.

It seems that only large businesses are accountable for reducing emissions and achieving net zero. Certain businesses are ready to implement new plans; other companies are not yet in a position to reach net zero carbon by 2025. Some feel that they can postpone their carbon net zero decisions until regulations from the government come into power or become more stringent (PWC). Globally, 450 firms controlling 40% of global financial assets – equivalent to $130tn (£95tn) have agreed to reduce gas emission and tackle net zero carbon.

Net zero carbon – the challenge or risk to be addressed

What can businesses do?

For some organisations, the debate about net zero carbon has already been prompted by shareholders. However, in many board rooms, further discussion is needed to address the issue of net zero carbon, which should be seen as a challenge or a risk to be addressed across different departments such as finance, operations and marketing (ICAEW), as organisations strive collectively to find solutions.

To start tackling net zero carbon, businesses can follow these steps.

  1. Measure your carbon emissions regularly.

To reduce carbon emissions, an organisation should first understand its current emissions, monitor them regularly, and keep track of progress over time.

  • Map your stakeholders’ expectations.

Organisations should be aware of national and international regulations, customers’ needs, and competitors’ activities to reduce emissions and media’s expectations.

  • Define a Net Zero Carbon Strategy.

The board and the executive team should define a strategy to support financial investments in net zero carbon. Such a strategy should cover how every department can contribute towards net zero carbon, the partners needed, and the targets to be achieved.

  • Establish an operational programme.

The operational programme should implement the net zero carbon strategy. This will include performance indicators to measure whether and to what extent carbon emissions change. This means using technology, people and processes to achieve net zero carbon. For instance, digital technologies can enable emissions reductions, while staff members and senior managers can be held accountable for controlling and auditing the net zero carbon strategy and operational programmes. The operational plan could include timeframes, costs and responsibilities, and track progress towards targets.

  • Mobilise internal and external resources

To implement the net zero strategy and the operational programme, organisations can mobilise internal and external resources including financial, technology and human resources.

  • Report your progress

It is essential to communicate the strategy, the operational programme, progress made, changes and achievements – to investors, customers, other businesses, policy-makers, academics and media. Every business should include performance indicators on emissions and net zero carbon in their regular reporting. On 29th October 2021, the UK government confirmed that large organisations must disclose and report climate-related financial data, in alignment with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) from April 2022. There is a call from a number of institutions and think-tanks to encourage, and even make it mandatory for all organisations to disclose information related to emissions. By engaging in meaningful reporting, organisations can become more transparent and accountable regarding their net zero targets, strategies, operational plans and performance.

  • Benchmark your organisation against others

To succeed in net zero carbon and incentivise a more rapid response to cutting emissions, organisations can benchmark their performance, actions and strategies against their national and international competitors. Identifying and comparing accepted standards and targets will encourage accountability, transparency and collective action to meet the net zero target. An example is offered by the Oil and Gas Industry where organisations compare and benchmark their strategies, performance and actions to create a more rapid response.

  • Seek external validation

To validate their net zero achievements, organisations need to go through an internal and external audit process. Internal audit refers to in-house teams or departments monitoring the progress of net zero. External audit refers to third party companies that independently monitor the organisational progress of net zero resulting in official certification. The UK government has recommended incorporating net zero elements into audits carried out under the Energy Savings Opportunity Scheme (ESOS)

A particularly concerning issue related to a lack of progress towards net zero carbon is that some organisations do not feel they need to take the issues seriously, and are be tempted to mask their inertia. Some businesses “are taking advantage of vague and often meaningless terminology”: whilst using eco-friendly buzzwords, they fail to make real changes. This phenomenon is alarming, not least because of a lack of any official system that verifies, audits, and hold organisations accountable, regardless of their size or sector. As noted above, it appears that only large organisations in the oil and gas industry are currently required to achieve net zero, whilst there is no monitoring of the efforts made by other organisations including SMEs.

In addition, organisations can suffer from an increased and daunting level of bureaucracy and reporting; the complexity of working towards net zero can kill the momentum and prevent real change from occurring.

Further blockers to the achievement of net zero goals by target dates include the inaction of policy-makers who fail to actively put forward stringent plans and the argument that many members of society feel impotent or disinterested in the real and present danger of climate change.

In summary, to overcome these difficulties, we need a shift in the attitude of boards of directors and the executive teams of every organisation in order to make net zero carbon a corporate priority. The board and the executive team should encourage carbon-related commitments and activities at all levels of the business. However, the reality is that to reach net zero carbon we need a combined effort from businesses, society, policymakers, media and academics. The pressure to act collectively continues to grow exponentially.



Vicki Williams