challenges-with-business-net-zero-transition

Challenges With Business Net Zero Transition

As businesses across the UK are working on becoming more sustainable and helping the country meet its goal of decarbonising all sectors of the economy and achieving net zero by 2050.  

Most companies now have some environmental targets and implement strategies designed to reduce their impact on the environment. Their dedication to climate action is admirable and even small changes can make a positive change. Unfortunately, however, business net zero transition is not always easy.  

What are the different scopes of emissions? 

Emissions of businesses can be divided into three scopes: 

Scope 1 Direct emissions from sources owned or controlled by a company 
Scope 2 Indirect emissions coming from the generation of energy that the company purchases 
Scope 3 Indirect emissions that occur in the value chain 

When looking at the case of the University of Aberdeen, examples of each of these emission types include: 

  • Scope 1 – vehicles and university facilities 
  • Scope 2 – electricity supply, heating, cooling 
  • Scope 3 – commuting by staff and students, working from home, waste emissions. 

Knowing what activities make up each of these categories is crucial for businesses to be able to undertake steps to reduce them.  

Challenges in becoming a net zero business 

Businesses that try to become net zero must overcome a number of challenges.  

Obstacle 1: Lack of collective action 

For efforts to protect the environment to be effective, all actors in a particular industry need to work together. By making alliances businesses can truly make a difference but not all business owners are aware of that. Many focus only on what their company can do to be more sustainable but they do not look at the bigger picture.  

‘We need to work together and form alliances. No single company on the planet can decarbonize alone and become sustainable. You absolutely have to work with your peers, with your suppliers, with your customers, to get something done,’ explains McKinsey & Company.  

Obstacle 2: Inadequate carbon accounting 

Carbon accounting helps companies measure their greenhouse gas emissions. By analysing the insights they can better understand their impact on the environment, as well as develop and meet a range of emission-related goals.  

Sometimes businesses only collect data about certain emissions but forget to capture the scope of others. Because of that their carbon accounting might not be providing the most accurate information.  

Obstacle 3: Lack of sustainable finance models  

Companies need to include innovative financing in their environmental strategies. Carefully planning how funds will be allocated to sustainability projects is important for businesses to be able to achieve their goals.  

Making the journey to net zero easier 

EMA described the case of the University of Aberdeen which is committed to tackling its carbon emissions and achieving net zero. The university recognises the importance of caring about the Planet as, in addition to playing a role in reversing the harmful effects of climate change, it can also attract the best staff and students.   

The University of Aberdeen is already reporting carbon emissions on an annual basis but is now setting more ambitious goals and undertaking concrete steps to achieve them.  

‘We are the first University in Scotland to commit to a Science Based Target – verified target aligned with the requirements set out in the 2015 Paris Climate Agreement to limit global warming to well below 2°C. Science Based Targets Initiative are not verifying targets for higher education institutions at present, but we are part of a working group chaired by the EAUC to lobby them to provide this service,’ Jane Boyle, an Energy Manager of the institution told EMA.  

The University of Aberdeen plans to achieve net zero sooner than 2040. However, the institution is facing significant challenges which include ageing campus infrastructure that does not prevent heat loss. Hence, refurbishment will play a role in achieving the net zero carbon target.  

Additionally, to make the net zero transition easier, ‘Energy Team will work in collaboration with the Transport and Waste Manager, Projects Team, building users, external consultants, and contractors to deliver on carbon and energy reduction targets, travel plan requirements, and water efficiency commitments.’ 

How to create a decarbonisation plan towards the net zero transition 

As the need to decarbonise is becoming clear to increasing numbers of businesses around the UK, many are investigating how they can alter the way they operate and create an effective decarbonisation plan.  

The first step in developing a decarbonisation plan should be getting an understanding of what our current emissions are. Once we do that, we can look for areas where improvements are easy to implement and where we can start using less energy and produce less emissions.  

Then, businesses need to prepare a timeline of various improvements. Reducing emissions cannot happen overnight. It is a process that takes time and requires patience and motivation.  

Something that many business owners are concerned with is the cost of the transition. Pricing pressures typically impact all business decisions, not only the ones related to sustainability. But, what companies need to be aware of is the fact that even though getting innovative smart solutions might require an upfront investment and can, therefore, seem expensive, it will likely lead to significant savings in the future.  

Ernst & Young advises that ‘in developing a decarbonisation plan, organisations can model the financial cost, including grants and incentives available relative to the business case for each lever, and in order of priority. The plan phase begins with a discovery and materiality exercise to look at: 

  • decarbonisation initiatives already in place 
  • an examination of opportunities and risks including the main contributors to organisational carbon footprint 
  • potential scope-three hotspots within the value chain 
  • a framework assessment and alignment across TCFD, GRI, SASB 
  • the ability of the organisation to gather necessary data to enable decarbonisation.’ 

Once a decarbonisation plan is developed, businesses need to monitor progress and keep track of whether changes they implement are bringing the desired results. Based on that, they might come up with ideas for adaptations. A decarbonisation plan is supposed to serve as a roadmap towards lower emissions and improved sustainability. It is supposed to guide businesses but it is important to note that the plan can be flexible and should be adjusted throughout the journey to net zero.  

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