Simply 41% of UK companies ready to transition to net-zero by 2050, Microsoft analysis finds

The main challenges in setting and delivering goals included a lack of political clarity and a lack of internal skills

Most UK businesses have “one foot in and one foot out” on sustainability, with more than half (59%) unprepared to meet the government’s legally binding net zero target for 2050, new research by nearly 2,000 companies have surrendered.

The main challenges in setting and delivering goals included a lack of political clarity and a lack of internal skills

The study, conducted by Microsoft and Goldsmiths’ director of innovation at the Institute for Management Studies, Dr. Chris Brewer, interviewed 1,707 UK-based business leaders, each from a different organization, and 2,153 of their employees. Respondents were asked to provide information on their organizations’ climate and broader environmental sustainability plans, as well as progress made in these areas to date.

Of the organizations surveyed, 45% have set themselves net-zero targets with deadlines up to 2050 or earlier and have made them public. The study found that most of these organizations are likely to achieve their goals if the momentum to reduce emissions is maintained in the years to come.

Still, the majority of companies remain without a goal as goal setting progress has slowed this year. And for many companies with public goals, large gaps remain between net-zero ambitions and implementation. The research found that many of these challenges also discourage companies without public goals from developing and announcing them.

Common challenges are the lack of an embedded, organization-wide sustainability strategy mentioned by 43% of business leaders; a lack of clear central government guidelines, cited by 41%, and a lack of in-house expertise to support strategy development and implementation, cited by 41%.

Interestingly, only 36% of business leaders reported a lack of funding. This suggests that despite the economic impact of Covid-19, many companies are willing to prioritize investments in environmental sustainability in order to build long-term resilience – what they need is information on how to maximize the benefits of that spending.

The need to address these challenges, according to the research report, is important not only to ensure the UK meets its long-term climate goals, but also to short-term business success. Of the employees interviewed for the study, only a fifth (19%) stated that their employer is effectively implementing their current sustainability plan. Half said the strength of a company’s sustainability plan would affect where they want to work. In other words, companies that fail to bridge the gap between sustainability ambitions and actions are likely to have problems attracting and retaining talent.

Dr. Brauer said: “UK organizations have strong zero ambitions, but to truly address the climate emergency that lies ahead, actions must speak louder than words.

“Today’s results don’t just call for progress, they outline a practical short- and long-term blueprint that will help companies accelerate net-zero progress. If companies can prioritize areas such as cross-sector collaboration, stakeholder engagement, in-house expertise and technology to track progress in reducing carbon emissions, the positive environmental impact could be seismic. “

Credible Goals?

In similar news, consulting firm South Pole released its annual report on corporate net-zero obligations. The report includes surveys of 200 companies on five continents.

As in the Microsoft survey, the percentage of companies with publicly announced net-zero targets was found to be 45%. Fortunately, 18% of these companies supported long-term net-zero goals with shorter-term science-based goals, up from 11% last year.

Nonetheless, South Pole insists that the science-based target uptake should be even higher to ensure the credibility of the targets. There is also the question of whether most companies are ambitious enough with their deadlines; 40% of the assessed net zero targets have no specific deadline and a further 22% have deadlines until 2040 or later.

The report warns that companies with no deadlines or late deadlines are unlikely to be ready to deliver the science-based emissions reductions required in the meantime. Instead, they are likely to be overly dependent on balancing and may use technology that does not yet exist on a large scale.

“If we want to move from ambition to action, net zero commitments must also be SMART – specific, measurable, achievable, relevant and timely,” said Renat Heuberger, CEO of South Pole. “We all set ourselves financial and operational goals for our companies – the way we set goals for our companies to deal with climate change should be no different.”

Another similarity in the conclusions of the South Pole and Microsoft research concerns the drivers – and barriers to – the development and implementation of net-zero strategies. South Pole noted that most companies do not see regulation as the main driver of corporate climate action. The most frequently mentioned drivers, on the other hand, were increasing consumer demand for low-carbon products and services (74%), industry leadership (62%) and the desire for future-proof operations (42%).

Sarah George