New research from Bain & Company has found that the average emissions reductions recorded by UK companies in 2023 are one-third lower than levels recorded in 2022 for Scope 1 and 2 emissions. For Scope 3, emissions reductions have slowed from an 8% annual reduction to just 2%.
The research utilises disclosure data from CDP and includes the emissions data of 1,797 UK-headquartered public and private organisations, including 94 of the companies listed in the FTSE 100 index.
According to the research, only 30% of disclosing UK organisations have decarbonisation targets in place and only 29% have targets in place for Scope 1 and 2 emissions, and just 19% have targets in place for Scope 3.
Based on publicly available targets, UK businesses are collectively aiming to reduce Scope 1 and 32 emissions by 51% on average by 2030, and 43% for Scope 3 emissions. However, the pace shown last year puts these levels of ambitions at risk.
“UK-based companies are failing to maintain the pace of decarbonisation needed to align with a 1.5° pathway. A key driver of this is that many of the easiest emissions reductions may have already been achieved, so businesses must now grapple with harder-to-abate parts of their operations,” Bain & Company’s partner Katherine Kajzer-Hughes said.
“Companies can still establish credible transition plans that reinvigorate their rate of decarbonisation. We find that companies that link decarbonisation with value to the customer, and to financial outcomes, can catalyse emissions reductions.”
Transition plans
The research notes that the number of UK businesses disclosing data to CDP grew by 24% in 2023 and the number of companies setting emissions targets grew by around 40%. This may create some fluctuations in the trends reported as many may still be just starting their decarbonisation journey after disclosing. As a result, around 66% of companies reported an increase in absolute emissions year-on-year.
Still, the research found that around 38% of UK businesses are not decarbonising in line with the needs of the Paris Agreement. Additionally, only 9% of reporting firms have long-term goals beyond 2030 in place.
Bain & Company states that the trends showcase the need for robust climate transition plans.
The UK Government commissioned the creation of a Transition Plan Taskforce (TPT) – a body to determine what a credible corporate transition plan for climate should look like – in 2021.
Last October, the jewel in the crown of the TPT’s work, its pan-industry ‘gold standard’ framework, was published.
The Task Force has recommended that corporates publish plans, and then an update in 2026. In 2024 and 2025, information material to the plan should be included in financial reporting. Advice has also been provided on what, exactly, the plans should cover.
The research found that UK companies that have already set up transition plans achieved annual decarbonisation rates of 8%, compared to 4% for companies without plans.
The research recommends key areas that can help businesses fast track emissions reductions based on the actions of disclosing companies. Engaging with customers, setting science-based targets and identifying and tying financial opportunities to decarbonisation opportunities are all highlighted as key actions.
Commenting on the findings, Dexter Galvin, chief commercial and partnerships officer at CDP, said: “It’s great to see a 24% increase in UK disclosure, but there is no excuse for a slowing or stalling of progress when it comes to decarbonisation; the stakes are far too high. Disclosure – on all scopes and across all environmental issues – is key to providing companies with the full picture and the foundation upon which to take meaningful climate and nature-positive action.
“UK businesses must step up on assessing value chain emissions, putting credible transition plans in place and seizing the financial opportunities that go hand in hand with effective decarbonisation.”