Just 41% of UK businesses prepared to transition to net-zero by 2050, Microsoft research finds

Key challenges to target-setting and delivery included a lack of policy clarity and a lack of in-house skills

The research, conducted by Microsoft and Goldsmiths’ director of innovation in the Institute of Management Studies Dr Chris Brauer, surveyed 1,707 UK-based business leaders, each from a different organisation, as well as 2,153 of their employees. Respondents were asked for information on their organisations’ climate and broader environmental sustainability plans and on progress in these fields to date.

Of the organisations polled, 45% have set net-zero targets with deadlines of 2050 or sooner and announced them publicly. The research found that most of these organisations are likely to meet their goals if momentum to reduce emissions in the coming years is maintained.

Nonetheless, this still leaves the majority of businesses without a target, with target-setting progress having slowed this year. And, for many businesses with public targets, major gaps remain between net-zero ambitions and delivery. The research revealed that many of these challenges are also discouraging firms without public targets from developing and announcing them.

Common challenges include a lack of an embedded, organisation-wide sustainability strategy, cited by 43% of business leaders; a lack of clear guidance from central government, cited by 41% and a lack of in-house expertise to support strategy development and implementation, cited by 41%.

Interestingly, a lack of funding was cited by just 36% of business leaders. This indicates that, despite the economic fallout of Covid-19, many firms are willing to prioritise investment in environmental sustainability to build long-term resilience – what they need is information on how to maximise the benefits of this spending.  

The need to address these challenges, the research report states, is not only important to ensuring that the UK meets its long-term climate targets, but to business success in the near-term. Of the employees polled for the research, just one-fifth (19%) said their employer is implementing its current sustainability plan effectively. One-half said the strength of a firms’ sustainability plan would impact where they choose to work.  In other words, businesses which fail to close the gap between sustainability ambitions and actions are likely to face issues attracting and retaining talent.

Dr Brauer said: “UK organisations have strong net-zero ambitions, but to truly address the climate emergency before us, actions must speak louder than words.

“Today’s findings don’t just call for progress, they outline a practical short- and long-term blueprint to help organisations accelerate net-zero progress. If organisations can prioritise areas such as cross-sector collaboration, stakeholder buy-in, in-house expertise and technology to track carbon reduction progress, the positive environmental impact could be seismic.”

Credible targets?

In related news, consultancy South Pole has released its annual report on net-zero commitments from businesses. The report covers research concerning 200 businesses across five continents.

As with Microsoft’s survey, the proportion of firms with net-zero targets announced publicly was found to be 45%. Encouragingly, 18% of these firms have supported net-zero targets in the long term with shorter-term science-based targets, up from 11% last year.

Nonetheless, South Pole is emphasising the fact that science-based target take-up should still be higher, to help ensure targets are credible. It is also questioning whether most companies are being ambitious enough with their deadlines; 40% of the net-zero targets assessed have no specific deadline, and a further 22% have deadlines of 2040 or later.

The report warns that companies with no deadlines or late deadlines are likely not prepared to deliver the science-based emissions reductions needed in the interim. Instead, they are likely to be over-reliant on offsetting, potentially using technologies that do not yet exist at scale.

“If we are going to get from ambition to action, net-zero commitments must also be SMART – Specific, Measurable, Achievable, Relevant, and Time-bound,” said South Pole’s chief executive Renat Heuberger. “We all set financial and operational goals for our businesses – the way we create goals for our companies to address climate change should not be any different.”

Another similarity in the conclusions of South Pole and Microsoft’s research regards the drivers of – and barriers to – net-zero strategy development and delivery. South Pole found that most firms do not see regulation as a top driver of corporate climate action. The most frequently-cited drivers, instead, were rising consumer demand for low-carbon products and services (74%), industry leadership (62%) and the desire to future-proof operations (42%).

Sarah George