Our key takeaway: The Advisory Business Group (ABG) is a group of senior leaders from a range of sectors and regions across the UK that was appointed by the Climate Change Committee (the UK’s statutory independent advisor on climate change) to advise on business response to net zero. This week, they have emitted their report which gives advice both to companies and the government on how to reach UK net zero commitments. The report proposes a framework for company, government and collaborative action in “five I’s” representing the need to scale business’ (and government) integrity, investment, implementation, innovation and influence. The recommendations, accompanied by case studies from companies who are members of the ABG, can also be used as benchmarks for business setting up and implementing net zero commitments, to identify where barriers to progress exist and where business-government collaboration is most urgent and relevant.
In June 2023, the Advisory Business Group (ABG) of the UK’s Climate Change Committee published the “The Power of Partnership Unlocking business action on Net Zero,” a report on UK businesses’ response to net zero:
- Achieving net zero requires change in all sectors, but creates opportunities for businesses. The UK has committed to cutting 78% of emissions by 2035 and, while good work has been done in reducing emissions in energy production (almost 50%), how (and what) we produce and consume will need to be transformed to reach that target (and stay within the limits set in the Paris Agreement). These transformational changes are difficult, but they are also an opportunity for businesses, with “new global markets for low-carbon products and services – worth an estimated £1trn to the UK by 2030.” The prize for the goal: “a more modern, more productive, more efficient, and more prosperous economy, compared to the potentially astronomical costs of inaction on climate.” The Advisory Business Group understands that business and the UK Government alike benefit from “positioning companies to seize the benefits that the transition will bring” and can together secure integrity, scale up investments, implement standards along supply chains, innovate and influence the consumer and public behaviours needed for these to be adopted at scale. The report presents as a case study how business and the government in Denmark are working together to deliver net zero priorities in what they call Climate Partnerships, a model for “developing and trialling innovative solutions” and “supplying these throughout the economy.”
- A framework for action: Integrity, Investment, Implementing, Innovative, Influence. What the report calls the “Five I’s” is the proposed framework for action for businesses and governments, independently and in partnership, “to realise the full potential of Net Zero.” Under the Integrity pillar, the report recommends that businesses assess and disclose emissions in their value chains, while supporting smaller suppliers. Businesses are also advised to set ambitious, science-based targets and KPIs to reduce emissions, integrate these within performance appraisals, develop appropriate plans to reduce emissions and deliver targets and only use high-integrity carbon credits where direct emissions reduction are not yet viable. Investment in net zero solutions, the second “I”, includes recommendations to shift and scale investments into low-carbon sectors, products and technologies, since “the private sector is expected to provide the majority of the £50BN per year (by 2030) investment required to deliver net zero. The third “I” is about Implementing net-zero through supply chains, procurement, and infrastructure, with the recommendation that businesses collaborate to do so and larger businesses support smaller businesses in their value chains. For instance, Lloyds Banking group (mentioned in the case study) is supporting customers to meet climate expectations through new products, as is solar power company SME which has transformed the business to advise clients on how to implement energy transition plans. For Innovative industries and workers, their fourth “I”, the Advisory Business Group recommends that businesses direct capacity and resources into solving key net zero challenges, with larger companies piloting emerging technologies. Additionally, businesses are urged to “actively consider future skills requirements in their sector and work with Government to inform and fund appropriate training and qualifications.” Finally, when it comes to Influence of business on society, businesses are recommended to “channel consumer influence in support of Net Zero societal changes and technologies” through education and accessibility. Case studies from AGB members accompany each of these recommendations.
- The framework underscores the importance of partnership (and leverage, using the language of the UN Guiding Principles) for transformative actions. The report provides one cross cutting recommendation: to establish government-business net zero partnerships, where companies can “collaborate transparently with Government and competitors to solve shared Net Zero challenges.” Through these collaborative efforts, business can implement or use their leverage to facilitate what the Advisory Business Group calls transformative actions, such as: (i) introducing a Net Zero test to assess commitment to Net Zero of major investments, spending, policies, strategies and performance (on Integrity), implementing targeted reforms on taxes, capital allowances and lending criteria, “as part of a renewed Net Zero industrial strategy” (on Investment), and “Government and business work together to create compelling consumer offer on Net Zero, incentivising and empowering the public to adopt lower carbon lifestyles and products.”