Until recently, publishing Greenhouse Gas (GHG) Emissions Reduction strategies and demonstrating incremental progress towards these targets has been generally accepted as adequate development with regard to an organisation’s efforts to reduce its GHG footprint. However, more recently various reports have been released that point out how this approach is falling short and will result in net zero targets failing to be reached by 2050.
Organisations are now being challenged on whether their annual GHG reduction progress will allow their medium and long-term GHG emission reduction targets to be achieved. EY recently published their analysis of FTSE 100 companies, assessing each organisation’s Net Zero transition plan material (disclosed publicly) against the Government’s Transition Plan Taskforce’s (TPT) Draft Disclosure Framework.
EY found that only 5% of FTSE 100 companies had published transition plans that would align closely enough to the TPT’s guidance to be considered credible and sufficiently detailed. Looking more broadly at the UK, 80% of UK-listed firms state that they are committed to becoming net zero by 2050 but the majority (95%) have not yet publicly disclosed detailed, actionable transition plans. These statistics and others all highlight the growing issue of slow and inefficient implementation of emissions reduction strategies. Despite increasing awareness and rhetoric surrounding sustainability, translating aspirations into concrete actions remains a challenge.
This is not an issue specific to the UK with Accenture recently sharing its Accelerating global companies toward net zero by 2050 report which found that out of the one-third (34%) of the world’s largest companies who are now committed to net zero, nearly all (93%) will fail to achieve their goals if they don’t at least double the pace of emissions reduction by 2030.
These reports and others are encouraging stakeholders, particularly investors, to start focusing on progress rather than planning and this will only increase as target years draw closer. Investors are also applying increased pressure to ensure that Greenhouse Gas reporting is verified by a third party to reduce the risk of inaccurate reporting which can lead to allegations of misleading key stakeholders or greenwashing.
These growing pressures come at a time when many organisations are grappling with the scale of transformation required, and the need for significant capital investment and the development of alternative business models required to achieve net zero. It is crucial for businesses to overcome the inertia of established practices and the fear of disrupting existing operations in order to prioritise the agility and speed required to implement meaningful changes across the full gambit of their operations and strategies.
At ITPEnergised our trusted advisors in the ESG, Carbon Services and Energy & Low Carbon Transition teams work closely to support clients as they navigate their transition pathway. Please contact us at info@itpenergised.com to find out more.