Tesco and BT join calls for mandatory net-zero reporting
Image credit: Reuters
Some of Britain’s largest businesses have joined asset managers in calling for mandatory net-zero reporting, which would force businesses to become more transparent about their decarbonisation ambitions.
Research from environmental charity WWF suggests that fewer than one in five of the UK’s largest public companies have credible plans to slash their emissions to net-zero.
Under the Paris Agreement, which seeks to limit global warming to within 1.5°C, the world must reach net-zero greenhouse gas emissions by 2050. In June 2019, the UK became the first major economy to enter into law its net-zero target. However, it has only fully implemented 11 of 92 policy recommendations from the independent climate change committee and it is not on track to meet its long-term or medium-term carbon budgets
A letter to ministers, which has been signed by more than 30 organisations, calls for large companies to be forced to disclose their plans for decarbonisation. It says the government should clearly lay out when it intends to do this.
“In other jurisdictions, the European Union, seeking to build its green finance credentials, has announced an intent to require transition plans from all large companies, including short-term targets and reports on progress,” the letter says. “The UK, however, can consolidate its green finance competitiveness and climate leadership by being the decisive first-mover in setting global norms for transition plans.”
The signatories include B&Q owner Kingfisher, outsourcer Mitie, energy company E.On UK, and financial institutions that oversee assets worth £4.5 trillion (Aviva, Legal & General Investment Management, Santander). The Association of British Insurers and the Aldersgate Group also signed the letter.
Legal & General Investment Management CEO Michelle Scrimgeour said: “We need to see substantial change across economies and society globally to achieve this goal. While there is clear progress in many areas of industry, it will not be enough and we are supportive of the government in its aim to raise standards across the entire market.”
Earlier this year, laws were put in place which make it mandatory for large businesses to publish climate-related financial disclosures.
Nick Molho, executive director at the Aldergate Group, explained: “We therefore see mandatory net-zero transition plans as the natural next step to climate-related financial disclosures and one which is essential to drive good business and investment decisions and promote a level playing field.
“The plans will ensure that all corporates and financial institutions have a strategy in place to decarbonise their supply chains and assets and address climate risks. Introducing such a requirement will ensure businesses operating in the UK are equipped to support the delivery of the country’s net zero target and the goals of the Paris Agreement and will put the UK economy at the forefront of the global shift towards net-zero emissions.”
Research published earlier this year by European researchers found that inconsistencies in the way global carbon emissions have been estimated mean around 5.5GT of carbon are not being accounted for. This quantity, equivalent to total annual US emissions, may be large enough to derail climate action to keep heating within 1.5°C. Inconsistencies were found between the carbon estimates in the national inventories that countries submit (an obligation under the Paris Agreement) and estimates from international models.
While some countries monitor their greenhouse gas emissions using methodologies agreed by the Intergovernmental Panel on Climate Change, some use alternative models. The divergence in methodology led to different estimates of carbon absorption.
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