LONDON—August 10, 2023—Almost two thirds of UK corporate carbon emissions are not currently covered by decarbonisation targets1, research released today by Bain & Company and CDP finds. The analysis reveals that 64% of Scope 1 and 2 emissions by UK companies are not covered by a target, rising to 69% for Scope 3 emissions emitted further down the supply chain2.
The UK Climate Report from Bain and CDP finds that even among UK companies who are setting targets, 21% are currently expected to miss their 2030 targets for Scope 1 and 2 emissions, while 31% are set to miss Scope 3 targets. The full number of companies off-track in relation to the UK’s net-zero plan is likely to be far higher once all businesses not disclosing through CDP, not setting targets, or both, are taken into account. The findings come in the wake of the UK Government’s own recent statement that its net-zero strategy is currently set to miss the key interim 2030 goal of cutting emissions by 60% compared with 1990 levels.
With this current lack of progress, companies are at risk of falling behind incoming regulation, including in the UK where it was announced at COP26 that listed companies and financial institutions will be mandated to disclose their transition plans. This wave of regulation is likely to be global as the US Securities and Exchange Commission (SEC) has proposed climate disclosure regulation, including disclosure of climate targets and transition plans and the European Sustainability Reporting Standards (ESRS) will also require disclosure of climate transition plans, as outlined in the standards.
The UK Climate Report finds that there are some causes for optimism, however. The number of UK businesses disclosing emissions reduction targets through CDP increased by around 130% between 2020 and 2022, with average annual increases of 52% a year over the period. UK businesses are also decarbonising faster than their counterparts in Europe and North America. On average, UK companies have cut emissions by 8% since they began reporting through CDP, compared with just 4% for both their North American and European counterparts. The UK hospitality sector has cut emissions by an average of 12%, compared to just 7% in Europe and 6% in North America. Meanwhile, the UK’s fashion sector has cut emissions by 12%, compared with 7% and 5% for North America and Europe respectively.
Dexter Galvin, Chief Commercial and Partnerships Officer at CDP, said: “It is concerning that the majority of UK companies have yet to set and deliver on targets in line with the annual emissions reductions needed to align with a 1.5° pathway, especially given the various disclosure regulations already, or set to be, implemented across the globe that will have significant impacts on UK companies.
“As the UK Climate Report shows, companies can truly embrace decarbonisation and add value to their business – these are not mutually exclusive. But you need to show leadership to do it, with credible transition plans aligned with 1.5 degrees that bring your senior managers along with you and link decarbonisation to core value proposition and value creation. The fact is there are nowhere near enough companies taking the necessary steps to do this, even though it is good for business, people and planet.
Businesses which decarbonise effectively are generating significant financial value
The Bain-CDP analysis shows that companies which take decarbonisation seriously are generating significant financial value. Companies classed as “Effective Decarbonisers” 3 capture significantly greater financial opportunities from their decarbonisation strategies – 1.3 times more opportunities are identified by these businesses than by “Carbon Laggards”. Effective Decarbonisers also identify more valuable opportunities from decarbonisation, with a projected lifetime financial impact 1.6 times greater for each opportunity on average.
A key to the success of Effective Decarbonisers is that they have proactively embedded decarbonisation into their businesses, including through their use of incentives to management to drive action. Indeed, more than half (52%) provide financial incentives with a further 29% providing non-monetary incentives.
“Effective decarbonisation strategies are a win-win – good for the planet and good for the organisations which enact them,” said Katherine Kajzer-Hughes, a partner in Bain & Company’s Sustainability practice who leads the firm’s ESG work with UK industrial companies. “Businesses which link decarbonisation to value creation, have targets underpinned by robust transition plans, and embed delivery into their operating model can generate significant upside.”
To arrange an interview or for any questions, please contact:
Emma Thomas (London) — Email: Emma.Thomas@cdp.net
Bain & Company:
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Notes to editors
1. Research only includes a subset of companies which disclosed through CDP in 2022. This includes 1,450 companies in the UK.
2. Scope 1 carbon emissions are those which a company makes directly, while Scope 2 are those which come from the energy which it purchases to run its operations. Scope 3 emissions are those which are emitted by other businesses in a company’s supply chain, as well as by customers using the company’s products, and are increasingly seen as critical to a company’s understanding of its climate impact.
3. “Effective Decarbonisers” are defined as companies whose progress on decarbonisation is consistent with meeting the Science Based Targets Initiative’s (SBTi) 1.5o C pathway. These are compared to ‘Carbon Laggards’, whose progress is not consistent with meeting the SBTi’s 1.5o C targets 1.5o C pathway.
About Bain & Company
Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.
Across 64 cities in 39 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 740 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Nearly 20,000 organizations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.
About the Report
The UK Climate Report analysed disclosure of greenhouse gas (GHG) emissions through CDP by companies in the UK and compared them to disclosures made by companies in North America and Europe. In total, the study comprised 1,450 UK companies that disclosed through CDP in 2022.