7 Risks of Falling Behind in the Race to Net Zero

There seems to be a new sense of urgency around organisation’s sustainability commitments. The UK government has promised to cut carbon emissions by 78% by 2035, helping bring the country three-quarters of the way to Net Zero by 2050. Meanwhile, leading businesses such as the BBC,Microsoft, and AstraZeneca are committing to achieve Net Zero by 2030, 20 years ahead of the government’s Net Zero target. Despite these businesses getting ahead there is still a great deal of organisations who have not yet started on their Race to Net Zero. Of the world’s largest organisations 66% have not yet set any Net Zero targets and according to our research, 28% of SMEs have not started measuring their carbon footprint. With many organisations hesitant to make a start on their sustainability initiatives, we explore the risks of delaying taking any action today:

1. Consumer Demands are Shifting

Nearly 1 in 3 consumers claimed to have stopped buying from certain brands due to their ethical and sustainability concerns. The growing number of conscious customers who expect more from organisations is felt to be the biggest driving force behind businesses introducing sustainability initiatives (41%). From the SME perspective, there seemed to be even more pressure as 69% felt that customers have a greater expectation for them to demonstrate credible sustainability practices compared to larger counter parts. Even though larger organisations emit more carbon emissions, eyes are on SMEs to take advantage of their agility and start making more positive environmental contributions.

2. Competitors are Starting

Of those who have started introducing sustainability practices, 54% claim to have seen improvements to their reputation. With many organisations fighting for market share, adding value to your brand in the form of more sustainable initiatives can give you the competitive advantage you need. Demonstrating an established sustainable position in the market that is built on reliable practices can only enhance your brand’s long-term reputation and put you ahead of your competitors.

3. Markets are Watching

As entire markets and industries are shifting towards more sustainable practices, there is a greater need to be credible so to not risk being considered a greenwasher. With improved education and transparency in the market, there is an increasing amount of scrutiny on those who are claiming to be sustainable yet fall short when having to demonstrate any detailed credentials. It seemed to be a concern of the SME’s surveyed as 52% were worried about being considered a greenwasher when introducing sustainability practices. Despite the fear of being considered a greenwasher, taking no action poses an even greater risk. Concentrating your sustainability initiatives on credible and robust methods will strengthen your position in the market and help you avoid potentially making any false claims.

4. Buyers are Demanding

If you are a supplier to any large organisation who is reviewing their carbon footprint, chances are you will be part of this assessment. Known as Scope 3, businesses are required to review their supply chains carbon footprint so that they can reduce and offset these emissions. Scope 3 can account for 70 – 97% of an organisation’s carbon emissions and so they will be reviewing their supplier’s environmental impacts as a high priority in order to achieve their Net Zero targets. This means the demand will be high for those who are able to demonstrate their sustainability credentials clearly and the pressure will be on for those who can’t. This risk was especially felt amongst SMEs as 73% said that they have already felt increasing pressure from buyers.

5. Regulation is Increasing

Establishing standards and regulations on how to build the pathway to Net Zero is becoming increasingly prevalent. It is a positive sign that the likes of the EU Taxonomy, TCFD or TNFD are demonstrating that greater clarity and transparency can be achieved through regulation. It allows organisations to feel confident in their efforts and that they are making steps in the right direction. However, there is a risk of falling behind as further regulations get introduced, and a danger of not meeting requirements enforced by these standards as you try to catch up. You can mitigate this risk by aligning your sustainability strategy with recognised industry standards as well as regulations that have already been introduced such as the UK Sustainability Disclosure Requirements.

6. Money is Circulating

The financial value of becoming a sustainable business is growing. Whether it’s through investors looking to develop their green portfolio, conscious customers looking to make environmentally friendly purchases or operational efficiencies that come with introducing sustainable initiatives, there is real money to be made in starting now. Of those who have begun their sustainability journey, 36% claim to have already seen greater sales revenue as a result. Companies are starting to shift their perception from seeing sustainability as a cost to seeing it as an investment that will reap rewards in the long-term.

7. Time is Unforgiving

No business or industry can avoid the time pressure felt by tackling climate change. The theme throughout all of the risks mentioned is that the time is now to get started and build what is necessary to become a fully-fledged sustainable organisation. With the solutions available today to get started, there is no longer a reason to wait. Introducing sustainability practices into the business is a long-term commitment and so building your knowledge and experience in such initiatives now means you can start to build a clear roadmap and achieve your long-term targets. If you are yet to start your journey to Net Zero and need support on knowing where to begin, we can help. For more information on Eight Versa’s latest research ‘Empowering SME Sustainability’ you can download the full findings here.