Collage image showing net zero businesses

In 2019 the UK became the first major economy to set a legally binding target to achieve net zero by 2050 (2045 in Scotland), signalling its commitment to meet its obligations under the Paris Agreement. Since then, many other nations have followed suit. This commitment goes beyond what is considered necessary to keep global average temperature rises below 2°C and would end the UK’s contribution to global warming. The target is challenging and will require huge changes in the way we travel, transport our goods and heat our homes. Industry and business contribute 18% of our greenhouse gases and must also be largely decarbonised. For industry and business, there is some way to go. Some 85% of FTSE 100 firms do not have adequate carbon reduction strategies. In the SME sector, this percentage may be even higher.

Government moves to encourage business transition to net zero

Clearly, change is required and the government is already putting measures in place to encourage business to move towards net zero.

For example, The Streamlined Energy and Carbon Reporting framework (SECR), came into effect on 1 April 2019, placing a company’s carbon footprint into the public domain. Large companies need to comply. These are defined as those that have two of the following criteria:

  • Turnover greater than £36 million
  • Balance sheet > £18 million
  • 250 employees or more

It is likely that additional measures will be put in place and the chancellor, Rishi Sunak, has already signalled the government’s intention to impose a carbon emissions tax.

Business drivers for the transition to net zero

Incentives

Cost cutting

Part of the process of embarking on a carbon neutral pathway involves measuring and reducing energy use. This uncovers efficiency opportunities and cost savings in adopting new technologies, such as LED lighting, renewable energy generation, battery storage, demand shifting and power purchase agreements.

Brand reputation

Consumers are becoming more environmentally aware. Companies that adopt and publicly declare a net-zero business model enhance their brand reputation with the public and enjoy a competitive advantage over those that don’t. 

Employer reputation

We all know that any organisation is only as good as its people. Making a commitment to work towards a net-zero business is a strong message to feature in recruitment campaigns, helping you to attract the best talent available.

Investor reputation

For listed companies, a net-zero business can be attractive to potential investors. Increasingly, funds and institutional investors are investing in ‘green’ companies and a net-zero certification is a great way of demonstrating these credentials

Consequences of inaction

Legislation and taxation

The Streamlined Energy and Carbon Reporting framework (SECR) already requires larger companies to report on their carbon footprint. Such legislation is likely to be expanded to cover smaller firms. It has also been reported that chancellor Rishi Sunak is planning to introduce a carbon tax as soon as the end of 2020, to replace EU carbon-reduction schemes as the Brexit transition period ends.

Supply chain demands

As more and more companies start out on the road to net zero, this has as knock-on effect on supply chains. Many major brands will insist that their suppliers themselves gain net-zero certification – or lose out on supply contracts.

Rising energy prices

Carbon taxes are likely to contribute to increasing fossil fuel prices.

Reputational loss

As the market moves towards a net-zero future, there is a danger that organisations not embracing this change are seen as sluggish, behind the times and even environmentally irresponsible.

When to act

The short answer is now.

The business world is changing and moving towards a low carbon and, ultimately, net-zero economy. This brings opportunity for those companies able to adapt. 

For those who don’t, the future is less certain. In 2019, then Bank of England Governor, Mark Carney, put it succinctly when he wrote in an open letter to the international financial community: 

“If some companies and industries fail to adjust to this new world, they will fail to exist.”

The net-zero process

There are a number of routes to net zero depending on starting point and desired timescales. Broadly speaking the process can be summarised in the below diagram.

net zero process diagram

Net zero definition and certification

Carbon neutrality can be said to have been achieved using the formula below:

Current emissions – (reduced emissions + offset emissions) = zero

When calculating carbon intensity the following emissions should be considered:

All Scope 1 emissions - Scope 1 refers to all direct emissions from the activities of an organisation and/or activities which are under their control. This includes fuel combustion on site, such as gas boilers, fleet vehicles, and air-conditioning leaks.

All Scope 2 emissions - Scope 2 emissions covers indirect emissions from utilities purchased and used by the Applicant. Emissions are created during the production of the energy that is eventually used by the organisation.

Scope 3 emissions that contribute more than 1% of total footprint - Scope 3 emissions are all other indirect emissions originating from sources that Applicants do not control or own.

Net-zero certification

PAS2060:2014 is the only internationally recognised standard for carbon neutrality. It provides a standardised approach to achieving and demonstrating carbon neutrality and is the standard we work to with our net-zero clients.

Our net-zero services

Maximising the benefits of a net zero carbon business to gain competitive advantage means acting now but many organisations identify significant hurdles to starting the process. These include perceived issues around complexity, cost, resource, expertise and the ever-present daily pressures of business. 

Our goal is to make carbon neutrality an achievable and financially beneficial reality for our clients, so we have therefore adopted a practical and affordable approach to overcome these challenges and achieve net zero using the only internationally recognised standard - PAS2060:2014.

Our flexible service portfolio is tiered to accommodate organisations with different needs and resources.

Independent Review

Locogen will review the evidence put forward by the client and validate that the criteria set out within the PAS2060 guidelines has been met.

Independent Submission

Locogen manages the process of data gathering, preparation of evidence, and submission to a certification body to expedite the process and improve outcomes. This also frees up staff to concentrate on their core business functions.

Full Consultancy Services

Clients who wish to adopt a net-zero carbon philosophy at the core of their business can engage Locogen, to provide a holistic approach to managing the client’s long-term transition to net-zero carbon.

industry with net zero technologies

Working with Locogen to achieve net zero

Founded in 2009, Locogen’s vision has always been to see the world powered 100% by distributed renewable and low carbon energy; where everyone has access to affordable, sustainable energy and clean air. 

For more than a decade we have worked to realise that vision by providing investment-grade technical and commercial expertise and advisory services to support the development, design, build and operation of renewable energy and low carbon projects in the UK and internationally.

In doing so, we have worked with a huge variety of organisations, from government and public sector bodies, to PLCs, SMEs and community groups, to help them understand their options and select the most beneficial pathways and effective technologies as they move towards a lower carbon future.

With the writing of net-zero targets into law, our initial company vision is now shared across the board. We believe that our experience in providing not only consulting services, but also turnkey engineering, procurement, and construction services, places us in a unique position to offer a holistic, practical net-zero service accessible to most organisations.

We understand that all businesses are unique and therefore adopt a flexible approach in delivering our net-zero services. Depending on the availability of in-house resource and expertise, we may work alongside the client team to supplement resource and fill in resource and knowledge gaps as required. Alternatively, we can manage the process and implementation or provide a fully outsourced service.

Please don’t hesitate to get in touch if you’d like to discuss how we can help you on your own journey towards a net-zero business.