Why collaboration is key to tackling climate change

By working more closely together, businesses and governments can deliver a greener future and unlock new opportunities.

From the recent G7 meeting in Cornwall to the UN Climate Change Conference of the Parties (COP26) in Glasgow later this year, the need to reduce carbon emissions and slow down global warming has never been higher on the world’s political agenda.

But delivering on those climate change commitments is going to depend on industries and the Government working closely together. Businesses need a framework that supports investment and governments need entrepreneurs who can turn ambition into action. This is particularly important in relation to the UK Government’s Ten Point Plan, which will only be achieved by unlocking the power of the private sector to deliver on public objectives.

EY is playing its part through the formation of the EY UK Climate Business Forum (CBF), made up of senior industry leaders from all sectors. To broaden viewpoints and challenge established thinking, the CBF also involves future leaders: young professionals, students and entrepreneurs with new ideas and fresh perspectives.

Before we look at what the Government’s green targets mean for businesses, let’s explore the growing opportunities for UK companies. 

From a cost to a benefit, the sustainability opportunity

Falling green energy costs and rapid advances in low-carbon technology mean that we are rapidly approaching the point when, not only is the cost of sustainability falling, but its value is rising.

Customers are increasingly demanding green choices. EY research carried out earlier this year in the energy sector, found that 62% of consumers were more likely to purchase a product or service that was sustainable. 

Investors are increasingly ‘baking in’ environmental, social and governance (ESG) factors into their valuation and investment models. Our 2020 survey of institutional investors globally found that 98% are now evaluating non-financial performance. 

The wider public, and especially young people, are increasingly holding companies accountable for their impacts on the environment. From recruiting talented employees to winning new customers, sustainability is becoming a new key driver for long-term growth. The value being generated by early adopters committing to long-term sustainability commitment¹, such as Tesla’s fearless focus on electrification², illustrates this point. In fact, even niche areas are now attracting commercial interest. 

Rising to the challenge: four key areas of focus 

The CBF examined in detail what delivering the Government’s green plans means for businesses, and hosted the Minister of State for Business, Energy and Clean Growth, Anne-Marie Trevelyan, to present our detailed findings. Below, we share a brief summary of the four key themes that were debated by the CBF.

1. Helping consumers make low-carbon choices

For the Government’s Ten Point Plan to be a success, consumer demand for green products and services must continue to rise. Yet, although consumers say they are more likely to purchase sustainably, research suggests that a much lower percentage actually do³. This is where businesses, with their understanding of customers and ability to launch attractive new propositions, can play a key role in changing consumer behaviour. A great example of how sustainability can breed success is that Unilever’s green brands now consistently outperform other products within their portfolio, growing 69% faster than the rest of the business and delivering 75% of the company’s growth⁴. 

Consumers also want more information on product sustainability. This suggests that companies which can set clear standards, perhaps taking into account everything from the carbon emitted during production to that used to transport it to the point of sale, can gain a competitive edge. 

2. Rising to the skills challenge 

As the UK transitions to net-zero, significant changes to the labour market are expected. To succeed, businesses will need to take a long-term view of their workforce requirements and prepare for a more flexible labour force, one which is capable of adapting to change. With new skills likely to be required, business links with the education sector will need to be strengthened to make sure the talent pipeline is in place to fuel future growth. Introducing a cross-sectoral talent sharing scheme, whereby individuals develop critical skills through secondments, can also help to close the skills gap. Using learning and development programmes to make workforces more knowledgeable about the risks and opportunities posed by climate change can also help create the right culture and drive change.

4. Trading our way to a zero-carbon world

While the Government must align its post-Brexit trade strategy with its net-zero targets and the Paris Agreement, businesses will have their own version of this challenge. Those with global supply chains will need to integrate their own ESG policies throughout international supply chains, engaging with partners who are also committed to reducing environmental impacts. Any failure to do so may risk reputational damage as consumers increasingly demand full transparency and traceability of products.

With concerns that taxation will be used as a tool to lower the carbon intensity of trade, businesses can prepare by improving the sustainability of their products. As businesses are increasingly asked to offset global emissions, there will be greater pressure to invest in offsetting schemes or nature-based solutions. And as a leader in green technology, from carbon capture and storage to green hydrogen, the UK has a unique opportunity to export its expertise and capabilities globally.

Looking ahead

Many predicted that the economic pressures caused by the COVID-19 pandemic would slow down the sustainability agenda, but the opposite appears to be true. As businesses face increasing pressure for action from consumers, investors, regulators and employees – along with a growing awareness of the green opportunity – now is the time to act. By bringing businesses together and sharing their findings with the Government, we hope to make that action better targeted and ultimately more successful.