Do you have 2020 vision on business sustainability challenges and drivers?

2019 has been an eventful year in sustainability. Businesses are doing more than ever before to reduce their climate impacts. There are several drivers for change in businesses in response to climate change.

2019 has been an eventful year in sustainability. Businesses are doing more than ever before to reduce their climate impacts. There are several drivers for change in businesses in response to climate change. These might be grouped into regulatory, political, economic, and social pressure. Some relevant examples in the UK can be drawn on from 2019 that will have ongoing effects throughout 2020.

Streamlined Energy & Carbon Reporting (SECR)

2019 saw the end of the CRC Energy Efficiency Scheme – a carbon reporting scheme that impacted roughly 4,000 large organisations. Its successor, SECR, will impact close to 12,000. Thousands of these organisations will never have previously been required to footprint their energy and carbon or release that information into the public domain.

The purpose of SECR is to get organisations to think about and report on their energy and carbon in the same way that they do their finances. The SECR guidance explicitly recommends that the boundaries of accounting figures match those used to capture energy use and carbon emissions. Including energy and emissions alongside finances in yearly accounts gives prospective customers or investors new information with which to evaluate companies. SECR is changing what it means for a company to be transparent. The novel challenge for thousands of companies in reporting on their energy and carbon and being held accountable for their impacts will be important in 2020.

The Energy Savings Opportunity Scheme (ESOS)

ESOS finished its second phase in 2019 and saw more than 7,000 organisations undergo energy audits of their operations. These audits produce costed Energy Conservation Measures (ECMs). ESOS does not require that a participant implement its identified ECMs. However, the cost of compliance with the scheme can be significant. We are seeing greater engagement from ESOS participants with their Phase 2 audit reports and interest in implementing ECMs identified during ESOS. Behaviour change, an effective and low-cost ECM, has become more prominent in Phase 2 reports.

Political developments

In 2019, the UK became the first country to announce a 2050 net-zero emissions target. Several other countries followed it. Sub-national entities, such as municipalities, had earlier set similar targets, but action by national governments has sent a strong signal to businesses to consider the long-term effects of net-zero targets by anticipating future regulation. They must match the ambitions of the governments of their countries. While national action in the form of net-zero targets has been influential in 2019, governments have not been without their disappointments. December saw the 25th Conference of the Parties (COP 25) of the United Nations Framework Convention on Climate Change (UNFCCC); the intergovernmental forum which develops global climate policy. The meeting had hoped to increase the ambition of contributions by member states to the 2015 Paris Agreement. However, the meeting was largely bogged down in technical discussions related to implementation. This outcome reminded businesses that they still bear significant responsibility as standard-setters in sustainability.

Of importance in the UK, however, is its anticipated hosting of the COP 26 in 2020. COP 26 will comprise the first of the Paris Agreement’s planned five-year stock-takes, which review progress against the Agreement’s goal to limit global warming to at most 2 °C. Some of the UK’s largest emitting businesses were crucial to realising the UK’s bid to host COP 26. Businesses will remain relevant to the UK’s vision of being a global sustainability leader.

Social pressure

Perhaps one of the most important developments in 2019 is what appears to have been a paradigm shift in the average citizen’s engagement with climate change. Social movements including global climate protests and strikes, neologisms such as ‘climate emergency’ and ‘global heating’, and growing lifestyle trends centred on sustainability, are signalling to businesses that sustainability is becoming an increasingly important selection criteria used by customers. Furthermore, tools like SECR are giving citizens greater ability to exert social pressure on businesses through improved access to information.

Wrap-up

The take-away from this short summary should be that businesses face growing, multifaceted pressure to reduce their climate impacts. The UK in 2019 introduced new dimensions that will influence behaviour in 2020. This is fitting for the first year of the 2020s, a pivotal decade for sustainability during which important green technologies and climate policies will come of age in developed countries.

Nicholas Fedson

Carbon Compliance Analyst – Alfa Energy Group

Need to know more? Listen to Alfa Energy’s Podcast, Looking back on 2019 and the year ahead in energy and sustainability here!

Jeremy Nicholson, Corporate Affairs Officer, reviews the major events in 2019 and ahead in 2020 for energy and sustainability managers with Wayne Bryan, Senior Analyst, and Nick Fedson, Carbon Compliance Analyst.

What you will learn:

  • Market volatility and reasons for falling wholesale prices in the run up to 2020
  • Reasons for falling prices and a warning of how quickly prices can change
  • The challenges for businesses due to sustainability and what is driving them
  • Regulatory changes and impacts on reporting
  • Net-zero targets vs COP 25 in terms of real ambition – but is recognition of responsibility now coming through?
  • The critical impact of carbon pricing
  • The European Green Deal – Net-Zero Europe and a new type of tax to prevent carbon leakage across borders when dealing with countries that have lower environmental standards
  • What to look out for on wholesale prices in 2020 in terms of significant issues
  • Will we see new legislation early in the new year?
  • Policy proposals that will solidify the UK’s movement towards net-zero

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