UK business at a crossroads on climate change

The number of UK companies developing plans to tackle climate change has increased significantly over the past year, according to Aviva’s annual Climate Readiness Index.

Almost half (44%) of UK companies now have a structured plan in place to reduce their carbon footprint and climate impact, up from 34% a year ago, reflecting growing concern among businesses about the impact of climate change. Two-thirds of UK businesses are now concerned about the climate (up from 54% a year ago) and believe organizations should reduce their carbon footprint.

UK businesses appear to be responding to growing pressure from customers and other businesses to tackle climate change. Nearly half (45%) of businesses now feel consumer pressure to take climate action, up from 30% just a year ago, and 39% feel pressure from other businesses to implement climate plans, up from 27% in 2022.

The most popular actions businesses are taking, according to Aviva, are energy-saving measures (48%) such as turning off lights, increased use of renewable energy such as solar power and ground source heat pumps, and greater waste recycling (54%).

Looking ahead, businesses intend to reduce water use and work with more sustainable suppliers. This is despite the effects of the current economic environment, with 42% of businesses halting investment in reducing their carbon footprint and 56% of UK businesses finding the cost of reducing their carbon footprint prohibitive at the moment.

Aviva’s Climate Readiness Index also highlights a very mixed picture of the UK’s overall progress in adapting to and mitigating climate change. After years of being seen as a leader in climate action, the UK’s position in mitigating climate change is beginning to slip.

Although progress has been slow and comprehensive details are lacking, UK climate change policy has continued to evolve over the past year, including new details on the Carbon Budget Implementation Plan, the Net Zero Growth Plan and the Energy Security Plan. However, the recent dilution of the government’s net zero commitments means that meeting future targets is even more challenging and creates uncertainty, potentially risking the opportunity for UK businesses to benefit from green growth.

The report argues that the UK’s international leadership in tackling climate change could be at risk as the government increasingly focuses on short-term energy security over long-term sustainability.

For example, the UK’s decision to proactively expand domestic oil and gas production is a worrying development. If the UK’s performance is to improve, a greater focus on phasing out fossil fuels, improving the energy efficiency of buildings and expanding renewable energy sources is needed.

The UK is the second largest producer of oil and gas in Europe and the country’s lack of a policy framework for phasing out oil and gas production is a problem.

Amanda Blanc, Group Chief Executive, Aviva plc, said:

“I am concerned that UK climate action has stalled this year, according to our analysis. The UK’s ambitious climate targets are at risk due to the lack of practical and detailed plans. This puts at clear risk the jobs, growth and extra investment the UK needs to become more climate ready.

“However, we can see British businesses trying to tackle climate challenges in greater numbers and putting action plans in place. To support them, we urgently need a UK economy-wide transition plan that allows us to compete more effectively with the US Deflation Act and help the UK become the most climate-ready large economy by 2030.”

In response to the findings of the Aviva Index, Aviva is today calling on the UK Government to accelerate the transformation of the UK economy and the wider financial system so that the UK can be the most climate-ready major economy by 2030. In particular Aviva is calling on the UK Government to create an environment of widespread net zero transition planning across the UK economy. This should be achieved by:

• Launching a comprehensive national climate transition plan and reporting against delivery annually to give businesses greater policy certainty and confidence to invest in UK green industries.
• Extending existing sustainability reporting requirements to ensure sound and reliable transition planning by listed companies, financial institutions and large corporations, in line with the Transition Plan Working Group’s gold standard framework.

The Aviva Climate Readiness Campaign:

• Aviva wants the UK to be the world’s most “climate-ready” major economy by 2030.
• Being ‘climate ready’ means reducing our carbon emissions to limit further climate damage and adapting the way we live and work to protect ourselves from the negative effects of climate change both locally, and as part of the global community.
• We will therefore track the progress the UK is making alongside the other major G7 economies (plus Ireland as the only country we share a land border with) through our Climate Readiness Index.
• Over the coming months and years, Aviva will announce a range of actions it will take and support it will provide to enable the UK to be more climate ready – helping communities, our customers, other companies and our country – while we aim to help the UK become the most climate-ready major economy in the G7 by 2030.

The Climate Readiness Index:

The index assesses how climate-ready a country is in four key areas:

• Emissions and mitigation
• Environment and adaptation
• Economics and Business
• Society and community

Through the four pillars The index tracks 11 measures about how each country is doing in areas such as reducing emissions, supporting biodiversity, building climate-resilient infrastructure, helping communities and small businesses prepare, and helping other countries around the world adapt.

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The Aviva Climate Readiness Index 2023 can be found here

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