Shaky Net Zero Plans Pose Business Risks: UK Government’s Strategy Ruled Inadequate

Shaky Net Zero Plans Pose Business Risks: UK Government’s Strategy Ruled Inadequate

Following the recent court ruling that the UK government’s net zero strategy is inadequate, firms must be wary of the business risks they face if they do not develop robust net zero strategies. The High Court has ruled that the UK government’s net zero strategy is unlawful, as it provides no assurances that the government’s 2050 net zero target will be met. The legal challenge was raised by non-profits including Good Law Project, Client Earth and Friends of the Earth. This follows the Climate Change Committee’s 2022 report, published at the end of June, that evaluated the UK government’s progress in emissions reductions. The report found that the government had made credible plans to deliver only one third of reductions needed to meet the national target of a 78% reduction by 2035. 

This ruling against the UK government demonstrates that stakeholders and NGOs will not stand by when governing bodies and firms do not deliver on decarbonization. This litigation risk not only applies to governments, as firms will, and have, also come under fire. In 2021 a Dutch court ordered Shell to reduce its greenhouse gas emissions by 45% by 2030, as the energy firm’s climate policy was deemed ‘not concrete and… full of conditions.’ The lawsuit was filed by non-profits including Greenpeace and Friends of the Earth Netherlands. If firms do not thoroughly plan a decarbonization pathway to ensure that their established targets are reachable, in addition to facing litigation risks, they also face reputational risks as investors and customers are demanding that firms repurpose their business models for the low carbon transition.

Firms must nip greenwashing in the bud and avoid setting net zero targets without adequate plans in place to achieve them. By using SBTi-validated targets as a starting point to initially demonstrate credibility and commitment to carbon reductions, firms should utilize digital solutions and professional services to develop their net zero pathways. Additionally, firms should embed decarbonization objectives into their corporate governance structures to ensure sufficient prioritization and internal communication.

See Verdantix Strategic Focus: Designing An SBTi-Ready Net Zero Strategy for more information on establishing net zero targets, navigating their credibility, and avoiding business risks by putting in place robust decarbonization plans.