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ESG News Review: New net zero commitments gather pace

Cast your mind back to late 2019 and early 2020, before the COVID-19 pandemic struck.

At the time, large companies were falling over themselves to announce long-term decarbonisation programmes centred on net zero commitments. That January, for example, Microsoft hit the headlines for announcing a target to become carbon net-negative by 2030.

Since then, much has happened. Lockdown restrictions saw many emissions dip in ways that would not have been possible in more normal times. Geopolitical events have shaken business operations and economies.

Above all, the politicisation of ESG and tensions around the transition to a ‘green economy’ have brought new pressures for companies wanting to stay the course and remain committed to their long-term goals. Simply put, many businesses have made efforts to communicate those commitments and be transparent about their progress towards achieving them.

But the vibe in the past couple of years has been very much a heads-down approach to those efforts, rather than major new announcements. Over the past week or so, there is a sense that that is beginning to change.

It has come from several sectors and from Government too.

  • Diageo’s announcement that it will invest €100 million in accelerating the decarbonisation of the Guinness brewery in Dublin captured the imagination.
  • In a carbon-intensive sector, cement giant Holcim announced a €500 million investment in a net zero production plant in Belgium.
  • In professional services, Deloitte announced new and more ambitious 2050 targets.

Yet, in other sectors, the focus was not on announcing commitments or investments but on calling on politicians to do more to help achieve net zero. BloombergNEF’s New Energy Outlook issued a report that called for more investment in the electricity grid than in renewable energy to support the green transition.

In a big announcement from the Government, its latest report shows that the UK is on track to meet its 2050 net zero targets, which it has made into legal commitments. “By deciding not to carry forward our over-performance from the third carbon budget, we are doubling down on our commitment to reach net zero, and we’re already halfway there. This will keep the UK at the forefront of global efforts to cut its emissions, but we will do this while also driving down consumer bills,” it said.

However, the British Standards Institution issued a survey that found 9 in 10 business leaders want the Government to provide more policy support, financial incentives, and clarity in helping themachieve net zero.

The Guardian’s take on the above was also clear, with a strong leader piece outlining the case for a national industry strategy from Government rather than relying on a “bank-led green transition”.

And in the EU, with the ‘green deal’ seemingly having taken a back seat to the economy ahead of elections next month, politicians have been criticised for not sticking to their guns on climate.

It all adds to the continued need for greater political certainty, but some companies just getting on with it anyway - even if the investments are relatively small - rather than waiting to see how everything shapes up.

Companies may not be flying the flag for an ESG-centric approach to value creation in the way that they have done in the past, but with crunch time looming ahead of a busy election season, some are beginning to set out their net zero stalls more clearly again, and will likely up the ante on what environment they need to achieve that.

The ESG News Review is written by Steve Earl, a Partner at PR agency BOLDT.

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