Net Zero Targets: How does this affect your business? - Tim Jones

Over the last few weeks we have seen some of the most extreme weather conditions experienced in our generation. In the UK we have had the longest dry and hot month. In Europe, we have witnessed unprecedented temperature levels ranging well above 40 degrees centigrade.

Apart from the effect this has on human health (we have a very limited tolerance to direct exposure to these levels of temperature), the main memories we will have are the horrifying fires, particularly in Rhodes and Greece generally.

If there was ever to be a clearer reminder of the advances in global temperatures then we have just had this. Whilst there are still a few climate deniers the overwhelming evidence is that this is the result of human activity, principally through Co2 emissions. On a daily basis we get an ear bashing from government or climate change activists about what needs to be done. The government continues to set challenging targets, such as, the reduction in the number of cars fuelled by diesel or petrol.

They have also set some extremely challenging targets to ensure that buildings become more energy efficient. There are many other pressures on all types of business to achieve Net Zero targets. This affects the smallest and largest businesses we have in our region. No one however has as yet started to understand what the financial implications of this might be and how on earth many of our smallest businesses can possibly afford to achieve these new targets, however much they might wish to.

This debate however is not just about how business can respond to government legislation. There are an increasing number of physical events which are already disrupting the normal conduct of business. The list of these events is getting longer but it includes more frequent incidents of extreme weather and also longer periods when our weather is difficult to predict. There is already a strong indication of increased flooding events. Surprisingly, in the Westcountry we are also experiencing water shortages. For many years we have taken it for granted that we will have an uninterrupted water supply, we all know how much our prevailing South West winds can contribute to wind and rainy conditions.

Despite this, we are still on a hosepipe ban. The predictions are that the South West will fall into water deficit in around 20 years’ time. This problem is already playing out in Europe, where large parts of France and Spain are experiencing “water wars”. This will also have a major impact in the agricultural world where around 70% of our clean water is consumed. It is likely that almost all of our local businesses will have seen how unpredictable weather can disrupt their normal supply chain or even cause this to collapse. There is also no doubt that regular customers and tourists will vote with their feet when encountering these intense periods of weather disruption. It is already the case that obtaining insurance is becoming increasingly difficult. Either premiums are rising to frightening levels or in some flood areas obtaining flood risk insurance cover for premises can be impossible.

This issue is of such concern that more detailed studies have been undertaken to assess the scale of the problem and look for solutions. One of the latest reports has found that 52% of businesses have felt the direct impacts of extreme weather conditions, such as, heat waves and floods. 47% have incurred higher operational costs and 39% have had their supply chains disrupted. Perhaps the most surprising and worrying finding is that more than half (53%) of those in the business survey reported that they had taken no direct action to mitigate such risks despite being routinely advised that climate risk is a high priority for them. A similar proportion (51%) considered it to be the governments job to ensure that businesses are sufficiently adapted to meet climate challenges. Only 16% agreed that businesses themselves should take full responsibility for these challenges.

Perhaps the killer statistic is that 68% of consumers expect the businesses they deal with to demonstrate active plans to tackle climate change. These consumers are however a canny bunch and are not going to be fooled by green washing – paying someone else to do good green things whilst continuing to pollute the atmosphere. It is also clear that many employees expect their bosses to demonstrate green and ethical standards.

So what is the government doing to help? There are a number of helpful ways in which they propose to meet reduction targets. The climate change levy is a method designed to improve your business’s energy efficiency. You may already pay this levy as part of your energy bills. You can reduce the amount of levy you pay by cutting the amount you use and by switching to renewable energy. Climate change agreements are available if your business is in an energy intensive sector. This means that you can be eligible for a reduction in the climate change levy by meeting energy reduction targets.

We are beginning to learn how to tackle these huge problems. There is no doubt that this is going to cost businesses across the country huge sums of money in order to hit the 2050 target. The latest predictions from the Treasury suggest that the final bill could be somewhere between £1-2 trillion.

So how can we individually or collectively start to tackle these huge problems. As with 'how do you eat an elephant?', answer 'slowly!'. My suggested first step is to draw up an environmental management plan and backup delivery system. This will help to identify where to start and how much it might cost. There is no doubt however that this needs to be tackled on a collective basis across our region. If we all work together on this, then we can start making some meaningful progress.

Written by Tim Jones, Chairman of the North Devon Biosphere Foundation