Funding net zero during a time of recovery

As ongoing economic uncertainty continues to create challenges for UK organisations, it's possible that some will put sustainability initiatives...

Funding net zero during a time of recovery

As ongoing economic uncertainty continues to create challenges for UK organisations, it's possible that some will put sustainability initiatives on hold while more pressing financial needs are addressed. However, it's important to keep reminding ourselves how far and fast we need to travel on the path to net zero if we're going to get there by 2050 - and how important it is that all businesses play their part.

Could we miss our climate goals?

In its most recent report, the Climate Change Committee (CCC) has identified numerous gaps in current government policy; gaps which put the UK at risk of missing its climate goals by what they say is a 'huge margin'. Referring to an 'alarming' lack of progress and a failure to provide the firm policies needed to back up statements of net zero ambition, the CCC has pointed out that, 'with every month of inaction, it is harder for the UK to get on track'. It is time, they say, for the government to tackle the 'big cross-cutting challenges of public engagement, fair funding and local delivery.'

Government policy needs to go further

Our latest report - 'Plot Your Path to Net Zero: A Focus on Funding' - suggests that most businesses would agree with the opinions of the CCC. We spoke to more than 60 organisations from across a range of sectors, including manufacturing, transport and the public sector, to find out how they're funding decarbonisation projects, who they think should pay for the net zero transition and whether they think the government is providing enough incentives for businesses to invest - a question to which 75% answered no. On one hand, our survey gave us some very positive insight into business attitudes: two thirds (67%) of businesses are using their own funds to finance sustainability projects, evidencing a strong commitment to climate goals. However, 70% are still worried about the cost impact of net zero on their businesses - suggesting that they don't have faith in the government to create the policy they need to invest with confidence.

Finding the best funding option for your business

With government support seemingly slow to materialise, building a business case for investment in decarbonisation can seem like a high hurdle - especially during these economically challenging times. But, by following the three steps below, we believe businesses will find it easier to focus their efforts to help secure investment.

Step one: start with the 'quick wins'

There is often the misconception that any decarbonisation project will require major capital expenditure upfront - but this is not always the case. Conducting an energy audit can help you to identify where easy to implement, inexpensive changes could deliver a meaningful and measurable return on your investment; providing your business with both cost and carbon savings.

Step two: get your data together

If you already have the quick-wins covered, it might be time to start looking at a larger project like installing an energy management system or on-site generation asset. Data modelling is the best way to build a business case for this investment, and will help you understand the value it could deliver.

Note: When you're gathering your data, it's crucial to look beyond headline cost savings and also consider the commercial value proven to come with decarbonisation, including an improved reputation, increased employee engagement and better operational resilience. Your investment may also open the door to revenue-making opportunities, for example through Demand Side Response (DSR) schemes.

Step three: explore all available funding options

Before you commit to any project, make sure you've explored all of the funding options out there. It's possible your business is eligible for government funding or a local authority grant, particularly if you work in an energy intensive sector.

One additional option you might not have considered yet is a Power Purchase Agreement (PPA). They can help fund on-site generation with minimal financial risk and there are even flexible funding options out there that will allow you to switch from a PPA to owning an asset during the agreement term. If you're looking to make a long-term commitment to sustainability with little or no upfront investment, this might be the ideal solution for your business.

Funding a net zero future

Whichever funding route you decide to take, it's going to be important to stay informed as we make the net zero transition. Understanding how others in your sector are approaching the funding challenge, and how policy changes are likely to affect you, can help you plot a practical path to net zero for your business.

To find out more, download our report.

Related Content