Driving economic growth: How the UK’s climate targets unlock business action and investment

10 November 2025 - A briefing by CLG UK and We Mean Business Coalition examines how the UK’s updated 2035 Nationally Determined Contribution (NDC) can drive growth, competitiveness and innovation, while managing climate risks and delivering a socially inclusive transition.

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The UK’s updated 2035 Nationally Determined Contribution (NDC) – targeting an 81 per cent reduction in greenhouse gas emissions from 1990 levels – represents a pivotal moment for climate leadership and economic opportunity. As one of the first countries to submit its 2035 NDC, the UK has reaffirmed its commitment to net zero by 2050 and positioned itself to unlock significant business action and investment. 

This briefing, which builds on We Mean Business Coalition’s Call to Action for Ambitious and Investible NDCs, sets out how the UK’s climate targets can drive growth, competitiveness and innovation, while managing climate risk and delivering a socially inclusive transition. It highlights the critical role of business in delivering the UK’s climate ambitions and the importance of credible, consistent government leadership to enable this. 

Key Takeaways 

  • Climate action is driving growth with the help of strong business commitment. Since 1990, the UK has reduced emissions by 50.4 per cent while growing its economy by nearly 80 per cent. In 2024 alone, the net zero economy contributed £83.1 billion to UK GDP, growing three times faster than the wider economy. UK businesses have played an integral role in enabling the decoupling of economic growth from greenhouse gas (GHG) emissions.  
  • Over half of large UK organisations have set net zero targets, and 25 per cent have achieved measurable emissions reductions. UK businesses make up 53 per cent of global Race to Zero signatories, with small and medium enterprises (SMEs) playing a vital role. 
  • Coherent and stable policy framework is essential to facilitate further progress. To deliver on its climate targets and unlock economic growth, the UK government must provide long-term clarity for businesses and engage companies, especially SMEs, in delivering the Carbon Budget and Growth Delivery Plan (CBGDP) and future carbon budgets. As of mid-2025, credible plans existed for only 38 per cent of the emissions reductions needed to meet the 2030 NDC, let alone 2035. To address this gap, the government has to take action to enable electrification and provide targeted support for SMEs. In particular, the government needs to reform energy pricing, accelerate grid upgrades, create lead markets for green technologies, and ensure the benefits of low-cost renewables are felt by all.  
  • People are central to ensuring a just, effective and publicly acceptable transition. Despite political polarisation, public support for climate action remains high. A forthcoming Public Participation Strategy must build on this support and communicate the benefits of climate action, including measures to contain costs for consumers, clearly and inclusively. Upskilling and reskilling people will be crucial to enable business and the public to capitalise on the opportunities offered by the transition. 
  • The UK faces a green skills gap of up to 400,000 workers. The Clean Energy Jobs Plan sets a strong foundation, but delivery must be scaled and broadened to include overlooked sectors.
  • Engagement with business and the public is essential. A robust public participation strategy and a business engagement strategy could help bring the whole country on the journey to net zero. 
  • Efforts to avert the climate crisis must also protect the environment.  The UK’s environmental targets are legally binding, but delivery is lagging. A credible Environmental Improvement Plan and a National Land Use Framework are needed to align climate, nature and growth goals.  

Recommendations 

To deliver on its climate targets and unlock economic growth, the UK government must: 

  • Set credible, consistent direction: Provide long-term clarity for businesses and engage companies, especially SMEs, in delivering the CBGDP and future carbon budgets. 
  • Implement effective, market-friendly policies: Reform energy pricing, accelerate grid upgrades, and create lead markets for green technologies, including to ensure the benefits of low-cost renewables are felt by all. 
  • Engage business and the public: Launch a robust public participation strategy and a business engagement strategy to bring the whole country on the journey to net zero. 

The UK’s climate leadership has historically inspired global action. By delivering on its 2030 and 2035 targets, the UK can continue to lead by example, shaping international ambition through securing long-term prosperity for its people, businesses and economy. 

Citing this report 

University of Cambridge Institute for Sustainability Leadership (CISL). (2025). Driving economic growth: How the UK’s climate targets unlock business action and investment. Cambridge, UK: Cambridge Institute for Sustainability Leadership.