UK
The UK government has announced several policies and plans, including the Net Zero Strategy, which is expected to deliver significant emission reductions. A recent carbon budget announcement proposed a 78% reduction below 1990 levels by 2035. In a boost to sustainable investment, an impact assessment of the net benefit to the UK economy of achieving this target was calculated to be GBP 266bn.
However, funding announcements fell short as analysis found there to be a need for GBP 40bn in infrastructure spending a year and GBP 33bn a year in additional investment respectively to meet targets. There is also some debate over the level of impact the energy crisis will have on emissions targets.
A post-COVID economic recovery package allocated only 17% of the funds to low-carbon measures, compared to 30% in the EU.
A recent Conservative party leadership campaign, by eventual winner Liz Truss, included promises to expand oil and gas production in the North Sea, voiced support for fracking and her opposition to onshore wind and solar farms. This could impact investor and business confidence and has led to fears that she could renege on actions needed to meet emissions targets.
Climate change is less of a concern to people in the UK with a 2022 poll showing only 34% were worried about its impact. The percentage of people who believed that businesses should take action to combat climate change was 67%.
US
The survey indicates clear progress in the US for moving from commitments to strategies: 77% of businesses have a net zero plan in place, the second highest among the seven countries surveyed.
Support for regulation is strong: 68% of American business leaders believe that a clear policy and regulatory environment is important for their ambitions, and 59% are mostly relying on these policy changes to deliver on their plans, a lot higher than the other countries surveyed.
The survey was carried out before the Inflation Reduction Act was passed into law in the United States. Since then we’ve seen a flurry of investment announcements in clean tech, especially in battery storage, which are already proving the impact that clear policy support for investments in the energy transition can make.
Finally, US businesses have the highest level of investments needed to deliver on their net zero ambitions: more than half have all the investment needed.
In August 2022, President Biden signed into law the Inflation Reduction Act (IRA), setting the country’s emissions on course to halve greenhouse gases (GHG) emissions by 2030, to take them below 2005 levels. In the previous year an official commitment to net zero emissions by 2050 was also made. In a boost to business confidence and investment opportunities, this ambitious move has provided USD 369bn to develop clean energy technologies and investments essential to decarbonising the economy. Yet it also contains a number of concessions to the fossil fuel industry which contradict the administration's pledge to ban new oil and gas drilling on federal lands. The Russian invasion of Ukraine has led to an increase in domestic oil production and plans for further oil and gas leases.
A Congress-approved $1bn for international climate finance for 2022, fell far short of a pledge to provide USD 11.4bn a year by 2024. Last year’s USD 1.2tn Infrastructure Investment and Jobs Act, will further enable the transition to a low-carbon economy, including the development of EV charging infrastructure, upgrading the power grid and improving energy efficiency and electrification in buildings. Cheaper renewables are decarbonising the US power sector, driving coal out of the electricity sector. However, the US will need to implement additional policies to reach its proposed targets as experts have calculated that the 2030 NDC target is consistent with a 2°C temperature rise. A total of 61% of Americans believe that more action needs to be taken by the corporate sector to combat climate change, with the same percentage concerned about the effect it is already having in their country.
Brazil
69% of businesses surveyed have some sort of net zero plan in place, higher than the average across all businesses surveyed.
Belief among respondents that government policies are necessary to bring about economy-wide change is relatively high also, with 85% of respondents agreeing with this.
77% of respondents concur that investors and financial system are important for their company and net zero ambitions, and 75% contend policy and the regulatory environment is important for net zero ambitions, in Brazil. Both metrics are higher than the total averages for these questions.
Brazil is also among the countries relying more heavily on technology innovations not yet available in the market, to meet net zero ambitions. 85% are either relying considerably or marginally on these, compared to 76% across all countries.
Since 2019 Brazil’s environmental regulation has been systematically undermined through a series of policies cutting environmental law enforcement budgets, granting amnesty for illegal deforestation and opening protected areas to extractive activities. There are significant challenges for businesses to move towards net zero given a reliance on energy-intensive sectors. Many are making commitments to reduce emissions but there remains a lack of detail on how these will be achieved. Carbon emissions from the energy sector are forecast to increase with an expanded role for oil and gas. A steady rise in wind and solar capacity has been held back by a lack of significant investment and its considerable potential remains untapped.
In July 2022, the Brazilian Supreme Court decreed that its climate fund must be reactivated and recognised the Paris Agreement as a human rights treaty making Brazil the first country to do so. However, under current policies, emissions will continue to rise and the country will not meet its 2030 NDC target. There are significant gaps in policies for halting emissions growth and deforestation, their main source, which remains a serious cause for concern with levels increasing in 2020 and 2021, largely due to illegal mining activity and cattle ranching.
Brazil’s presidential election will take place in October 2022 and candidates are showing different degrees of commitment to climate action but there is a lack of concrete proposals to substantially increase efforts to reduce emissions. Public concern over climate change is increasing and over half of voters believe the government is doing too little to reduce its effects. Over 70% of Brazilians think protecting the environment should be given priority, even if it causes slower economic growth and job losses. A similar amount has also called for more action from businesses to combat it.
Japan
More than half of businesses have a net zero plan in place in Japan, according to the results of this survey. 76% of respondents believe that businesses will drive the change needed, and 80% of respondents believe that government policies are necessary; both higher than the totals across countries.
80% of Japanese companies agree that technology will deliver the required solutions to tackle the climate crisis, higher than the average of 75%. 80% believe government policies are necessary, while 76% believe businesses are necessary, when it comes to driving economy-wide change.
Japan’s 2050 net zero target became law in May 2021 and its Green Growth Strategy, revised the following month, provided further information on sector-level roadmaps towards net zero. However, these did not provide sufficient details on key elements on the effectiveness and transparency of the targets, including the emissions scope and reporting.
The country's updated 2030 Paris Agreement target committed to reducing emissions by 46% below 2013 levels, a significant step forward from the previous 26% target. A new Basic Energy Plan, approved in October 2021, and including a revised 2030 electricity mix target of 36–38% renewable electricity, was seen as a crucial step to deliver the new emissions target. This remains below the 60% reduction estimated to be 1.5°C-compatible and necessitates substantial improvements to climate policies and increased levels of investment. However, economic measures to address COVID-19 through an USD 2.78 trillion recovery package include few policies to enable the transition.
Japan’s conservative ruling coalition won a landslide victory in a national election in July 2022 but over half of the Japanese public believe the government is doing too little to reduce the effects of climate change with over 70% stating that they are already experiencing its effects. Less than half believe that there should be more corporate action to combat it. Meanwhile, major Japanese businesses and the Japan Climate Leaders’ Partnership (JCLP) have urged the government to pursue more ambitious renewable energy targets to decarbonise the economy.
India
Business leaders surveyed in India stand out among their peers in other countries for facing the largest barriers on policy and technology: 92% of business leaders are relying on policy and regulatory changes to help deliver on their net zero plans. Additionally, the lack of technology innovation also features as a major barrier: 87% say that they are relying on innovations not yet available in the market to meet their ambitions.
Nonetheless, the private sector is already moving ahead with implementing net zero strategies. 70% of Indian businesses surveyed have a plan in place, and business leaders in the country have the lowest concerns about organisational barriers: only 45% think organisational barriers need to be tackled to meet their net zero ambitions.
The survey shows that the economic opportunities created by the low-carbon transition are clear to business leaders. Indian businesses are driven a lot more by economic opportunities created by the transition (65%) compared to climate-related risks (37%). Additionally, 72% have all or most of the investment needed to deliver on their net zero ambitions, a lot higher than their peers in richer countries like Japan (29%) or the UK (52%). There is also a lot more clarity over what potential funding options might be available to businesses: 75% compared to an average of 47% across all countries surveyed.
At COP26, Indian Prime Minister Modi announced a 2070 net zero target and a recently updated NDC commitment stated that, by 2030, it will reduce emissions intensity of its GDP by 45% and install about 50 per cent electric power capacity from non-fossil sources. In 2021, in response to the impact COVID has had on the economy, the government unveiled one of the largest stimulus packages in the world. Two-thirds of the resources were targeted towards a net zero transition, including around USD 3bn in battery development and solar PV.
However, India still has one of the largest coal pipelines in the world and continues to expand its capacity with a number of projects under construction and loans to a number of thermal power projects. Subsidies are still approximately 35% higher than those available for renewables. A recent report from the Central Electricity Authority found that in 2029-30 India’s coal capacity will have gone up by 64GW above 2021 levels, increasing emissions.
Some businesses are already taking action to cut emissions but there are calls for the government to introduce regulations and incentives to reduce them. About six out of ten people think protecting the environment should be made a priority, even if it causes slower economic growth and some job loss. They feel that they are already experiencing the effects of climate change but also believe the government is doing too little to reduce its effects whilst 69% think that there should be more corporate action to combat it.
South Africa
Business leaders in South Africa stand out as the largest group to have a strategy: 90% of all businesses have some kind of net zero plan in place. 86% of executives also believe that businesses will drive the change needed to tackle the climate crisis: the highest group among the countries surveyed to do so.
But in order to implement the strategies developed, 93% of business leaders are relying on policy and regulatory changes to help the company’s net zero ambitions. Again South African businesses represent the highest group among all countries to struggle with an unclear policy environment.
South African businesses are a lot more driven by the economic opportunities created by the energy transition (69%) compared to climate-related risks (48%), showing that the investment case has now become established in the business community. Additionally, 86% of executives think they have all or most of the investment required to deliver on their net zero ambitions: the highest of all in the countries surveyed.
Lastly, 91% also say that they are relying on technology innovations not yet available in the market to meet their net zero ambitions - again a major barrier identified.
The South African government has set stronger 2030 targets, but domestic policies will need a range of improvements to make them Paris Agreement compatible. The government’s post-COVID economic recovery measures have focused around carbon-intensive investments, such as fossil power plants, instead of prioritising a net-zero transformation. Out of the recovery package of USD 2.5bn, the government has only spent around 4% on low-carbon initiatives.
This has impacted investor and business confidence, presenting a missed opportunity considering the urgent need to invest in the low-carbon transition. Uncertainty around state-owned utility giant Eskom’s financial solvency has further delayed the expansion of renewable energy capacity. Plagued by blackouts and an unreliable energy infrastructure, South Africa currently relies on foreign investments and international finance to implement many of its climate change programmes, a source that will help determine whether it meets its NDC, updated in 2021. However, under current targets and policies, experts believe the 1.5°C limit wouldn’t be met.
The Integrated Resource Plan (IRP2019), announced in October 2019 marked a major shift in electricity policy away from coal towards renewables, but there has been a lack of leadership over this and other flagship policies such as the Green Transport Strategy. Climate change is a concern for over 60% of South Africans and eight out of ten believe that there should be more corporate action to combat it.
Germany
According to the survey, there is strong support for net zero commitments in Germany, with more than half of companies having some form of net zero plan in place already. A similar proportion believe that both government policies and business will be required to bring about the changes required for the energy transition.
Nearly 80% of businesses are relying on technology innovations that are not yet available in meeting their net zero ambitions in Germany; somewhat higher than the total across countries. Similarly, 90% of businesses are relying on regulatory changes. A significantly smaller fraction - 67% - say they have the investment required to achieve their net zero ambitions, in Germany. Only 50% are clear on what potential funding options are available to them for net zero transitions.
In June 2021, under a revised Climate Protection Act, Germany adopted its 2045 net zero target. This covers all sectors and gases underpinned by an emissions pathway until 2040 and the communication of binding sectoral targets until 2030.
The new government, in power since December 2021, has significantly accelerated domestic climate policy implementation. If all measures were achieved, it would get close to its domestic emissions target of a 65% reduction below 1990 levels by 2030.
Some of the initiatives to resolve energy security issues, following the Russian invasion of Ukraine, appear counterproductive to climate policy. These include a temporary tax reduction on petrol and diesel and the expansion of LNG import infrastructure. There has also been a proposed u-turn on the decision to stop financing or supporting fossil fuel projects abroad, contradicting the G7 Environment Ministers plan to no longer support fossils overseas after 2022.
There are comprehensive plans to prioritise an increase in renewable energy and to phase out coal by 2030 but there have been calls for further increases in emissions reduction targets.
As a leading export-oriented economy there have been calls for Germany to help pioneer the required new technologies and incubate new business models as part of the transition. Without a robust framework to achieve this, German companies could lose market share, jobs and prosperity
Businesses also have a pivotal role to play in developing, testing, and scaling green technologies and many are on the path to net zero but there is a need for further, large-scale, investment to realise the transformation. Amongst the public, there is increased awareness about climate change. Over 70% believe it to be the biggest challenge and that it is already having an impact on their lives with just over 60% in favour of more corporate action to combat it.
