UK businesses at climate change crossroads

Authored by Aviva

• Almost half of UK businesses now have a climate plan in place
• Yet immediate activity has stalled - majority of businesses see climate action as currently unaffordable
• UK is third most climate-ready country across the G7, but UK’s climate leadership is at risk

The number of UK companies developing plans to tackle climate change has increased significantly in the past year, according to Aviva’s annual Climate-Ready Index.

Almost half (44%) of UK companies now have a structured plan in place to reduce their carbon footprint and climate impact, up from 34% one year ago, reflecting increasing concern among businesses about the impact of climate change. Two thirds of UK businesses are now concerned about the climate (compared to 54% a year ago) and believe that organisations should reduce their carbon footprint.

UK businesses appear to be responding to increasing pressure from customers and other businesses to address climate change. Nearly half (45%) of businesses now feel consumer pressure to act on climate, up from 30% only a year ago, and 39% feel pressure from other businesses to put climate plans in place, up from 27% in 2022.

The most popular action businesses are taking, according to Aviva, are energy-saving measures (48%) such as turning off lights, increased use of renewable energy such as solar power and ground source heat pumps, and greater waste recycling (54%).

Looking ahead, businesses intend to reduce water use and work with more sustainable suppliers. This is despite the effects of the current economic environment, with 42% of businesses pausing investment in cutting their carbon footprint and 56% of UK businesses viewing the cost of reducing their carbon impact as currently unaffordable.

I am worried that UK climate action has stalled this year, according to our analysis. 

Amanda Blanc, Group Chief Executive Officer, Aviva

Aviva’s Climate-Ready Index also highlights a very mixed picture for the UK’s overall progress in adapting to and mitigating climate change. After years of being seen as a leader in climate action, the UK’s position in climate change mitigation is starting to slip.

Whilst progress has been slow and lacking comprehensive detail, UK climate change policy has continued to develop over the past year, including new details on the Carbon Budget Delivery Plan, Net Zero Growth Plan and the Energy Security Plan. However, the recent dilution in Government net zero commitments means meeting future targets is an even bigger challenge and creates uncertainty, potentially risking the opportunity for UK businesses to capitalise on green growth.

The report argues that the UK’s international leadership in tackling climate change may be at risk as the government increasingly focuses on short-term energy security over long-term sustainability.

For example, the UK’s decision to proactively expand domestic oil and gas production is a worrying shift. If the UK’s performance is to improve, a greater focus is required on phasing out fossil fuel extraction, improving buildings’ energy efficiency and expanding renewables.

The UK is Europe’s second-largest oil and gas producer, and the country’s lack of a policy framework to phase out oil and gas extraction is an area of concern. 

Amanda Blanc, Group Chief Executive Officer, Aviva plc, said:

“I am worried that UK climate action has stalled this year, according to our analysis. The UK’s ambitious climate goals are under threat due to a lack of practical and detailed plans. This puts at clear risk the jobs, growth and the additional investment the UK requires to become more climate ready.

"Despite this, we can see UK businesses trying to address the climate challenge in greater numbers and putting action plans in place. To support them, we urgently need a UK, whole economy, transition plan which allows us to compete more effectively with the US Inflation Reduction Act and help the UK become the most climate-ready major economy by 2030.”

In response to the Index’s findings, Aviva is today calling for the UK government to accelerate the transformation of the UK economy, and wider financial system, so that the UK can be the most climate-ready large economy by 2030. In particular, Aviva is calling the UK government to create an environment of widespread net zero transition planning across the UK economy. This should be achieved by:

• Releasing a comprehensive national Climate Transition Plan and reporting against delivery annually to provide businesses with greater policy certainty and confidence to invest in UK green industries.
• Expanding existing sustainability reporting requirements to ensure robust and credible transition planning by listed businesses, financial institutions and large corporates, in line with the Transition Plan Taskforce’s gold standard framework.

The Aviva Climate-Ready Campaign:

• Aviva wants the UK to be the world’s most ‘climate-ready’ large economy by 2030. 
• Being ‘climate-ready’ means reducing our carbon emissions to limit further damage to the climate and adapting how we live and work to protect ourselves from the negative effects of climate change, both at a local level and as part of the global community.  
• Therefore we will track the progress the UK makes, alongside the other large economies in the G7 (plus Ireland as the only country with whom we share a land border) through our Climate-Ready Index.
• Over coming months and years, Aviva will announce a range of actions it will take and support it will give to help enable the UK to be more climate-ready – helping communities, our customers, other companies, and our country – as we seek to help make the UK the most climate-ready large economy in the G7 by 2030. 

The Climate-Ready Index:

The Index assesses how climate-ready a country is across four key areas:

• Emissions and Mitigations
• Environment and Adaptation
• Economy & Business
• Society and Community

Across the four pillars the Index tracks 11 measures on how each country is doing in areas such as  reducing emissions, supporting biodiversity, building climate-resilient infrastructure, helping communities and small businesses prepare, and helping other countries in the world adapt. 

The 2023 Aviva Climate Ready Index can be found here