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What COP26 means for business

Simon Miller, Deputy Head of Public Affairs & Regional Affairs at Virgin Media O2, discusses the lessons for business from COP26 with expert journalist James Murray from Business Green.

As COP26 ends, I was fortunate enough to meet up online with James Murray, founder and chief editor of Business Green, and one of the UK’s leading commentators on sustainability and business. We discussed the government’s net zero strategy, COP26, and what it means for UK businesses today.

Business engagement

I started by asking James whether he thought that the government had done enough to engage business in the drive towards decarbonisation. He suggested that there were two sides to the question:

“On the one hand, they have created the sense that this is important, and that this is positive for business. The net zero strategy that came out the other week was essentially a pro-business plan. It was a bit light on public investment, which is a cause for concern, but it was strong on innovation, entrepreneurialism, and about business and private capital flowing to deliver these changes.”

Where James thinks more work is needed is on providing the technical policies that can deliver change at the pace required. The government hasn’t sufficiently recognised the power of tech and connectivity to help achieve net zero:

“The government has done it in some areas, but not consistently. More support and funding are needed from the treasury.”

The potential for UK green tech

James and I talked about last month’s green investment summit, which showcased what UK green tech has to offer and the potential for investment in the UK tech industry. He believes that there is plenty to be excited about in the green tech sector, and that the UK is in a strong position:

“We have some really exciting world leading businesses in technology, including in connectivity, in the renewable space, the electric vehicle space, smart grids – the list goes on. It’s also self-evident that we are not going to be able to decarbonise at the pace and scale needed without massive technical innovation and technological deployment.

The innovators and disruptors

I asked James about whether there are particular sectors or companies that are leading the way and offering inspiration:

“I think that the innovators, who are doing things that are completely new, are particularly interesting. Octopus energy is a fascinating company, for example. It is hugely ambitious and achieved Unicorn status in very short order. Then there’s Arrival, the electric van company in the UK – again, a huge success story, with a valuation far greater than anticipated.”

“The obvious example that everyone mentions is Tesla – a company that has completely disrupted a sector with clean technology and with the vision to do that.”

Aside from the disruptors, James mentioned the established, consumer facing organisations that are trying to change:

“The example that most often gets quoted is Unilever. It has made decarbonisation a huge focus of its business. It has made great strides, yet still has a substantial footprint, and faces some fundamental challenges about how it makes that footprint sustainable.”

Changing pace

The rapid pace of change resulting from the net zero goal is something that businesses in all sectors will need to accommodate and embrace. James talked about the motor industry, for example, a sector that has followed broadly the same model for more than a hundred years, and that is currently undergoing unprecedented transformation:

“Every major automotive manufacturer in the world has gone from resisting this transition to committing to having fully electric fleets globally by 2040, at the latest, and many by 2030.”

“UK businesses need to be at the leading edge of this rapid transformation – lag behind and businesses risk becoming the next Blockbuster or Kodak.”

Sufficiently ambitious?

I asked James about how ambitious he thought the strategy was overall – including the aim to replace gas boilers and switch to clean energy entirely by 2035. Whilst he thought that the overall message was broadly positive, there were a few areas light on detail, where he would have welcomed more focus and emphasis:

“The strategy needed more detail about engaging the public – it needed more on communication, and how to foster support for this with positive public actions. Also there was not enough priority given to smart technology – digital connectivity, the smart grid, smart homes, and so on.”

James thought that there was an opportunity for the tech industry as a whole to ‘turn the volume up’ on its role in helping the delivery of the decarbonisation agenda. Interestingly, he thought that the communication required might best be delivered direct to the consumer, rather than at an industry or governmental level:

“The message needs to be that smart tech is a cornerstone of this decarbonisation, net zero agenda, and that when the available technology is deployed, it is effective, it will save the consumer money and will reduce their energy bills.”

Signs of conflict?

With little mention of decarbonisation in the budget, and with the decrease in air passenger duty, I asked James whether he thought there were conflicting priorities in government. Is the chancellor less enthusiastic about the implications of driving hard and fast for net zero?

“We need to be careful not to overstate it, but there is cause for concern. I believe that the single biggest threat to the net zero transition comes from a sort of ‘culture war style’ backlash. Some of it is legitimate, for example, from people concerned about the impact on communities that are reliant on high carbon jobs. But much of it is driven by ideology, whose argument is that the drive towards net zero will be too costly and will have too great an impact on our lives.”

“Inevitably, this will have an impact on business, because if they don’t feel that the long-term policies in this space are bankable, then they are less likely to invest where it’s needed. This is a global race, where capital will flow to the markets that can make the most rapid progress and the best return.”

So, was it a good COP or bad COP?

Although the commitments from COP26 may have fallen short in a number of areas, most notably the watered-down commitment to phase out fossil fuels, there are clear market signals that business will accelerate efforts on sustainability. The announcements on green financing will demand greater progress and transparency as capital will be increasingly diverted into climate friendly business. This will require new types of partnerships, where suppliers will need not only to support greater productivity and cost efficiency, but also solutions to help organisations reduce their impact on the environment.

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