As the saying goes, Rome wasn’t built in a day. Time will tell what Cop26 shall deliver. However, from a corporate perspective there are signs that a range of key organisations including enlightened banks, ethical venture capitalists and private commercial enterprises are already playing their part in laying down durable foundations in pursuit of a cleaner, greener, more sustainable world.
Undoubtedly, corporate entities in Scotland and the UK have a tricky balancing act to perform. After all, businesses focused on meeting carbon net zero targets also need to focus on delivering their own commercial objectives (and satisfy private investors and shareholders), while also identifying budget to invest in new technologies and ways of working.
In July last year a YouGov poll suggested 46 per cent of businesses in the UK have plans to be carbon neutral by 2050. Depending on your perspective, such a statistic can be interpreted positively or negatively. Those inclined towards the latter may look for evidence of ‘greenwashing’ and bemoan the fact that significant pledges aren’t legally binding.
Still, from Sky to computer software manufacturer Logitech, there are many sizeable UK businesses across diverse sectors already committed to reducing their energy footprints and deploying innovative methods in pursuit of carbon reduction goals
POSITIVE STEPS ARE also being taken within my own sector of law and professional services. As a partner within leading UK-wide law firm Shoosmiths, I am proud to be part of a firm that places Environmental, Social and Governance (ESG) considerations at the heart of its business strategy.
Reflecting its ESG vision, the firm is resolute in a belief that businesses need to play a leading role in protecting the climate through collective action. Our environmental objective, underpinned by key performance indicators and targets, is that Shoosmiths is committed to protecting the environment, by demonstrating high standards of responsibility in all its operations and by preventing or mitigating the environmental impacts associated with our activities, products and services – befitting of the aims of Cop26.
Continual improvement forms an important part of our approach, so that we can achieve a positive environmental impact overall because of the way we do business. The firm has committed to a net-zero future, with a target for our operations to achieve net zero emissions by 2025.
In addition, in November 2021 the Science Based Targets initiative (SBTi) approved our science-based emissions reduction targets, namely that Shoosmiths commits to reductions across its entire value chain. This includes to increase annual sourcing of renewable electricity from 74 per cent in the financial year 2020 to 100 per cent by the financial year 2025.
Despite the challenges, hopefully we will steadily see other professional services firms commit to achieve their own net zero targets.
As underlined by the continued success of global giants such as Google and Apple, tech is a ‘sweet spot’ in economic terms and can help business and wider society operate in an innovative and more sustainable manner. The UK technology sector is diverse and arguably the Covid pandemic has created greater opportunities for the further development of diverse tech products and services.
Undoubtedly, tech is increasingly aligning with the renewable and energy storage industries. Shoosmiths’ energy and infrastructure team work closely with clients actively involved in the decarbonisation of electricity, heat and transport and in projects involving onshore wind and hydrogen-based technologies.
In my professional experience, businesses that can develop ground-breaking technology while also supporting global causes are becoming increasingly attractive to a range of investors.
Motorsport is renowned for its significant investment in innovation, albeit observers may not immediately correlate realising bold carbon emissions targets with an industry that has traditionally been powered by fossil fuels.
Yet Extreme E, a business I have advised from start-up and most recently on a series of funding rounds, is already blazing a trail in redefining the future of the sport. Last year saw it launch the world’s first electric 4×4 motor racing championship, with races being hosted around the globe while raising awareness of climate change issues. As its own website succinctly states: ‘We bring electric racing to some of the most remote corners of the planet to highlight the climate change challenges faced by different ecosystems.’
IN MY OPINION it is the type of innovative business that engenders real enthusiasm. In addition to creating an exciting new racing concept that fans can engage with virtually, it is contributing to the development of the technology required to assist in the evolution of electric vehicles and showcasing globally part of the solution for climate change.
Last year also saw the creation of the E1 Series by another client of mine, Electric Sea Racing Limited. This is set to revolutionise the world of boat racing and further promote the use of electric technology by launching the world’s first electric boat racing championship.
However, to deliver industry-wide change, many more businesses will need to do much more if a positive legacy is to emerge from Cop26. Understandably, there are calls for pledges to be legally binding, forcing signatories to focus on ensuring that they will meet agreed carbon reduction targets.
From the perspective of UK businesses, financial considerations will certainly be pivotal to delivering the necessary step-change towards a greener, more sustainable UK economy. Cop26 saw much talk of discouraging private investment in fossil fuels and greater government financial support to enable sectors of the UK economy to smooth the transition from fossil fuels to more sustainable energy sources.
During Cop26 a BBC news report noted that the Glasgow Financial Alliance for Net Zero (GFANZ) said more than £95 trillion of private capital “is now committed to transforming the economy for net zero”. A colossal financial figure, it underlines there are those in the investment world serious about aligning with positive climate action.
Indeed, Fiona Cameron, a Glasgowbased banking partner at Shoosmiths, recently stated that climate change has become a strategic focus for all the big banks and financial institutions with ESG (environmental, social and governance) on the tip of everyone’s tongue.
Noting that both green loans and sustainability-linked loans are gaining popularity, she added: “It’s significant that the incentive of cheaper debt in return for meeting sustainability key performance indicators can be considered a win-win for borrowers and for their funders. Both increasingly must answer to stakeholders scrutinising the sustainability of their investments.”
However, Fiona also noted that due to various constraints, to date it has been larger corporates principally who have taken up these types of loans. She believes that there needs to be a shift towards a consensus on sustainability targets accepted as the market standard before there is en masse receptiveness by the mid corporate and SME markets to such loans.
IN SUMMARY, there is significant pressure on businesses in Scotland and throughout the UK to become proactively involved in the eco-train that is undoubtedly gaining momentum throughout many parts of the world.
Fortunately, many new and established businesses are embracing the challenge.
We have a wealth of ambitious, innovative individuals and businesses in the UK well placed to attract investment and to make the most of the opportunities available to them. I believe these individuals and organisations will find their own ways to achieve their commercial goals and contribute to the greater good.
There are those in the investment world serious about aligning with positive climate action