Corporate barriers to net zero adoption
Whose responsibility is it to get corporates and small business owners to switch? Should energy providers, electric vehicle retailers, building energy solutions etc be more incentivised to drive up the transition rates?
One of the easiest switches for business to make is to clean energy. The UK is in an exciting place when it comes to renewable energy with 37.3% of all electricity generation from renewables (Q2, 2021), compared to 26.2% globally.
The legally-binding target to reduce greenhouse gas emissions by 78% by 2030 means 87% of electricity would need to come from nuclear or renewable energy by 2030 according to the Climate Change Committee. Considering 75% of electricity came from fossil fuels in 2010 vs 63% in 2021, we have come a fair way but it’s clear the pace of change needs to drastically speed upend beyond just electricity.
Why is it we aren’t seeing businesses adopt sustainable practices more readily, what are the barriers?
To investigate this we look at the main actions businesses should take to reduce emissions:
Switch to a 100% clean energy provider
Reduce energy usage (includes switching to LED lighting)
Electrify transportation and fleets
Reduce energy wastage (includes better insulation and smart meters)
Generate their own renewable energy
It seems a no brainer. Switching to 100% clean or renewable energy and making energy reductions has instant benefits to a company’s ESG credentials, emissions and bottom line. So why isn’t everyone switching?
The main barriers largely consist of:
- Other priorities (but incoming ESG mandates from investors are changing this)
- Ain’t broke don’t fix
- Upfront costs and resource
- Lack of control / Landlords
- Perception not reliable / range anxiety / storage
Other priorities / If it ain’t broke don’t fix it
When looking at businesses who focus on other priorities or have the mentality of “if ain’t broke don’t fix it” we need to consider the root cause of these mindsets - not making the alternative appealing enough. Not everyone will rely on planetary benefits or social impact as enough reason to create change. Whilst there is a strong argument that our economy prioritises the wrong metric of purely revenue, it is how we are wired to see success so this needs to be the driving language.
Making the benefits so strong businesses can’t say no is key. Just look at Tesla. As this Forbes article says “Tesla has been the company that has made the EV desirable beyond those who are environmentally friendly early adopters. The Model S wasn’t a car people bought to save the planet, but because it was an order of magnitude faster than anything else in its class.” It leads the way by being better. By making clean energy solutions better than fossil fuel solutions to non-environmentally friendly professionals it will see much faster take up.
Another consideration is investor activity. ESG and sustainability are more commonly on the agenda for the C-Suite as investors prioritise businesses with ESG credentials to indicate future business intent and success. Not only this, having a transparent sustainability strategy is proven to bring in more customers and improve business reputation. Counteract this barrier by understanding the why of your potential customer. Are they aware of the business and investor benefits? Are you making it too easy to say no by not making the trade up appealing enough?
Read more about what investors are looking for in our article “What is impact investing and how can it affect your business” to be better informed for your future customers.
Upfront costs and resource
A lot of the time this will come down to cost, resource and effort.
Again a lot can be combatted through understanding the challenge for the business and offering a solution they can’t say no to. This isn’t about “selling” but about having the same agenda to reduce carbon emissions. Whilst that line may be blurred when your product is something you make revenue from, it is a win-win-win scenario - reducing costs and improving impact for the customer, reducing carbon emissions and helping your business to stay in profit. There’s nothing wrong with transparency around this, transparency is a key factor for good sustainability practices.
If the objection is cost, what incentives or reductions can you offer? How can you make this viable for everyone to win? If there is nothing more you can discount, how can you help the customer further by pointing them in the right direction of grants available and ensuring you’re one the of the quotes they receive as part of the process. Make sure you are informed. Resources such as Ofgem, Grants Online and the UK Government’s Finance and support for your business section are full of grant and funding options to cover building retrofits, solar panel installations and energy reduction strategies in the workplace. There are also many grants towards electric vehicles and workplace charging, LV offers a good overview here. Helping your prospect towards these opportunities helps gain their trust and helps the UK towards its net zero targets.
If the objection is resource this is usually a lack of time or people power. In this case the customer needs to know you can take on the installation, evaluation, perhaps even team training for them. If you are not in a position to do this could you partner with someone else to package up your offer as an ‘out of the box’ solution? Can you point them to any associations or alliances where they can benefit from combined purchase power to drive down costs?
For example, when buying clean energy, large organisations can benefit from buying directly from energy producers but small businesses do not have the purchase power. By collaborating, however, they can club together to form Power Purchase Agreements (PPAs). Chris Bowden, MD, Squeaky tells us “It is not only entirely possible to collaborate, but it is also of huge commercial and environmental benefit. For instance, in a UK first, 20 leading universities joined forces to strike a landmark renewable energy deal that would reduce both their bills and carbon footprints. It was a ground-breaking corporate power purchase agreement (CPPA) which saw the university cohort buy £50m of renewable energy from a portfolio of wind farms.”
Lack of control / Landlords
David Humphreys, Director at sustainability consulting firm Green Circle Solutions tells us “One of the major blocks is landlords. Many businesses don’t own their own premises so the accountability is a step removed. The only solution here is putting pressure on the landlord. If it’s a multi-tenancy building like a co-working space get other tenants onboard to multiply the pressure.” You could even take on the landlord yourself. Help out your client and get a bigger deal as a result; incentivise the client to help arrange meetings by offering a referral fee.
Another barrier can be long-term contracts. It may be the business is tied in for a number of years with a non-green provider but there are always exit options. Bear in mind this may incur a fee for the customer - can you incorporate this as a discount to make it an easy decision for them?
Squeaky also point out that some who have switched may unknowingly still be supporting fossil fuels and incurring higher emissions for their business. Chris Bowden explains “Businesses are often surprised to discover that the renewable energy contract they agreed to isn’t actually delivering them clean energy. Renewable doesn’t necessarily mean non-polluting, sustainable or carbon neutral. To be clear; clean energy is renewable energy which comes from zero emission sources and doesn’t damage the planet when used or disposed of. This includes energy from natural resources such as the wind blowing, the sun shining, or water running.”
Ensuring businesses understand the difference and aren’t being greenwashed or sold “dirty” packages by being transparent is key to gaining trust and ultimately getting business committed to real carbon reductions.
Perception not reliable / range anxiety / storage
Lastly fear is a barrier to change, some view clean energy as unreliable. Variable renewable energy is changeable as the weather is changeable, some weeks and months have more sun or wind than others. This is easily managed through back up from storage, interconnectors and low-carbon sources. This may not be a factor for many customers as they can rely on their clean energy provider to control the mix and ensure adequate storage is accounted for year round. However, for some customers with large or specific energy needs this may be a real concern and needs an honest discussion. Work through the options, it may be that the solution is part clean, part low carbon whilst storage capabilities further develop and increase.
The same goes for electric vehicles. Range anxiety can be a real worry, goods and services are dependent on reliable transportation. The government has enhanced its Ten Point Plan with £20 million committed to increase on-street charge points and £50m to support charge point installations so again, have an honest discussion and help customers to understand the capabilities available for their business needs and what’s in the development.
Communication and collaboration is key
What’s clear is corporates need more help, more information, more impossible to say no to opportunities. Many don’t have the time or incentive to prioritise the changes needed so it’s up to suppliers to support and make this as easy for them as possible. We are an ecosystem, we all need to work together to affect real change. If someone has a challenge, the ecosystem needs to provide the solution.
Shout loud and proud about your customers who have made the switch. Do case studies on them, make a positive example of them to show their peers how easy it is and the benefits their competitors are reaping. Your customer will welcome the PR and want to share it themselves getting you further exposure and likely prospects. Sustainability is collaborative. Work with your customers doing good to make them sustainability leaders in their field, working with them to change the face of their sector. This will help your business too as the provider behind these game changers.
Provide solutions to their barriers. If costs are an inhibitor can you offer any incentives? Could they be your future testimonial and route into a new target market? Can you work with them to create petitions, lobbying or community projects to change regulations or processes for the better? Can you create alliances to better support the industry and set a pledge or benchmark to get people working towards? This helps with everyone’s emission reductions and gets you positive PR for future business.
Get out there and meet people. Not everyone is aware of the solutions that exist. Be a champion for the cause and your business development needs at the same time. Sustainability is not a priority for all businesses often through a lack of awareness so joining groups where your target market comes together or where those already interested in sustainability come together is the perfect forum to network, share your knowledge and solutions. This could be through industry associations, business networks or trade shows dedicated to your target audience.
Find out more about the community and exhibition Reset Connect run connecting sustainable professionals, solutions and investors here. If we can help you with your sustainability journey please get in touch here.