In our latest Director blog David Trevelyan discusses managing the impact of climate change on businesses and the FEP's brand new Net Zero & Climate Action subgroup.
In the next couple of months the FEP’s Climate Change working group will kick off. The idea is for FEP to interface between businesses, council and the FoD Climate Action Partnership. As the group lead I’m looking forward to the opportunities that this group can bring around the efforts businesses will need to make on climate change.
Of course one of the questions that gets raised is the impact of climate change on businesses. Currently the direct impacts are becoming more obvious whether is flooding, rain, the rapidly disintegrating road infrastructure etc. As business group we can’t really influence these things other than pointing out the consequential costs of these impacts.
My day job is advising companies on Sustainability and Risk and helping them navigate the regulatory environment that they are increasingly finding themselves involved with. A couple of areas I’m seeing significant action in can be split into the two areas below:
General Sustainability Action
If you sell into the public sector you may have started seeing more question about having a climate action plan this is because of a public procurement note from 2021 (Link: Procurement Policy Note 06/21: Taking account of Carbon Reduction Plans in the procurement of major government contracts - GOV.UK (www.gov.uk)).
Companies are also becoming much more aware and are increasingly asking questions about sustainability and climate change in their supply chains. This may be a result of their obligations of the above or as an impact of their stakeholders or customers placing obligations on them because they are publicly listed or they are in supply chains that are targeted on climate change action. There’s a soup of sustainability and climate change acronyms (ESG, TCFD, SECR, EPR to name a few), not to be explained here, but are all adding to the mix and the result is companies asking for more and more information.
Exporters and Importers
The latest regulation that I’m increasingly being asked to support on is CBAM (Carbon Border Adjustment Mechanism - European Commission (europa.eu) Where businesses exporting to the EU in certain sectors will be expected to report on their products carbon and whether they have contributed to Carbon Trading Scheme. In essence the EU are enforcing a global carbon tax, and if you haven’t paid into a local scheme, then you will be expected to balance this by though the CBAM mechanism.
Putting aside views on carbon taxes, this will work to address the age old complaint “but what about China, USA [Insert country here]?” where the assumption was these countries are doing much less and Europe is doing all the heavy lifting… well CBAM will balance this out, no longer with overseas, highly polluting production get away with avoiding their contribution to carbon reduction.
Of course despite the UKs diverging regulatory pathway the UK is currently consulting on its own CBAM system. (Link: Factsheet: UK Carbon Border Adjustment Mechanism - GOV.UK (www.gov.uk)) which means importers into the UK could well be faced with ensuring their materials have been subjected to CBAM. Watch this space.
In summary regardless of your business or position on climate change, we’re going to see significant changes from climate change in business over the next 5 years. Which brings me back to the point of the Blog, we’ll be starting the climate change group soon, and it seems that there’s plenty to discuss and the de-carbonisation drive within our area, might well be good timing to ensure our businesses remain competitive and sustainable regardless of where their customer based is.
For more information on the climate change group contact fep@fdean.gov.uk
David Trevelyan
Climate Change Lead, FEP Director
Director of Sustain You Limited (www.sustainyou.co.uk )