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COP26: Five key updates

A host of announcements that will affect how UK businesses address climate change coincided with COP26. Supply chain risk management experts, CHAS highlights some of the key developments.

  1. Net Zero targets introduced for government supply chains

In the run-up to COP26, it was confirmed that from 1 October all companies bidding for government contracts worth more than £5 million a year must commit to achieving Net Zero emissions by 2050.

Under the new rules, set out in Public Policy Note 06/21, in-scope organisations need to produce a carbon reduction plan detailing where their emissions come from and what environmental management measures they have in place.

While some large companies already self-report Scope 1 (direct) and Scope 2 (indirect owned) carbon emissions under the Streamlined Energy and Carbon Reporting regulations, the new targets require them to go further. This includes committing to achieving Net Zero by 2050 and reporting Scope 3 emissions such as business travel, employee commuting, transportation, distribution and waste.

The requirements currently only apply to government contracts, but they could become an advisory part of the Common Assessment Standard in 2022.

  1. Government publishes Net Zero Strategy

On 19 October, the government published its long-awaited Net Zero Strategy: Build Back Greener which outlines how the UK will deliver on its commitment to reach net-zero emissions by 2050. Measures set out in the strategy include:

  • An extra £350 million to support the electrification of UK vehicles and their supply chains and another £620 million for targeted electric vehicle grants and infrastructure
  • £140 million Industrial and Hydrogen Revenue Support scheme to accelerate industrial carbon capture and hydrogen projects
  • An additional £500 million towards green technologies of the future to support the most pioneering ideas and technologies to decarbonise our homes, industries, land and power
  • £3.9 billion of new funding for decarbonising heat and buildings, including the new £450 million three-year Boiler Upgrade Scheme
  • £124 million boost to the Nature for Climate Fund helping meet commitments to restore approximately 280,000 hectares of peat in England by 2050 and treble woodland creation in England
  • £120 million towards the development of nuclear projects through the Future Nuclear Enabling Fund
  1. Company climate disclosures to become mandatory

The eve of COP26 saw the announcement that from 6 April 2022, subject to Parliamentary approval, it will become mandatory for large UK-registered companies to disclose climate-related risks.

In line with recommendations from the Task Force on Climate-Related Financial Disclosures (TFCD) the new requirements will apply to financial institutions along with private companies that employ more than 500 people and with more than £500 million in turnover.

The mandatory disclosures are designed to increase the quantity and quality of climate-related reporting among UK businesses and to encourage more companies to assess the risks and opportunities posed by climate change, including within their supply chains.

Non-mandatory guidance to support companies in their disclosures is due by the end of 2021.

  1. SMEs urged to take Climate Pledge

Throughout COP26, businesses of all sizes were encouraged to sign up to the globally-recognised UN Race to Zero Climate Commitment which includes a focus on supporting SMEs to make a difference via the  SME Climate Hub.

SMEs that take the pledge commit to: Halving greenhouse gas emissions before 2030, Achieving net zero emissions before 2050; and disclosing their progress yearly.

SMEs make up 99 per cent of UK businesses and business & industry accounts for a quarter of UK emissions so the efforts of smaller companies are essential but smaller businesses can lack the resources and knowledge needed to make a difference.

Once businesses have taken the pledge, the SME Climate Hub provides support in the form of tools to help organisation understand their emissions, how to tackle them, and how to share what they’re doing with their customers and community. Suggestions for how construction SMEs can reduce emissions include: Getting involved with CO2nstruct Zero; Designing out carbon; Delivering on low-carbon heat; Retrofitting; Making sites more efficient and Using low carbon materials.

  1. The Environment Bill passes into law

On 9 November, the Environment Bill became the Environment Act 2021 after the House of Lords gave the legislation Royal Assent. This means a post-Brexit framework for environmental governance in England is now in place and legally-binding targets for air pollution, biodiversity, water quality and waste are on their way.

The Environment Act has also established a new Office for Environmental Protection which will hold government and public authorities to account against their commitments and environmental law.

Commenting on developments from COP26, Alex Minett, Head of Products & Markets at CHAS said: “There is a lot of good work already underway to tackle climate change in the construction industry but COP26 highlighted the scale of the challenge that still lies ahead.

”It was also a reminder that everyone must play their part and we expect scrutiny on the environmental performance of construction supply chains to continue to increase.”

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