Net Zero

What is net zero?

The UK government has set a date of 2050 for the UK to achieve our ‘net zero’ target. To facilitate this, they have implemented environmental, social and governance (ESG) standards which businesses need to have made strides to meet, on the approach to the deadline.

Larger companies are already required to publish their data on carbon emissions, and it is anticipated this will be rolled out across all companies regardless of size on approach to the deadline.

It will become evident which companies have a clear strategy and philosophy in place and those who are yet to fully invest or commit to a strategy. There is danger in this strategy however and it could have legal implications if it is considered misleading which could have further brand repercussions.

Why net zero?

This has been introduced to try and curb the effects of global warming change. We are all witnessing the increased frequency of events such as flooding, or forest fires and the recent COP climate conference concluded with the view we need to start the transition away from fossil fuels.

There is no doubt, a sustainable movement will involve input from all sectors, globally, with more questions currently arising than answers around how this could be achieved.

How is this impacting your financial plan?

There is no doubt with this bold commitment from the government, which impacts all industries, that ESG will become more and more visible within our daily lives and as a consequence will start to trickle through to our investments as the underlying holdings and businesses start to focus more on sustainability.

With larger or listed companies now reporting on their emissions, this is having an impact and changing how businesses operate. Those who are now implementing clear strategies, time and resources, are likely to be ahead of the curve which could help with their reputation, brand and bottom line as they may benefit from tax incentives and reduction in energy bills on their journeys to sustainability.

This is good news for those with a penchant for the ‘ethical’ investment. Not only are we seeing undercurrents of the ESG within more traditional investing due to the net zero commitments, the ESG industry has grown in recent years meaning it is becoming more accessible with regulation becoming more robust with a recent spotlight on greenwashing from the FCA.

Greenwashing is when a product, brand or service is branded as more ESG aligned than it actually is through misleading communications and branding.

Sacha Sadan, the FCA’s Director of Environment Social and Governance, said: 'Greenwashing misleads consumers and erodes trust in all ESG products. Consumers must be confident when products claim to be sustainable that they actually are.’ (FCA proposes new rules to tackle greenwashing | FCA)

The proposed changes from the FCA, should they come into play, means there will be additional transparency for investors when it comes to ethical investing and will ‘build trust and integrity in ESG-labelled instruments, products and the supporting ecosystem’.

Ensuring ongoing integrity is imperative for the financial industry and ultimately through increased transparency and increased accessibility we are giving investors more options.

What are we doing?

There is no doubt, we have hurdles to overcome on the national net zero journey and Crowe have a strong commitment and strategy in place to help us meet our net zero targets.

If ESG is an investment strategy you would like to explore in more detail, please contact our financial planning team and we can discuss the options available to you.