Green Sustainability & Regulations
As climate change intensifies and legislation tightens, businesses of all sizes must understand their environmental impact, how they contribute to carbon emissions, and what actions are expected at different stages of growth and complexity. This includes complying with regulations, reporting emissions under the correct ‘scopes’, and taking meaningful steps toward net zero.
What Is Sustainability in Business?
Sustainability in business means minimising environmental impact, enhancing social responsibility, and ensuring long-term economic viability. This includes:
- Reducing carbon emissions
- Minimising resource use and waste
- Promoting ethical supply chains
- Complying with environmental laws and standards
Under the Greenhouse Gas Protocol, emissions are divided into three scopes:
Scope |
Description |
Examples |
|---|---|---|
| Scope 1 | Direct emissions from owned/controlled sources | Company vehicles, gas boilers, on-site fuel combustion |
| Scope 2 | Indirect emissions from purchased electricity, heat, or cooling | Electricity used in buildings, data centers |
| Scope 3 | All other indirect emissions in the value chain | Business travel, employee commuting, purchased goods, waste disposal, supply chain, leased assets |
Why UK Businesses Should Care About Emissions Scopes
1. New Laws Are Coming
The UK is tightening rules on climate change. Businesses need to report their greenhouse gas emissions (GHG) to avoid fines and penalties.
- Climate Change Act: The UK must hit net-zero emissions by 2050—businesses play a key role.
- SECR Reporting: Large businesses must disclose their emissions (Scope 1 & 2) in annual reports.
- Future TCFD Reporting: Companies will need to report all emissions, including Scope 3, in the future.
2. Investors & Customers Want Transparency
Investors are looking for businesses with clear climate goals, including detailed emissions reports.
Customers expect companies to be sustainable. Failing to disclose or reduce emissions can hurt your brand.
3. Potential Trade Barriers
Carbon Border Taxes: If your business imports goods from countries with lower carbon standards, you might face higher costs in the future.
4. Reputation Risk
Failing to reduce emissions could lead to public backlash or loss of customers, especially as consumers are increasingly concerned about sustainability.
What Happens If Businesses Don’t Act?
| Risk | Impact |
|---|---|
| Regulatory Pressures | As we near 2050, there will likely be penalties for not complying with climate regulations and additional taxes. |
| Higher Costs | Tariffs on goods if your business doesn't meet carbon standards. CBAM (due 2027) is an example of this. |
| Reputational Damage | Losing customers and investor trust if your company isn’t transparent about emissions or there is a greener competitor. |
| Missed Opportunities | Missing out on cost-saving opportunities like energy efficiency and renewable energy. |
The Takeaway
To stay ahead of regulations, reduce risks, and stay competitive, UK businesses must start tracking and reporting their emissions (see below to see what your business could consider). Proactive action can protect your brand, attract investors, and save money in the long run.
Starting small doesn't mean you don't make an impact. Find out how your business can prepare for new green regulations, what support is available, and which steps to prioritise now.
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