Executive Summary
Premise
Climate change is a problem that affects the entire planet, which means that all stakeholders need to make a joint effort to reverse the impacts of climate change. Governments can spearhead the efforts to reverse the effects, majorly through making policies and leveraging investments in critical sectors of the economy. Net Zero by 2050 can be regarded as the best climate change framework if it can be effectively implemented by governments across the world.
Overview of main findings
The UK has made major commitments to Net Zero by 2050 by developing laws and investing in critical areas of the economy. Besides supporting critical jobs, the government supports the development of critical infrastructure, including electric vehicles. The business environment is expected to become more sophisticated as firms struggle to comply with the new environmental laws. Lastly, climate change affects both the internal and external business environment, especially due to pressure from multiple external stakeholders on businesses to become greener and more sustainable.
Introduction
Climate change has become a serious problem for the UK and other countries across the world. Harrabin (2021) finds that the UK is already struggling with the impacts of climate change, including rising sea levels, temperatures, and changing weather patterns. Currently, firms are making critical efforts to pursue clean and greener energy alternatives. Even so, the emissions and the carbon footprint remain significantly high, which means that climate change can be expected to continue. Additionally, it can be argued that green alternatives are more expensive to achieve, which would make it difficult for businesses to operate smoothly. Should the business continue to emit greenhouse gases from traditional energy sources, it can take initiatives to remove the greenhouse gases from the atmosphere. This is the essence of Net Zero by 2050, a commitment subscribed to by several countries across the world (The Royal Society, n.d.). Several press releases by various departments within the UK government have outlined the country’s plans for this challenge. The Department for Business (2021) reveals that the UK will help both consumers and businesses move to clean energy by supporting well-paid jobs and leveraging up to £90 billion of private investment by 2030. The main question that remains is how companies will embrace these initiatives and help the government.
The focus of this project is to explore the environmental changes and regulations in the United Kingdom (UK) and how these affect the business environment. Specifically, the report will examine the Net Zero by 2050 in the context of the UK and what this commitment to climate change means for companies investing and doing business in the country. First, an overview of Net Zero and climate change in the UK is given, which will be followed by an assessment of the impacts of climate change at the macro-environment level. Additionally, the key issues to be faced by businesses will be outlined alongside the possible future scenarios. Lastly, recommendations for business and a concluding section will be presented.
Overview of Net Zero by 2050 and Climate Change in the United Kingdom
Net-zero 2050
Net Zero 2050 can be described as one of the most recent and radical climate change plans for countries and businesses across the world. According to Krishnan et al. (2022), stabilizing the climate and limiting the risks associated with the physical climate require two major steps. First, a reduction in the amount of greenhouse added to the atmosphere is needed, which means that companies shift toward cleaner sources of energy. Second, the firms have to balance out the amount of greenhouse emitted by removing them from the atmosphere until a net zero is achieved. In other words, the Nez Zero initiative is an effort by countries to facilitate a reduction in emissions and implement mechanisms to remove emissions from the atmosphere.
Theoretically, Net Zero 2050 means that the countries will be emitting net zero greenhouse gases, where the expected result is that the ongoing deterioration of the climate will cease. A report by the HM Government (2021) reveals that the UK is developing policies and making investments toward achieving Net Zero by 2050. By 2025, the UK government will support 190000 jobs, with the number expected to reach 440000 by 2030. These jobs will be supported by investments totaling £90 billion by 2030. The key policies developed by the UK government include zero-emission vehicle mandates, investments in the development of electric vehicles, and investments in zero-emission heavy goods vehicles (HGVs) and related infrastructure. Even though the Net Zero program is adopted by multiple countries, it can be argued that each state is expected to develop its own policies and display varying levels of commitment to the program. The UK seems keen to achieve this goal due to the heavy investments and progressive policies toward this end.
Climate Change in the United Kingdom
Every country across the planet is experiencing the effects of climate, even though each faces different situations. Today, the news media is full of news and commentaries on how climate change impacts the UK. Mostly, extreme weather or disrupted weather patterns serve as the main indicators of climate change. According to Harrabin (2021), the UK is already experiencing disruptive climate change characterized by increased temperatures, rainfall, and sunshine. Additionally, the country is reported to be struggling to keep pace with the impacts of climate change, which explains why the UK is pioneering the Climate Change Act across the OECD (Climate Change Committee, 2021; OECD, 2021). Temperatures across the country have risen by around 1.2°C from the pre-industrial levels. Similarly, the sea level has risen by 16cm since 1900, and episodes of extreme heat are increasing in frequency. Since 201, the UK has recorded over 4000 heat-related deaths. Therefore, it can be observed that it is in the UK’s best interests to reverse climate change to evade these impacts.
Macro-economic Assessment of Climate Change Impacts
Impact of climate change on the legal and regulatory frameworks
The impacts of climate change necessitate the UK legislature and other governing bodies to formulate laws and regulations to reverse the climate change trend. These impacts are manifested by the fact that the UK is involved in multiple environmental and climate change initiatives at the national, regional, European Union (EU), and international levels (Hussain, 2022). Climate change is considered a triple planetary crisis since it affects the welfare, prosperity, and peace of the human species, the welfare of every species influenced by humans, and the welfare of the natural world. Therefore, observers notice the need for and advocate that climate change is a matter of people’s welfare, which means that it should be considered the highest law (Anderson, 2021). The role of the laws in addressing climate change is to solicit participation by all stakeholders and observe common requirements for making the planet safer. Therefore, environmental laws are developed by countries that already acknowledge the detriments of climate change. Additionally, these laws are to be implemented at the top levels and should cover all levels. Therefore, climate change necessitates environmental protection laws and regulations.
Governments across the planet are taking the initiative to spearhead and pioneer solutions for climate change. However, there are only a few alternatives for the government to follow, which means that making laws and investing in climate change solutions are the major tools used by the government. The legislature plays a critical role since it makes laws that are ratified by the executive arm of the government. Additionally, the regulations imposed on businesses and other stakeholders may require compliance with the relevant legislation. Overall, climate change has become a major consideration for legal and regulatory agendas.
Impact of climate change on the business environment
It can be argued that most of the laws and regulations developed by the government tend to target corporations. Climate change is considered to be the result of industrial development, which resulted in ever-increasing pollution and emission of greenhouse gases. Therefore, it is logical to argue that reversing climate change requires businesses and all economic activities to be remodeled and restructured around sustainability. The legal and political climate are part of the external business environment that corporations have to address. The political debate around climate change has meant that governments have been set up around climate change policies. Therefore, businesses have to consider both the government initiatives and the political pressure, even from opposition leadership (Wright and Nyberg, 2017, p. 1636). In addition to the legal and political environment, businesses are facing increasing pressure from a wide range of external stakeholders. Examples include customers and environmental activists, who have become part of the climate change agenda and debate.
The internal environment also faces challenges, especially when compliance with the legal and regulatory frameworks means incurring hefty operational costs. Additionally, the internal processes are also influenced by external pressure, including such changes as the types of energy and the choice of suppliers. The rationale behind these observations is that many corporations are blamed for the actions of their partners, which means that businesses pursuing sustainability have to consider, monitor, and influence the actions of suppliers.
Impact of climate change on the broader physical environment
The physical environment is harmed or changed by climate change. In the example of the UK presented earlier, the effects on the physical environment have included rising temperatures, rainfall, and sea levels (Harrabin, 2021). It can be expected that other parts of the same effects are felt elsewhere across the planet. In the last three decades, the planet has become considerably warmer and some regions are wetter than they were 30 years ago. The melting of the polar ice serves as evidence of the rising temperatures and a reminder that the sea levels will continue to rise as more ice melts.
Key Issues
Key Issue 1: Stricter Environmental Laws
One of the key issues in the business environment is that the UK will experience even stricter environmental laws affecting the major industries. Net Zero is a program focusing on emissions, which means that all those industries with higher emissions will be targeted. As mentioned earlier, the UK seeks to implement policies and undertake investments targeting zero emissions in transport, which include the development of electric vehicles (HM Government, 2021). The commitment to New Zero means that companies will face more environmental laws and policies that dictate such elements as the sources of energy, modes of transport, and the nature of economic activities.
Key Issue 2: Novel Alternative Energy Sources
The cost burden of the new environmental policies will fall on the companies. Net Zero can only be accomplished if each firm reduces emissions and removes the same amount of emissions it makes from the atmosphere. Both of these approaches will be costly, especially since alternative sources are expensive, and implementing emission removal infrastructure will require massive capital investments. However, it can be argued that there is a possibility of continuous innovations and the use of renewable energy. All companies seeking zero-emission will opt for cleaner and more sustainable sources, including wind and solar. Other novel alternatives will also emerge due to government pressure.
PESTEL for Key Issues
Table 1: PESTEL analysis table (Developed using MS Word).
Risk Probability Matrix
Future Scenarios
The UK Business Environment
The future business environment in the UK can be expected to be riddled with sanctions and public relations crises. Many companies will most likely misinterpret the climate change law or use underhand methods, which offend both the public and the policymakers. The assumption is that many industries will not be able to achieve net-zero emissions and will remain in the spotlight for their failures. Turmoil in the external business environment could become a norm across the UK.
Legal and Regulatory Frameworks
The UK government’s commitment to Net Zero can be expected to continue, which means that the legal and regulatory frameworks will become more profound and extensive. Compliance issues can be expected to emerge, especially for foreign companies from countries with dissimilar environmental laws as the UK. The legal framework will become a major barrier to entry into business ad industries due to compliance challenges. New laws can be expected to emerge as the government responds to the changing business environment.
Recommendations
For businesses operating or wishing to establish themselves in the UK, several recommendations can be made, most of which focus on climate change response measures. First, businesses should invest significantly in the development of alternative energy sources. The rationale is that future laws in the country will either mandate this initiative or make it costly for companies to emit greenhouse gases. Additionally, investing in emission removal infrastructure can be more expensive, considering that there are hardly any technologies being developed for this purpose. Therefore, developing zero-emission energy sources could eliminate the costs of emission removal.
Second, businesses should restructure their internal processes in light of the new laws and regulations on climate change. The rationale for this recommendation is similar to the first in the sense that emitting less will cost the business less in removing the emissions. Therefore, operations that consume more energy should be replaced by those that consume less. Additionally, energy-saving measures should also be developed to help the business incur fewer costs while complying with climate change laws.
Conclusion
Climate change is bound to have critical implications and risks for the UK business environment. First, companies would be required to address the problem, which means operating with clean energy and reducing their carbon footprint. Additionally, the UK government’s Net Zero commitment can change the external business environment since compliance requires businesses to remodel their operations and invest heavily in alternative energy sources or emission removal infrastructure. The government is developing climate change laws that affect how companies do business in the country. Soon, it can be expected that these laws will become stricter since it is the only way to achieve zero-emission.
Reference List
Anderson, I. (2021) Law, climate change and welfare of the people.
Climate Change Committee (2021) UK struggling to keep pace with climate change impacts.
Department for Business (2021) UK’s path to net zero set out in landmark strategy.
Harrabin, R. (2021) the UK already undergoing disruptive climate change.
HM Government (2021) Net Zero strategy: build back greener. London: Crown.
Hussain, T. (2022) The environment and climate change law review: United Kingdom.
Krishnan, M. et al. (2022) The net-zero challenge: accelerating decarbonization worldwide.
OECD (2021) The United Kingdom’s pioneering Climate Change Act.
The Royal Society (n.d.) #2050challenge – reaching net zero emissions by 2050.
Wright, C. and Nyberg, D. (2017) ‘An inconvenient truth: how organizations translate climate change’, Academy of Management Journal, 60(6), pp. 1633-1661.
Appendices
Team Charter and Project Plan
- Purpose:
- The purpose of this project it to offer an understanding of the relationship between climate change and business environment.
- Goals:
- To explore the effects of climate change on business environment in the UK.
- To highlight UK’s commitment to Net Zero and how it affects the business environment in the country.
- Member Roles and Responsibilities.
- Ground Rules:
- All members have to collaborate in the accomplishment of the project.
- All members have to understand and accomplish their tasks on the set timelines.
- Open communication and feedback are a necessity.
- Signees:
- Members:
- Signatures: