Net zero push held back by red tape, say bosses

BOSSES have blamed red tape and low returns for hampering net zero efforts, according to PWC.

More than a third of UK chief executives said regulatory complexity and lower returns from climate-friendly investments are holding back efforts to decarbonise their businesses.

They also pointed to a lack of climate-friendly technology and weak demand from external stakeholders to help reach net zero goals.

The findings come as bosses remain under pressure to row back on environmental, social and governance (ESG) promises and focus on delivering shareholder returns and customer value.

The post-pandemic boom in ethical investing has faded amid concerns among companies and investors of low returns and greenwashing. Declining interest in green investing has seen billions flow out of ESG investments, with ethical funds suffering record withdrawals last year, according to data from global funds network Calastone.

The energy crisis and global political upheaval has also prompted a resurgence in demand for oil and gas stocks.

Meanwhile, City chiefs have pushed back against proposals to introduce climate-related red tape amid concerns that they would result in extra costs and complexity for businesses.

The Financial Reporting Council last year scrapped plans to introduce burdensome environmental and diversity reporting requirements in an effort to create a level playing field between UK companies and international rivals.

The latest analysis of Pwc’s annual chief executive survey showed that more than a quarter of UK business leaders said they are moderately or extremely exposed to climate change threats over the next 12 months.

The vast majority of chief executives said they have taken steps to improve energy efficiency to cut consumption.

However, more than a quarter of the 135 bosses surveyed said they have no plans for net zero transformation.

Carl Sizer, head of regions and management board sponsor for ESG at PWC UK, warned that ongoing geopolitical tensions and upcoming elections – including those in Britain and America – could distract boards from their sustainability goals.

He added: “But the culmination of major regulatory change and failure to take action on sustainability and net zero will create both competitive and legal risk.”