Metrics and targets - Reporting climate-related financial disclosures
In this guide:
- Climate-related financial disclosure reporting (TCFD)
- How to report on climate risk in my business
- Governance - Reporting climate-related financial disclosures
- Strategy - Reporting climate-related financial disclosures
- Risk management - Reporting climate-related financial disclosures
- Metrics and targets - Reporting climate-related financial disclosures
How to report on climate risk in my business
Which businesses are required to report under TCFD and which businesses may benefit from voluntary climate risk reporting.
The Task Force on Climate-related Financial Disclosures (TCFD) focuses on integrating climate-related risks into business strategies. This approach enables investors and other stakeholders to evaluate climate-related risks and opportunities.
To achieve this objective, TCFD has a reporting framework with disclosure recommendations so companies can understand and report their climate-related risks to investors, lenders, and insurance underwriters. The TCFD framework considers both ‘physical’ and ‘transition’ risks like legal liability and insurance. The framework has recognition as the benchmark for businesses to use to identify, assess and report on climate-related impacts.
Who must report under TCFD?
Since April 2022, reporting climate-related risks and opportunities has been mandatory for large companies and financial institutions in the United Kingdom.
Climate-related financial disclosure reporting is mandatory for:
- all companies currently required to produce a non-financial information statement annually, eg listed companies, banks and insurers with more than 500 employees
- UK-based Alternative Investment Market (AIM) companies with 500 or more employees
- limited liability partnerships (LLPs) with 500 or more employees and a turnover of more than £500 million
- non-listed companies with 500 employees or with a turnover of more than £500 million
These compulsory climate reporting categories are expected to expand to include more businesses in coming years.
How TCFD can benefit SMEs
Although climate reporting is only mandatory for large businesses, small and medium-sized businesses (SMEs) may be asked to report on these issues as part of their larger supply chain.
SMEs can use TCFD reporting to show their value in the supply chain by demonstrating they have considered climate-related risks and opportunities. Following the TCFD framework is an opportunity for SMEs to show investors and lenders that they are measuring and monitoring their climate risk in a structured and consistent way.
What are the TCFD themes and main disclosures?
TCFD has a set of recommendations for reporting across four key areas, which are:
To help identify your current and potential future impact in these areas, alongside accessing guidance to plan business actions, Climate NI has developed four step-by-step checklists, which you can find in this guide.
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Governance - Reporting climate-related financial disclosures
How to disclose the governance of your business around climate-related risks and opportunities in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD) framework, governance disclosures should enable an understanding of how climate change risks and opportunities are identified, considered, and managed within the governance structure of your business.
What TCFD recommends on governance Recommendation Disclose the business’ governance around climate-related risks and opportunities. Key aspects Describe the board’s oversight of climate-related risks and opportunities. Describe management's role in assessing and managing climate-related risks and opportunities. This checklist will support you through the governance area of TCFD's recommendations covering organisational structures and processes. It provides the information you should know and suggests actions, including further resources and guidance to help you.
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Governance - Suggested actions
Consider how risks and opportunities are currently managed in your business by asking questions such as:
- Has your business assigned climate-related responsibilities at management-level positions?
- What processes are in place to inform management about climate-related issues and at what frequency?
- How do the management team monitor climate-related issues?
- Are climate-related issues considered when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, investments and business plans?
- How does the board/management team monitor and oversee progress against goals and targets for addressing climate-related issues?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Strategy - Reporting climate-related financial disclosures
How to disclose the impacts of climate-related risks and opportunities on your operations, strategy, and financial planning in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.
What TCFD recommends on strategy Recommendation Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material. Key aspects Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term. Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning. Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.
Planning ahead where possible, rather than responding reactively, will help you to:
- save your business money in the long term
- give your business the best chance to continue to operate and meet customer orders, despite the weather
- identify possible business opportunities, eg new products or services, reduced costs
Climate-related risks
TCFD divides climate-related risks into two main categories:
Transition risks (related to the transition to a low-carbon economy) Current and emergent regulation Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change. Technology Risks associated with technological improvements or innovations that support the transition to a low-carbon economic system. Legal Climate-related litigation claims. Market Shifts in supply and demand for certain commodities, products, and services. Reputation Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy. Workforce Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics? Financial market Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria? Physical risks (related to the physical impacts of climate change) Acute Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms. Chronic Longer-term shifts in climate patterns, eg sea-level rise.
This checklist will support you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.
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Supply chain - Impacts and actions
Impacts
Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.
Risks Flooding (high rainfall, coastal and river) Flooding and landslips will disrupt transport for deliveries. Extreme weather events (storms and intense cold) Extreme weather events can cause disruption of supply chains due to: - transport disruption
- impact on suppliers, eg flooding of premises
- changes in raw material price or availability
Extreme weather events can cause disruption to utilities supply and distribution. Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events. Opportunities Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning. Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles. Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.
Suggested actions
- What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
- Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
- Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
- Do you have any processes or products that are sensitive to changing temperature or climate conditions?
- Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
- Have you identified critical activities and the employees and inputs required to maintain them?
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Finance/insurance - Impacts and actions
Impacts
Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.
Risks Flooding and extreme weather events. Flooding damage and other severe weather events could result in unplanned business costs. An increase in extreme weather events will see more insurance-related issues. Global climatic events could impact international investments or products sourced from overseas. Cost implications for retrofitting existing buildings or relocating to cope with climate impacts. Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors. Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term. Disruptions to supply chains can have significant negative financial impacts. Opportunities Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities. Clients and customers attracted to businesses that can show they are resilient to climate change. New insurance products and services that spread the risk of climate change. Increasing resilience now can pay off many times over in the future. More weather-related claims improve the efficiency per claim.
Suggested actions
- When did you last check that you have the insurance you need?
- Are you covered for floods and storm events?
- What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
- Does your policy cover the full value of your business?
- Do you keep documents safe from weather impacts (and store copies off-site)?
- Do you have business continuity cover if your business is interrupted?
- Do you have a business continuity plan?
- Have you considered the financial management implications of a severe weather event?
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Products and services - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Increased heavy rainfall and flood risk will increase demand for products, services and expertise to support sustainable water resource management. Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence. High Temperatures and Drought Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed. Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive. Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season. Extreme Weather Events (storms and intense cold) Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains. Opportunities New innovative products, or modifications to existing products, in response to a changing market. Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry. Advantages for those who are quick to respond to changing markets and lifestyles. Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.
Suggested actions
- Is your business product or service weather or climate-sensitive?
- Have you put in place measures to increase your business' resilience?
- Does your business have global markets or suppliers that could be affected by climate change in other countries?
- Have you considered establishing alternative suppliers for critical goods and services?
- How would it impact your customers if you could not provide your product or service?
- Would it change your customers’ requirements?
- To what extent do others depend on your business in the event of a severe weather event?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?
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Operations - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Flood or torrential rain conditions may cause difficulties accessing premises, land or sites. High Temperatures and Drought Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage. Existing crops may no longer be viable in new climatic conditions. A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector. Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water. Extreme Weather Events (storms and intense cold) Extreme events can cause damage or disruption to some production processes. Opportunities A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry. Warmer conditions and longer growing seasons will mean new species and varieties of plants. Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage. As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change. There will be opportunities to develop new farming and forestry practices that support increased resilience.
Suggested actions
- Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
- Do you have documentation of all key processes/procedures?
- Do you scan important physical documents and store the originals off-site?
- Have you considered backup utilities – energy and water?
- What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
- Have you considered where you store your products, stock, and raw materials?
- Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
- Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
- Do you have a contact list of current and alternative suppliers?
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Scenario planning - Impacts and actions
Impacts
One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.
Scenario Indicator 2°C in 2100 4°C in 2100 Average Annual Temperature + 1.27°C + 2.5°C Average Mean Rainfall 1.25% change 2.93% change
Suggested actions
Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:
- How might your governance procedures have to change between a 2°C and 4°C world?
- How might your risk management processes have to change between a 2°C and 4°C world?
- How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
- How might these changes affect your transition risks?
- What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
How to disclose how your business identifies, assesses, and manages climate-related risks in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), risk management disclosures should provide insight into the maturity of the approach to climate-related risks in your business. This area includes indicating the resources assigned to understanding this systemic risk and the potential for procedural change in the future.
What TCFD recommends on risk management Recommendation Disclose how the business identifies, assesses, and manages climate-related risks. Key aspects Describe the business’s processes for identifying and assessing climate-related risks Describe the business’s processes for managing climate-related risks. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the business’s overall risk management. This checklist will support you through the risk management disclosures area of TCFD's recommendations, which is about your business' structures and processes. It provides the information you need to know and suggests actions, including further resources and guidance to help you.
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Risk management - Suggested actions
Organisations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organisations determine the relative significance of climate-related risks in relations to other risks.
Describe your processes for managing climate-related risks, including how you make decisions to mitigate, transfer, accept or control those risks. In addition, organisations should describe their processes for prioritising climate-related risks, including how they are assessed, quantified and reviewed.
Organisations should consider providing the following details of their risk management process:
- How frequently do you carry out climate risk assessments?
- Time horizons covered (short, medium, and long-term)
- Risk types considered
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How do you manage these risks?
Businessess should disclose how their key transition and physical risks are being (or are planned to be) managed, and the time horizon for stages of management. You could add this to the Climate Risk Register Template in a new column or include it in an already established risk management tool or business continuity plan you use in your business.
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Complete the Climate Risk Register Template
To help report on business climate change risks and opportunities, Climate NI has developed a Climate Risk Register Template.
Completing the risk register will help identify and prioritise the business risks and assist in meeting the reporting elements for the Strategy and Risk Management sections of TCFD reporting recommendations.
Download the Climate Change Risk Register template (XLSX, 531K).
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Metrics and targets - Reporting climate-related financial disclosures
How to disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), metrics and targets disclosures should enable an understanding of any targets your business has set to help assess its progress in managing climate-related risks and opportunities. This should include how it intends to meet those targets and how it monitors and assesses progress over set timeframes.
What TCFD recommends on metrics and targets Recommendation Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. Key aspects Disclose your metrics for assessing business climate-related risks and the opportunities aligned with strategy and risk management process. Disclose Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. Describe your targets for managing business climate-related risks and opportunities and how you measure performance against targets.
This guide deals with the impacts of climate change - you can find more information on how to reduce your GHG emissions, on how to become a net zero business, on how to adapt your business to climate change and steps your business can take to mitigate climate change.
Organisations should provide their Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 GHG emissions and the related risk in transitioning to a low-carbon economy. Businesses can access a reporting platform to report their scope 1 and 2 emissions by signing up to Business in the Community's NI Climate Action Pledge.
This checklist will support you through the metrics and targets area of the TCFD recommendations, which is about your organisational structures and processes. It provides the information you need to know, suggested actions for including climate-related risks in your reporting, and further resources and guidance to help.
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Metrics - Suggested actions
Businesses should state the key metrics used to measure the risks and opportunities outlined in the Climate Risk Register Template. Consider providing metrics related to greenhouse gas emissions, energy use, water use and waste management. TCFD has provided illustrative metrics for four non-financial groups, which may help businesses consider the type of metrics best suited for their operations:
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Targets - Suggested actions
Organisations should describe their key climate-related targets, such as those related to GHG emissions, water usage. Other targets may include revenue goals for products and services designed for a lower-carbon, resilient economy. Remember to include information on time frames for the target, the baseline year targets are measured against, and key performance indicators used to assess progress against targets.
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
In this guide:
- Climate-related financial disclosure reporting (TCFD)
- How to report on climate risk in my business
- Governance - Reporting climate-related financial disclosures
- Strategy - Reporting climate-related financial disclosures
- Risk management - Reporting climate-related financial disclosures
- Metrics and targets - Reporting climate-related financial disclosures
How to report on climate risk in my business
Which businesses are required to report under TCFD and which businesses may benefit from voluntary climate risk reporting.
The Task Force on Climate-related Financial Disclosures (TCFD) focuses on integrating climate-related risks into business strategies. This approach enables investors and other stakeholders to evaluate climate-related risks and opportunities.
To achieve this objective, TCFD has a reporting framework with disclosure recommendations so companies can understand and report their climate-related risks to investors, lenders, and insurance underwriters. The TCFD framework considers both ‘physical’ and ‘transition’ risks like legal liability and insurance. The framework has recognition as the benchmark for businesses to use to identify, assess and report on climate-related impacts.
Who must report under TCFD?
Since April 2022, reporting climate-related risks and opportunities has been mandatory for large companies and financial institutions in the United Kingdom.
Climate-related financial disclosure reporting is mandatory for:
- all companies currently required to produce a non-financial information statement annually, eg listed companies, banks and insurers with more than 500 employees
- UK-based Alternative Investment Market (AIM) companies with 500 or more employees
- limited liability partnerships (LLPs) with 500 or more employees and a turnover of more than £500 million
- non-listed companies with 500 employees or with a turnover of more than £500 million
These compulsory climate reporting categories are expected to expand to include more businesses in coming years.
How TCFD can benefit SMEs
Although climate reporting is only mandatory for large businesses, small and medium-sized businesses (SMEs) may be asked to report on these issues as part of their larger supply chain.
SMEs can use TCFD reporting to show their value in the supply chain by demonstrating they have considered climate-related risks and opportunities. Following the TCFD framework is an opportunity for SMEs to show investors and lenders that they are measuring and monitoring their climate risk in a structured and consistent way.
What are the TCFD themes and main disclosures?
TCFD has a set of recommendations for reporting across four key areas, which are:
To help identify your current and potential future impact in these areas, alongside accessing guidance to plan business actions, Climate NI has developed four step-by-step checklists, which you can find in this guide.
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Governance - Reporting climate-related financial disclosures
How to disclose the governance of your business around climate-related risks and opportunities in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD) framework, governance disclosures should enable an understanding of how climate change risks and opportunities are identified, considered, and managed within the governance structure of your business.
What TCFD recommends on governance Recommendation Disclose the business’ governance around climate-related risks and opportunities. Key aspects Describe the board’s oversight of climate-related risks and opportunities. Describe management's role in assessing and managing climate-related risks and opportunities. This checklist will support you through the governance area of TCFD's recommendations covering organisational structures and processes. It provides the information you should know and suggests actions, including further resources and guidance to help you.
Show all-
1
Governance - Suggested actions
Consider how risks and opportunities are currently managed in your business by asking questions such as:
- Has your business assigned climate-related responsibilities at management-level positions?
- What processes are in place to inform management about climate-related issues and at what frequency?
- How do the management team monitor climate-related issues?
- Are climate-related issues considered when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, investments and business plans?
- How does the board/management team monitor and oversee progress against goals and targets for addressing climate-related issues?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Strategy - Reporting climate-related financial disclosures
How to disclose the impacts of climate-related risks and opportunities on your operations, strategy, and financial planning in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.
What TCFD recommends on strategy Recommendation Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material. Key aspects Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term. Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning. Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.
Planning ahead where possible, rather than responding reactively, will help you to:
- save your business money in the long term
- give your business the best chance to continue to operate and meet customer orders, despite the weather
- identify possible business opportunities, eg new products or services, reduced costs
Climate-related risks
TCFD divides climate-related risks into two main categories:
Transition risks (related to the transition to a low-carbon economy) Current and emergent regulation Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change. Technology Risks associated with technological improvements or innovations that support the transition to a low-carbon economic system. Legal Climate-related litigation claims. Market Shifts in supply and demand for certain commodities, products, and services. Reputation Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy. Workforce Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics? Financial market Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria? Physical risks (related to the physical impacts of climate change) Acute Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms. Chronic Longer-term shifts in climate patterns, eg sea-level rise.
This checklist will support you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.
Show all-
1
Supply chain - Impacts and actions
Impacts
Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.
Risks Flooding (high rainfall, coastal and river) Flooding and landslips will disrupt transport for deliveries. Extreme weather events (storms and intense cold) Extreme weather events can cause disruption of supply chains due to: - transport disruption
- impact on suppliers, eg flooding of premises
- changes in raw material price or availability
Extreme weather events can cause disruption to utilities supply and distribution. Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events. Opportunities Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning. Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles. Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.
Suggested actions
- What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
- Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
- Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
- Do you have any processes or products that are sensitive to changing temperature or climate conditions?
- Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
- Have you identified critical activities and the employees and inputs required to maintain them?
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2
Finance/insurance - Impacts and actions
Impacts
Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.
Risks Flooding and extreme weather events. Flooding damage and other severe weather events could result in unplanned business costs. An increase in extreme weather events will see more insurance-related issues. Global climatic events could impact international investments or products sourced from overseas. Cost implications for retrofitting existing buildings or relocating to cope with climate impacts. Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors. Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term. Disruptions to supply chains can have significant negative financial impacts. Opportunities Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities. Clients and customers attracted to businesses that can show they are resilient to climate change. New insurance products and services that spread the risk of climate change. Increasing resilience now can pay off many times over in the future. More weather-related claims improve the efficiency per claim.
Suggested actions
- When did you last check that you have the insurance you need?
- Are you covered for floods and storm events?
- What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
- Does your policy cover the full value of your business?
- Do you keep documents safe from weather impacts (and store copies off-site)?
- Do you have business continuity cover if your business is interrupted?
- Do you have a business continuity plan?
- Have you considered the financial management implications of a severe weather event?
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3
Products and services - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Increased heavy rainfall and flood risk will increase demand for products, services and expertise to support sustainable water resource management. Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence. High Temperatures and Drought Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed. Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive. Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season. Extreme Weather Events (storms and intense cold) Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains. Opportunities New innovative products, or modifications to existing products, in response to a changing market. Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry. Advantages for those who are quick to respond to changing markets and lifestyles. Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.
Suggested actions
- Is your business product or service weather or climate-sensitive?
- Have you put in place measures to increase your business' resilience?
- Does your business have global markets or suppliers that could be affected by climate change in other countries?
- Have you considered establishing alternative suppliers for critical goods and services?
- How would it impact your customers if you could not provide your product or service?
- Would it change your customers’ requirements?
- To what extent do others depend on your business in the event of a severe weather event?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?
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4
Operations - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Flood or torrential rain conditions may cause difficulties accessing premises, land or sites. High Temperatures and Drought Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage. Existing crops may no longer be viable in new climatic conditions. A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector. Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water. Extreme Weather Events (storms and intense cold) Extreme events can cause damage or disruption to some production processes. Opportunities A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry. Warmer conditions and longer growing seasons will mean new species and varieties of plants. Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage. As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change. There will be opportunities to develop new farming and forestry practices that support increased resilience.
Suggested actions
- Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
- Do you have documentation of all key processes/procedures?
- Do you scan important physical documents and store the originals off-site?
- Have you considered backup utilities – energy and water?
- What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
- Have you considered where you store your products, stock, and raw materials?
- Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
- Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
- Do you have a contact list of current and alternative suppliers?
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5
Scenario planning - Impacts and actions
Impacts
One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.
Scenario Indicator 2°C in 2100 4°C in 2100 Average Annual Temperature + 1.27°C + 2.5°C Average Mean Rainfall 1.25% change 2.93% change
Suggested actions
Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:
- How might your governance procedures have to change between a 2°C and 4°C world?
- How might your risk management processes have to change between a 2°C and 4°C world?
- How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
- How might these changes affect your transition risks?
- What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
How to disclose how your business identifies, assesses, and manages climate-related risks in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), risk management disclosures should provide insight into the maturity of the approach to climate-related risks in your business. This area includes indicating the resources assigned to understanding this systemic risk and the potential for procedural change in the future.
What TCFD recommends on risk management Recommendation Disclose how the business identifies, assesses, and manages climate-related risks. Key aspects Describe the business’s processes for identifying and assessing climate-related risks Describe the business’s processes for managing climate-related risks. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the business’s overall risk management. This checklist will support you through the risk management disclosures area of TCFD's recommendations, which is about your business' structures and processes. It provides the information you need to know and suggests actions, including further resources and guidance to help you.
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Risk management - Suggested actions
Organisations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organisations determine the relative significance of climate-related risks in relations to other risks.
Describe your processes for managing climate-related risks, including how you make decisions to mitigate, transfer, accept or control those risks. In addition, organisations should describe their processes for prioritising climate-related risks, including how they are assessed, quantified and reviewed.
Organisations should consider providing the following details of their risk management process:
- How frequently do you carry out climate risk assessments?
- Time horizons covered (short, medium, and long-term)
- Risk types considered
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How do you manage these risks?
Businessess should disclose how their key transition and physical risks are being (or are planned to be) managed, and the time horizon for stages of management. You could add this to the Climate Risk Register Template in a new column or include it in an already established risk management tool or business continuity plan you use in your business.
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3
Complete the Climate Risk Register Template
To help report on business climate change risks and opportunities, Climate NI has developed a Climate Risk Register Template.
Completing the risk register will help identify and prioritise the business risks and assist in meeting the reporting elements for the Strategy and Risk Management sections of TCFD reporting recommendations.
Download the Climate Change Risk Register template (XLSX, 531K).
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Metrics and targets - Reporting climate-related financial disclosures
How to disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), metrics and targets disclosures should enable an understanding of any targets your business has set to help assess its progress in managing climate-related risks and opportunities. This should include how it intends to meet those targets and how it monitors and assesses progress over set timeframes.
What TCFD recommends on metrics and targets Recommendation Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. Key aspects Disclose your metrics for assessing business climate-related risks and the opportunities aligned with strategy and risk management process. Disclose Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. Describe your targets for managing business climate-related risks and opportunities and how you measure performance against targets.
This guide deals with the impacts of climate change - you can find more information on how to reduce your GHG emissions, on how to become a net zero business, on how to adapt your business to climate change and steps your business can take to mitigate climate change.
Organisations should provide their Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 GHG emissions and the related risk in transitioning to a low-carbon economy. Businesses can access a reporting platform to report their scope 1 and 2 emissions by signing up to Business in the Community's NI Climate Action Pledge.
This checklist will support you through the metrics and targets area of the TCFD recommendations, which is about your organisational structures and processes. It provides the information you need to know, suggested actions for including climate-related risks in your reporting, and further resources and guidance to help.
Show all-
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Metrics - Suggested actions
Businesses should state the key metrics used to measure the risks and opportunities outlined in the Climate Risk Register Template. Consider providing metrics related to greenhouse gas emissions, energy use, water use and waste management. TCFD has provided illustrative metrics for four non-financial groups, which may help businesses consider the type of metrics best suited for their operations:
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2
Targets - Suggested actions
Organisations should describe their key climate-related targets, such as those related to GHG emissions, water usage. Other targets may include revenue goals for products and services designed for a lower-carbon, resilient economy. Remember to include information on time frames for the target, the baseline year targets are measured against, and key performance indicators used to assess progress against targets.
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Strategy - Reporting climate-related financial disclosures
In this guide:
- Climate-related financial disclosure reporting (TCFD)
- How to report on climate risk in my business
- Governance - Reporting climate-related financial disclosures
- Strategy - Reporting climate-related financial disclosures
- Risk management - Reporting climate-related financial disclosures
- Metrics and targets - Reporting climate-related financial disclosures
How to report on climate risk in my business
Which businesses are required to report under TCFD and which businesses may benefit from voluntary climate risk reporting.
The Task Force on Climate-related Financial Disclosures (TCFD) focuses on integrating climate-related risks into business strategies. This approach enables investors and other stakeholders to evaluate climate-related risks and opportunities.
To achieve this objective, TCFD has a reporting framework with disclosure recommendations so companies can understand and report their climate-related risks to investors, lenders, and insurance underwriters. The TCFD framework considers both ‘physical’ and ‘transition’ risks like legal liability and insurance. The framework has recognition as the benchmark for businesses to use to identify, assess and report on climate-related impacts.
Who must report under TCFD?
Since April 2022, reporting climate-related risks and opportunities has been mandatory for large companies and financial institutions in the United Kingdom.
Climate-related financial disclosure reporting is mandatory for:
- all companies currently required to produce a non-financial information statement annually, eg listed companies, banks and insurers with more than 500 employees
- UK-based Alternative Investment Market (AIM) companies with 500 or more employees
- limited liability partnerships (LLPs) with 500 or more employees and a turnover of more than £500 million
- non-listed companies with 500 employees or with a turnover of more than £500 million
These compulsory climate reporting categories are expected to expand to include more businesses in coming years.
How TCFD can benefit SMEs
Although climate reporting is only mandatory for large businesses, small and medium-sized businesses (SMEs) may be asked to report on these issues as part of their larger supply chain.
SMEs can use TCFD reporting to show their value in the supply chain by demonstrating they have considered climate-related risks and opportunities. Following the TCFD framework is an opportunity for SMEs to show investors and lenders that they are measuring and monitoring their climate risk in a structured and consistent way.
What are the TCFD themes and main disclosures?
TCFD has a set of recommendations for reporting across four key areas, which are:
To help identify your current and potential future impact in these areas, alongside accessing guidance to plan business actions, Climate NI has developed four step-by-step checklists, which you can find in this guide.
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Governance - Reporting climate-related financial disclosures
How to disclose the governance of your business around climate-related risks and opportunities in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD) framework, governance disclosures should enable an understanding of how climate change risks and opportunities are identified, considered, and managed within the governance structure of your business.
What TCFD recommends on governance Recommendation Disclose the business’ governance around climate-related risks and opportunities. Key aspects Describe the board’s oversight of climate-related risks and opportunities. Describe management's role in assessing and managing climate-related risks and opportunities. This checklist will support you through the governance area of TCFD's recommendations covering organisational structures and processes. It provides the information you should know and suggests actions, including further resources and guidance to help you.
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Governance - Suggested actions
Consider how risks and opportunities are currently managed in your business by asking questions such as:
- Has your business assigned climate-related responsibilities at management-level positions?
- What processes are in place to inform management about climate-related issues and at what frequency?
- How do the management team monitor climate-related issues?
- Are climate-related issues considered when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, investments and business plans?
- How does the board/management team monitor and oversee progress against goals and targets for addressing climate-related issues?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Strategy - Reporting climate-related financial disclosures
How to disclose the impacts of climate-related risks and opportunities on your operations, strategy, and financial planning in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.
What TCFD recommends on strategy Recommendation Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material. Key aspects Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term. Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning. Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.
Planning ahead where possible, rather than responding reactively, will help you to:
- save your business money in the long term
- give your business the best chance to continue to operate and meet customer orders, despite the weather
- identify possible business opportunities, eg new products or services, reduced costs
Climate-related risks
TCFD divides climate-related risks into two main categories:
Transition risks (related to the transition to a low-carbon economy) Current and emergent regulation Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change. Technology Risks associated with technological improvements or innovations that support the transition to a low-carbon economic system. Legal Climate-related litigation claims. Market Shifts in supply and demand for certain commodities, products, and services. Reputation Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy. Workforce Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics? Financial market Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria? Physical risks (related to the physical impacts of climate change) Acute Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms. Chronic Longer-term shifts in climate patterns, eg sea-level rise.
This checklist will support you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.
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Supply chain - Impacts and actions
Impacts
Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.
Risks Flooding (high rainfall, coastal and river) Flooding and landslips will disrupt transport for deliveries. Extreme weather events (storms and intense cold) Extreme weather events can cause disruption of supply chains due to: - transport disruption
- impact on suppliers, eg flooding of premises
- changes in raw material price or availability
Extreme weather events can cause disruption to utilities supply and distribution. Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events. Opportunities Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning. Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles. Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.
Suggested actions
- What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
- Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
- Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
- Do you have any processes or products that are sensitive to changing temperature or climate conditions?
- Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
- Have you identified critical activities and the employees and inputs required to maintain them?
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2
Finance/insurance - Impacts and actions
Impacts
Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.
Risks Flooding and extreme weather events. Flooding damage and other severe weather events could result in unplanned business costs. An increase in extreme weather events will see more insurance-related issues. Global climatic events could impact international investments or products sourced from overseas. Cost implications for retrofitting existing buildings or relocating to cope with climate impacts. Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors. Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term. Disruptions to supply chains can have significant negative financial impacts. Opportunities Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities. Clients and customers attracted to businesses that can show they are resilient to climate change. New insurance products and services that spread the risk of climate change. Increasing resilience now can pay off many times over in the future. More weather-related claims improve the efficiency per claim.
Suggested actions
- When did you last check that you have the insurance you need?
- Are you covered for floods and storm events?
- What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
- Does your policy cover the full value of your business?
- Do you keep documents safe from weather impacts (and store copies off-site)?
- Do you have business continuity cover if your business is interrupted?
- Do you have a business continuity plan?
- Have you considered the financial management implications of a severe weather event?
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3
Products and services - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Increased heavy rainfall and flood risk will increase demand for products, services and expertise to support sustainable water resource management. Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence. High Temperatures and Drought Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed. Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive. Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season. Extreme Weather Events (storms and intense cold) Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains. Opportunities New innovative products, or modifications to existing products, in response to a changing market. Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry. Advantages for those who are quick to respond to changing markets and lifestyles. Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.
Suggested actions
- Is your business product or service weather or climate-sensitive?
- Have you put in place measures to increase your business' resilience?
- Does your business have global markets or suppliers that could be affected by climate change in other countries?
- Have you considered establishing alternative suppliers for critical goods and services?
- How would it impact your customers if you could not provide your product or service?
- Would it change your customers’ requirements?
- To what extent do others depend on your business in the event of a severe weather event?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?
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4
Operations - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Flood or torrential rain conditions may cause difficulties accessing premises, land or sites. High Temperatures and Drought Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage. Existing crops may no longer be viable in new climatic conditions. A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector. Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water. Extreme Weather Events (storms and intense cold) Extreme events can cause damage or disruption to some production processes. Opportunities A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry. Warmer conditions and longer growing seasons will mean new species and varieties of plants. Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage. As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change. There will be opportunities to develop new farming and forestry practices that support increased resilience.
Suggested actions
- Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
- Do you have documentation of all key processes/procedures?
- Do you scan important physical documents and store the originals off-site?
- Have you considered backup utilities – energy and water?
- What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
- Have you considered where you store your products, stock, and raw materials?
- Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
- Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
- Do you have a contact list of current and alternative suppliers?
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5
Scenario planning - Impacts and actions
Impacts
One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.
Scenario Indicator 2°C in 2100 4°C in 2100 Average Annual Temperature + 1.27°C + 2.5°C Average Mean Rainfall 1.25% change 2.93% change
Suggested actions
Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:
- How might your governance procedures have to change between a 2°C and 4°C world?
- How might your risk management processes have to change between a 2°C and 4°C world?
- How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
- How might these changes affect your transition risks?
- What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
How to disclose how your business identifies, assesses, and manages climate-related risks in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), risk management disclosures should provide insight into the maturity of the approach to climate-related risks in your business. This area includes indicating the resources assigned to understanding this systemic risk and the potential for procedural change in the future.
What TCFD recommends on risk management Recommendation Disclose how the business identifies, assesses, and manages climate-related risks. Key aspects Describe the business’s processes for identifying and assessing climate-related risks Describe the business’s processes for managing climate-related risks. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the business’s overall risk management. This checklist will support you through the risk management disclosures area of TCFD's recommendations, which is about your business' structures and processes. It provides the information you need to know and suggests actions, including further resources and guidance to help you.
Show all-
1
Risk management - Suggested actions
Organisations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organisations determine the relative significance of climate-related risks in relations to other risks.
Describe your processes for managing climate-related risks, including how you make decisions to mitigate, transfer, accept or control those risks. In addition, organisations should describe their processes for prioritising climate-related risks, including how they are assessed, quantified and reviewed.
Organisations should consider providing the following details of their risk management process:
- How frequently do you carry out climate risk assessments?
- Time horizons covered (short, medium, and long-term)
- Risk types considered
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2
How do you manage these risks?
Businessess should disclose how their key transition and physical risks are being (or are planned to be) managed, and the time horizon for stages of management. You could add this to the Climate Risk Register Template in a new column or include it in an already established risk management tool or business continuity plan you use in your business.
-
3
Complete the Climate Risk Register Template
To help report on business climate change risks and opportunities, Climate NI has developed a Climate Risk Register Template.
Completing the risk register will help identify and prioritise the business risks and assist in meeting the reporting elements for the Strategy and Risk Management sections of TCFD reporting recommendations.
Download the Climate Change Risk Register template (XLSX, 531K).
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
Developed withActionsAlso on this sitePrimary parentContent category
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/content/risk-management-reporting-climate-related-financial-disclosures
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Metrics and targets - Reporting climate-related financial disclosures
How to disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), metrics and targets disclosures should enable an understanding of any targets your business has set to help assess its progress in managing climate-related risks and opportunities. This should include how it intends to meet those targets and how it monitors and assesses progress over set timeframes.
What TCFD recommends on metrics and targets Recommendation Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. Key aspects Disclose your metrics for assessing business climate-related risks and the opportunities aligned with strategy and risk management process. Disclose Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. Describe your targets for managing business climate-related risks and opportunities and how you measure performance against targets.
This guide deals with the impacts of climate change - you can find more information on how to reduce your GHG emissions, on how to become a net zero business, on how to adapt your business to climate change and steps your business can take to mitigate climate change.
Organisations should provide their Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 GHG emissions and the related risk in transitioning to a low-carbon economy. Businesses can access a reporting platform to report their scope 1 and 2 emissions by signing up to Business in the Community's NI Climate Action Pledge.
This checklist will support you through the metrics and targets area of the TCFD recommendations, which is about your organisational structures and processes. It provides the information you need to know, suggested actions for including climate-related risks in your reporting, and further resources and guidance to help.
Show all-
1
Metrics - Suggested actions
Businesses should state the key metrics used to measure the risks and opportunities outlined in the Climate Risk Register Template. Consider providing metrics related to greenhouse gas emissions, energy use, water use and waste management. TCFD has provided illustrative metrics for four non-financial groups, which may help businesses consider the type of metrics best suited for their operations:
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2
Targets - Suggested actions
Organisations should describe their key climate-related targets, such as those related to GHG emissions, water usage. Other targets may include revenue goals for products and services designed for a lower-carbon, resilient economy. Remember to include information on time frames for the target, the baseline year targets are measured against, and key performance indicators used to assess progress against targets.
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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/content/metrics-and-targets-reporting-climate-related-financial-disclosures
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-
Governance - Reporting climate-related financial disclosures
In this guide:
- Climate-related financial disclosure reporting (TCFD)
- How to report on climate risk in my business
- Governance - Reporting climate-related financial disclosures
- Strategy - Reporting climate-related financial disclosures
- Risk management - Reporting climate-related financial disclosures
- Metrics and targets - Reporting climate-related financial disclosures
How to report on climate risk in my business
Which businesses are required to report under TCFD and which businesses may benefit from voluntary climate risk reporting.
The Task Force on Climate-related Financial Disclosures (TCFD) focuses on integrating climate-related risks into business strategies. This approach enables investors and other stakeholders to evaluate climate-related risks and opportunities.
To achieve this objective, TCFD has a reporting framework with disclosure recommendations so companies can understand and report their climate-related risks to investors, lenders, and insurance underwriters. The TCFD framework considers both ‘physical’ and ‘transition’ risks like legal liability and insurance. The framework has recognition as the benchmark for businesses to use to identify, assess and report on climate-related impacts.
Who must report under TCFD?
Since April 2022, reporting climate-related risks and opportunities has been mandatory for large companies and financial institutions in the United Kingdom.
Climate-related financial disclosure reporting is mandatory for:
- all companies currently required to produce a non-financial information statement annually, eg listed companies, banks and insurers with more than 500 employees
- UK-based Alternative Investment Market (AIM) companies with 500 or more employees
- limited liability partnerships (LLPs) with 500 or more employees and a turnover of more than £500 million
- non-listed companies with 500 employees or with a turnover of more than £500 million
These compulsory climate reporting categories are expected to expand to include more businesses in coming years.
How TCFD can benefit SMEs
Although climate reporting is only mandatory for large businesses, small and medium-sized businesses (SMEs) may be asked to report on these issues as part of their larger supply chain.
SMEs can use TCFD reporting to show their value in the supply chain by demonstrating they have considered climate-related risks and opportunities. Following the TCFD framework is an opportunity for SMEs to show investors and lenders that they are measuring and monitoring their climate risk in a structured and consistent way.
What are the TCFD themes and main disclosures?
TCFD has a set of recommendations for reporting across four key areas, which are:
To help identify your current and potential future impact in these areas, alongside accessing guidance to plan business actions, Climate NI has developed four step-by-step checklists, which you can find in this guide.
Developed withActionsAlso on this siteContent category
Source URL
/content/how-report-climate-risk-my-business
Links
Governance - Reporting climate-related financial disclosures
How to disclose the governance of your business around climate-related risks and opportunities in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD) framework, governance disclosures should enable an understanding of how climate change risks and opportunities are identified, considered, and managed within the governance structure of your business.
What TCFD recommends on governance Recommendation Disclose the business’ governance around climate-related risks and opportunities. Key aspects Describe the board’s oversight of climate-related risks and opportunities. Describe management's role in assessing and managing climate-related risks and opportunities. This checklist will support you through the governance area of TCFD's recommendations covering organisational structures and processes. It provides the information you should know and suggests actions, including further resources and guidance to help you.
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Governance - Suggested actions
Consider how risks and opportunities are currently managed in your business by asking questions such as:
- Has your business assigned climate-related responsibilities at management-level positions?
- What processes are in place to inform management about climate-related issues and at what frequency?
- How do the management team monitor climate-related issues?
- Are climate-related issues considered when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, investments and business plans?
- How does the board/management team monitor and oversee progress against goals and targets for addressing climate-related issues?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Strategy - Reporting climate-related financial disclosures
How to disclose the impacts of climate-related risks and opportunities on your operations, strategy, and financial planning in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.
What TCFD recommends on strategy Recommendation Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material. Key aspects Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term. Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning. Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.
Planning ahead where possible, rather than responding reactively, will help you to:
- save your business money in the long term
- give your business the best chance to continue to operate and meet customer orders, despite the weather
- identify possible business opportunities, eg new products or services, reduced costs
Climate-related risks
TCFD divides climate-related risks into two main categories:
Transition risks (related to the transition to a low-carbon economy) Current and emergent regulation Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change. Technology Risks associated with technological improvements or innovations that support the transition to a low-carbon economic system. Legal Climate-related litigation claims. Market Shifts in supply and demand for certain commodities, products, and services. Reputation Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy. Workforce Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics? Financial market Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria? Physical risks (related to the physical impacts of climate change) Acute Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms. Chronic Longer-term shifts in climate patterns, eg sea-level rise.
This checklist will support you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.
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Supply chain - Impacts and actions
Impacts
Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.
Risks Flooding (high rainfall, coastal and river) Flooding and landslips will disrupt transport for deliveries. Extreme weather events (storms and intense cold) Extreme weather events can cause disruption of supply chains due to: - transport disruption
- impact on suppliers, eg flooding of premises
- changes in raw material price or availability
Extreme weather events can cause disruption to utilities supply and distribution. Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events. Opportunities Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning. Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles. Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.
Suggested actions
- What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
- Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
- Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
- Do you have any processes or products that are sensitive to changing temperature or climate conditions?
- Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
- Have you identified critical activities and the employees and inputs required to maintain them?
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Finance/insurance - Impacts and actions
Impacts
Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.
Risks Flooding and extreme weather events. Flooding damage and other severe weather events could result in unplanned business costs. An increase in extreme weather events will see more insurance-related issues. Global climatic events could impact international investments or products sourced from overseas. Cost implications for retrofitting existing buildings or relocating to cope with climate impacts. Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors. Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term. Disruptions to supply chains can have significant negative financial impacts. Opportunities Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities. Clients and customers attracted to businesses that can show they are resilient to climate change. New insurance products and services that spread the risk of climate change. Increasing resilience now can pay off many times over in the future. More weather-related claims improve the efficiency per claim.
Suggested actions
- When did you last check that you have the insurance you need?
- Are you covered for floods and storm events?
- What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
- Does your policy cover the full value of your business?
- Do you keep documents safe from weather impacts (and store copies off-site)?
- Do you have business continuity cover if your business is interrupted?
- Do you have a business continuity plan?
- Have you considered the financial management implications of a severe weather event?
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Products and services - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Increased heavy rainfall and flood risk will increase demand for products, services and expertise to support sustainable water resource management. Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence. High Temperatures and Drought Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed. Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive. Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season. Extreme Weather Events (storms and intense cold) Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains. Opportunities New innovative products, or modifications to existing products, in response to a changing market. Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry. Advantages for those who are quick to respond to changing markets and lifestyles. Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.
Suggested actions
- Is your business product or service weather or climate-sensitive?
- Have you put in place measures to increase your business' resilience?
- Does your business have global markets or suppliers that could be affected by climate change in other countries?
- Have you considered establishing alternative suppliers for critical goods and services?
- How would it impact your customers if you could not provide your product or service?
- Would it change your customers’ requirements?
- To what extent do others depend on your business in the event of a severe weather event?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?
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Operations - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Flood or torrential rain conditions may cause difficulties accessing premises, land or sites. High Temperatures and Drought Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage. Existing crops may no longer be viable in new climatic conditions. A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector. Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water. Extreme Weather Events (storms and intense cold) Extreme events can cause damage or disruption to some production processes. Opportunities A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry. Warmer conditions and longer growing seasons will mean new species and varieties of plants. Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage. As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change. There will be opportunities to develop new farming and forestry practices that support increased resilience.
Suggested actions
- Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
- Do you have documentation of all key processes/procedures?
- Do you scan important physical documents and store the originals off-site?
- Have you considered backup utilities – energy and water?
- What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
- Have you considered where you store your products, stock, and raw materials?
- Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
- Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
- Do you have a contact list of current and alternative suppliers?
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Scenario planning - Impacts and actions
Impacts
One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.
Scenario Indicator 2°C in 2100 4°C in 2100 Average Annual Temperature + 1.27°C + 2.5°C Average Mean Rainfall 1.25% change 2.93% change
Suggested actions
Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:
- How might your governance procedures have to change between a 2°C and 4°C world?
- How might your risk management processes have to change between a 2°C and 4°C world?
- How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
- How might these changes affect your transition risks?
- What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
How to disclose how your business identifies, assesses, and manages climate-related risks in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), risk management disclosures should provide insight into the maturity of the approach to climate-related risks in your business. This area includes indicating the resources assigned to understanding this systemic risk and the potential for procedural change in the future.
What TCFD recommends on risk management Recommendation Disclose how the business identifies, assesses, and manages climate-related risks. Key aspects Describe the business’s processes for identifying and assessing climate-related risks Describe the business’s processes for managing climate-related risks. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the business’s overall risk management. This checklist will support you through the risk management disclosures area of TCFD's recommendations, which is about your business' structures and processes. It provides the information you need to know and suggests actions, including further resources and guidance to help you.
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Risk management - Suggested actions
Organisations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organisations determine the relative significance of climate-related risks in relations to other risks.
Describe your processes for managing climate-related risks, including how you make decisions to mitigate, transfer, accept or control those risks. In addition, organisations should describe their processes for prioritising climate-related risks, including how they are assessed, quantified and reviewed.
Organisations should consider providing the following details of their risk management process:
- How frequently do you carry out climate risk assessments?
- Time horizons covered (short, medium, and long-term)
- Risk types considered
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How do you manage these risks?
Businessess should disclose how their key transition and physical risks are being (or are planned to be) managed, and the time horizon for stages of management. You could add this to the Climate Risk Register Template in a new column or include it in an already established risk management tool or business continuity plan you use in your business.
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Complete the Climate Risk Register Template
To help report on business climate change risks and opportunities, Climate NI has developed a Climate Risk Register Template.
Completing the risk register will help identify and prioritise the business risks and assist in meeting the reporting elements for the Strategy and Risk Management sections of TCFD reporting recommendations.
Download the Climate Change Risk Register template (XLSX, 531K).
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Metrics and targets - Reporting climate-related financial disclosures
How to disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), metrics and targets disclosures should enable an understanding of any targets your business has set to help assess its progress in managing climate-related risks and opportunities. This should include how it intends to meet those targets and how it monitors and assesses progress over set timeframes.
What TCFD recommends on metrics and targets Recommendation Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. Key aspects Disclose your metrics for assessing business climate-related risks and the opportunities aligned with strategy and risk management process. Disclose Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. Describe your targets for managing business climate-related risks and opportunities and how you measure performance against targets.
This guide deals with the impacts of climate change - you can find more information on how to reduce your GHG emissions, on how to become a net zero business, on how to adapt your business to climate change and steps your business can take to mitigate climate change.
Organisations should provide their Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 GHG emissions and the related risk in transitioning to a low-carbon economy. Businesses can access a reporting platform to report their scope 1 and 2 emissions by signing up to Business in the Community's NI Climate Action Pledge.
This checklist will support you through the metrics and targets area of the TCFD recommendations, which is about your organisational structures and processes. It provides the information you need to know, suggested actions for including climate-related risks in your reporting, and further resources and guidance to help.
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Metrics - Suggested actions
Businesses should state the key metrics used to measure the risks and opportunities outlined in the Climate Risk Register Template. Consider providing metrics related to greenhouse gas emissions, energy use, water use and waste management. TCFD has provided illustrative metrics for four non-financial groups, which may help businesses consider the type of metrics best suited for their operations:
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Targets - Suggested actions
Organisations should describe their key climate-related targets, such as those related to GHG emissions, water usage. Other targets may include revenue goals for products and services designed for a lower-carbon, resilient economy. Remember to include information on time frames for the target, the baseline year targets are measured against, and key performance indicators used to assess progress against targets.
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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How to report on climate risk in my business
In this guide:
- Climate-related financial disclosure reporting (TCFD)
- How to report on climate risk in my business
- Governance - Reporting climate-related financial disclosures
- Strategy - Reporting climate-related financial disclosures
- Risk management - Reporting climate-related financial disclosures
- Metrics and targets - Reporting climate-related financial disclosures
How to report on climate risk in my business
Which businesses are required to report under TCFD and which businesses may benefit from voluntary climate risk reporting.
The Task Force on Climate-related Financial Disclosures (TCFD) focuses on integrating climate-related risks into business strategies. This approach enables investors and other stakeholders to evaluate climate-related risks and opportunities.
To achieve this objective, TCFD has a reporting framework with disclosure recommendations so companies can understand and report their climate-related risks to investors, lenders, and insurance underwriters. The TCFD framework considers both ‘physical’ and ‘transition’ risks like legal liability and insurance. The framework has recognition as the benchmark for businesses to use to identify, assess and report on climate-related impacts.
Who must report under TCFD?
Since April 2022, reporting climate-related risks and opportunities has been mandatory for large companies and financial institutions in the United Kingdom.
Climate-related financial disclosure reporting is mandatory for:
- all companies currently required to produce a non-financial information statement annually, eg listed companies, banks and insurers with more than 500 employees
- UK-based Alternative Investment Market (AIM) companies with 500 or more employees
- limited liability partnerships (LLPs) with 500 or more employees and a turnover of more than £500 million
- non-listed companies with 500 employees or with a turnover of more than £500 million
These compulsory climate reporting categories are expected to expand to include more businesses in coming years.
How TCFD can benefit SMEs
Although climate reporting is only mandatory for large businesses, small and medium-sized businesses (SMEs) may be asked to report on these issues as part of their larger supply chain.
SMEs can use TCFD reporting to show their value in the supply chain by demonstrating they have considered climate-related risks and opportunities. Following the TCFD framework is an opportunity for SMEs to show investors and lenders that they are measuring and monitoring their climate risk in a structured and consistent way.
What are the TCFD themes and main disclosures?
TCFD has a set of recommendations for reporting across four key areas, which are:
To help identify your current and potential future impact in these areas, alongside accessing guidance to plan business actions, Climate NI has developed four step-by-step checklists, which you can find in this guide.
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Governance - Reporting climate-related financial disclosures
How to disclose the governance of your business around climate-related risks and opportunities in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD) framework, governance disclosures should enable an understanding of how climate change risks and opportunities are identified, considered, and managed within the governance structure of your business.
What TCFD recommends on governance Recommendation Disclose the business’ governance around climate-related risks and opportunities. Key aspects Describe the board’s oversight of climate-related risks and opportunities. Describe management's role in assessing and managing climate-related risks and opportunities. This checklist will support you through the governance area of TCFD's recommendations covering organisational structures and processes. It provides the information you should know and suggests actions, including further resources and guidance to help you.
Show all-
1
Governance - Suggested actions
Consider how risks and opportunities are currently managed in your business by asking questions such as:
- Has your business assigned climate-related responsibilities at management-level positions?
- What processes are in place to inform management about climate-related issues and at what frequency?
- How do the management team monitor climate-related issues?
- Are climate-related issues considered when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, investments and business plans?
- How does the board/management team monitor and oversee progress against goals and targets for addressing climate-related issues?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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/content/governance-reporting-climate-related-financial-disclosures
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Strategy - Reporting climate-related financial disclosures
How to disclose the impacts of climate-related risks and opportunities on your operations, strategy, and financial planning in TCFD reporting.
Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.
What TCFD recommends on strategy Recommendation Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material. Key aspects Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term. Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning. Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.
Planning ahead where possible, rather than responding reactively, will help you to:
- save your business money in the long term
- give your business the best chance to continue to operate and meet customer orders, despite the weather
- identify possible business opportunities, eg new products or services, reduced costs
Climate-related risks
TCFD divides climate-related risks into two main categories:
Transition risks (related to the transition to a low-carbon economy) Current and emergent regulation Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change. Technology Risks associated with technological improvements or innovations that support the transition to a low-carbon economic system. Legal Climate-related litigation claims. Market Shifts in supply and demand for certain commodities, products, and services. Reputation Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy. Workforce Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics? Financial market Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria? Physical risks (related to the physical impacts of climate change) Acute Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms. Chronic Longer-term shifts in climate patterns, eg sea-level rise.
This checklist will support you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.
Show all-
1
Supply chain - Impacts and actions
Impacts
Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.
Risks Flooding (high rainfall, coastal and river) Flooding and landslips will disrupt transport for deliveries. Extreme weather events (storms and intense cold) Extreme weather events can cause disruption of supply chains due to: - transport disruption
- impact on suppliers, eg flooding of premises
- changes in raw material price or availability
Extreme weather events can cause disruption to utilities supply and distribution. Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events. Opportunities Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning. Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles. Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.
Suggested actions
- What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
- Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
- Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
- Do you have any processes or products that are sensitive to changing temperature or climate conditions?
- Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
- Have you identified critical activities and the employees and inputs required to maintain them?
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2
Finance/insurance - Impacts and actions
Impacts
Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.
Risks Flooding and extreme weather events. Flooding damage and other severe weather events could result in unplanned business costs. An increase in extreme weather events will see more insurance-related issues. Global climatic events could impact international investments or products sourced from overseas. Cost implications for retrofitting existing buildings or relocating to cope with climate impacts. Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors. Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term. Disruptions to supply chains can have significant negative financial impacts. Opportunities Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities. Clients and customers attracted to businesses that can show they are resilient to climate change. New insurance products and services that spread the risk of climate change. Increasing resilience now can pay off many times over in the future. More weather-related claims improve the efficiency per claim.
Suggested actions
- When did you last check that you have the insurance you need?
- Are you covered for floods and storm events?
- What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
- Does your policy cover the full value of your business?
- Do you keep documents safe from weather impacts (and store copies off-site)?
- Do you have business continuity cover if your business is interrupted?
- Do you have a business continuity plan?
- Have you considered the financial management implications of a severe weather event?
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3
Products and services - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Increased heavy rainfall and flood risk will increase demand for products, services and expertise to support sustainable water resource management. Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence. High Temperatures and Drought Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed. Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive. Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season. Extreme Weather Events (storms and intense cold) Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains. Opportunities New innovative products, or modifications to existing products, in response to a changing market. Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry. Advantages for those who are quick to respond to changing markets and lifestyles. Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.
Suggested actions
- Is your business product or service weather or climate-sensitive?
- Have you put in place measures to increase your business' resilience?
- Does your business have global markets or suppliers that could be affected by climate change in other countries?
- Have you considered establishing alternative suppliers for critical goods and services?
- How would it impact your customers if you could not provide your product or service?
- Would it change your customers’ requirements?
- To what extent do others depend on your business in the event of a severe weather event?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?
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4
Operations - Impacts and actions
Impacts
Risks Flooding (high rainfall, coastal and river) Flood or torrential rain conditions may cause difficulties accessing premises, land or sites. High Temperatures and Drought Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage. Existing crops may no longer be viable in new climatic conditions. A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector. Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water. Extreme Weather Events (storms and intense cold) Extreme events can cause damage or disruption to some production processes. Opportunities A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry. Warmer conditions and longer growing seasons will mean new species and varieties of plants. Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage. As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change. There will be opportunities to develop new farming and forestry practices that support increased resilience.
Suggested actions
- Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
- Do you have documentation of all key processes/procedures?
- Do you scan important physical documents and store the originals off-site?
- Have you considered backup utilities – energy and water?
- What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
- Have you considered where you store your products, stock, and raw materials?
- Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
- Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
- Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
- Do you have a contact list of current and alternative suppliers?
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5
Scenario planning - Impacts and actions
Impacts
One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.
Scenario Indicator 2°C in 2100 4°C in 2100 Average Annual Temperature + 1.27°C + 2.5°C Average Mean Rainfall 1.25% change 2.93% change
Suggested actions
Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:
- How might your governance procedures have to change between a 2°C and 4°C world?
- How might your risk management processes have to change between a 2°C and 4°C world?
- How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
- How might these changes affect your transition risks?
- What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Risk management - Reporting climate-related financial disclosures
How to disclose how your business identifies, assesses, and manages climate-related risks in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), risk management disclosures should provide insight into the maturity of the approach to climate-related risks in your business. This area includes indicating the resources assigned to understanding this systemic risk and the potential for procedural change in the future.
What TCFD recommends on risk management Recommendation Disclose how the business identifies, assesses, and manages climate-related risks. Key aspects Describe the business’s processes for identifying and assessing climate-related risks Describe the business’s processes for managing climate-related risks. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the business’s overall risk management. This checklist will support you through the risk management disclosures area of TCFD's recommendations, which is about your business' structures and processes. It provides the information you need to know and suggests actions, including further resources and guidance to help you.
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Risk management - Suggested actions
Organisations should describe their risk management processes for identifying and assessing climate-related risks. An important aspect of this description is how organisations determine the relative significance of climate-related risks in relations to other risks.
Describe your processes for managing climate-related risks, including how you make decisions to mitigate, transfer, accept or control those risks. In addition, organisations should describe their processes for prioritising climate-related risks, including how they are assessed, quantified and reviewed.
Organisations should consider providing the following details of their risk management process:
- How frequently do you carry out climate risk assessments?
- Time horizons covered (short, medium, and long-term)
- Risk types considered
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How do you manage these risks?
Businessess should disclose how their key transition and physical risks are being (or are planned to be) managed, and the time horizon for stages of management. You could add this to the Climate Risk Register Template in a new column or include it in an already established risk management tool or business continuity plan you use in your business.
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Complete the Climate Risk Register Template
To help report on business climate change risks and opportunities, Climate NI has developed a Climate Risk Register Template.
Completing the risk register will help identify and prioritise the business risks and assist in meeting the reporting elements for the Strategy and Risk Management sections of TCFD reporting recommendations.
Download the Climate Change Risk Register template (XLSX, 531K).
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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Metrics and targets - Reporting climate-related financial disclosures
How to disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities in TCFD reporting.
Under the framework of the Task Force on Climate-related Financial Disclosures (TCFD), metrics and targets disclosures should enable an understanding of any targets your business has set to help assess its progress in managing climate-related risks and opportunities. This should include how it intends to meet those targets and how it monitors and assesses progress over set timeframes.
What TCFD recommends on metrics and targets Recommendation Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material. Key aspects Disclose your metrics for assessing business climate-related risks and the opportunities aligned with strategy and risk management process. Disclose Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. Describe your targets for managing business climate-related risks and opportunities and how you measure performance against targets.
This guide deals with the impacts of climate change - you can find more information on how to reduce your GHG emissions, on how to become a net zero business, on how to adapt your business to climate change and steps your business can take to mitigate climate change.
Organisations should provide their Scope 1 and Scope 2 GHG emissions, and if appropriate, Scope 3 GHG emissions and the related risk in transitioning to a low-carbon economy. Businesses can access a reporting platform to report their scope 1 and 2 emissions by signing up to Business in the Community's NI Climate Action Pledge.
This checklist will support you through the metrics and targets area of the TCFD recommendations, which is about your organisational structures and processes. It provides the information you need to know, suggested actions for including climate-related risks in your reporting, and further resources and guidance to help.
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Metrics - Suggested actions
Businesses should state the key metrics used to measure the risks and opportunities outlined in the Climate Risk Register Template. Consider providing metrics related to greenhouse gas emissions, energy use, water use and waste management. TCFD has provided illustrative metrics for four non-financial groups, which may help businesses consider the type of metrics best suited for their operations:
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Targets - Suggested actions
Organisations should describe their key climate-related targets, such as those related to GHG emissions, water usage. Other targets may include revenue goals for products and services designed for a lower-carbon, resilient economy. Remember to include information on time frames for the target, the baseline year targets are measured against, and key performance indicators used to assess progress against targets.
You can download the full guide on Climate Change Resilience for Businesses in Northern Ireland (PDF, 1.4MB).
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What is a net zero business?
In this guide:
- How to become a net zero business
- What is a net zero business?
- Carbon literacy for your business
- How to calculate your business carbon footprint
- Set net zero targets for your business
- Monitor and report on your net zero progress
- Champion net zero through your business
- Advantages of becoming a net zero business
- Barriers to becoming a net zero business
- Advisory and financial support for net zero businesses
- Setting net zero targets for our business - Kainos
What is a net zero business?
Explanation of what a net zero business is and why this is important for your business, your community, and the climate
Net zero is a recent addition to the terminology around global warming, climate change and greenhouse gas emissions. It’s important to understand what net zero means to industry and small businesses.
What does net zero mean for business?
Becoming a net zero business means that your business activities and your value chain have no net impact on the climate from your greenhouse gas emissions.
To get involved and take action towards becoming a net zero business, you should focus on four main areas:
- minimising your own emissions
- reducing emissions in your supply chain
- integrating climate action into your business strategy
- working to promote climate action across society
In line with international commitments, under the Paris Agreement, to limit global temperature rises to no more than 1.5 degrees Celsius, businesses should aim to:
- halve their emissions by 2030
- reduce their emissions to close to zero before 2050
Find out more about how to set net zero targets for your business.
Any remaining emissions which cannot be eliminated from your business activities (ideally no more than ten per cent of your base year emissions) should be offset.
Is carbon offsetting a way to reach net zero?
Carbon offsetting means greenhouse gas emissions are being reduced somewhere else, by someone else, to make up for continued emissions from your business.
Offsetting is a recommended way to bridge the gap to full net zero where a small percentage of greenhouse gas emissions from your business cannot yet be eliminated. This should be through funding high quality and permanent carbon removal projects, which are approved by a recognised certification organisation.
However, carbon offsetting is not a substitute for cutting emissions from your business. Transferring your climate responsibility elsewhere while continuing to pump out greenhouse gases could be considered greenwashing - when your business falsely gives the impression it is addressing climate responsibility.
Introduction to net zero for businesses
The Carbon Trust has recorded an introductory webinar on net zero for businesses which can help you understand more about the concepts and terminology.
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Carbon literacy for your business
How becoming carbon literate in your business is an important step on the way to realising your net zero ambitions
Businesses with net zero ambitions need to learn and understand climate language and terminology to become carbon literate.
Carbon (or climate) literacy is awareness of the impact of everyday business activities and greenhouse gas emissions. It helps you to build knowledge and confidence to speak with authority on actions needed within your business to reduce emissions and tackle climate change.
Ten net zero terms your business should know
There are terms and concepts around climate change, carbon emissions and net zero action which you, your staff and your business supply partners should be familiar with.
1.5 degrees Celsius
The Paris Agreement was adopted in 2015, setting the world on a path to limiting global warming to well below 2 degrees Celsius, and trying to limit the rise to only 1.5 degrees Celsius, compared to pre-industrial global temperatures.
Carbon footprint
A carbon footprint is the total amount of greenhouse gases which a business (or individual) generates through its action. The first step to setting a net zero target for your business is to measure your carbon footprint fully and accurately.
Carbon offsetting
This is investing in carbon removal projects outside of your business to balance against the carbon you emit, capturing and storing carbon through natural projects (such as forests, bogs, coastal ecosystems) or innovative new technological projects.
Climate change adaptation
Effects of climate change are already being recorded through variable weather, and new effects will arrive as global temperatures rise over the coming decades. Adaptation actions are about recognising unavoidable disruptions and altering how you do business to cope with change.
Climate change mitigation
Mitigation is about the actions your business and society can take now to lessen greenhouse gas emissions to help prevent the worst-case scenarios of extreme global temperature rises from happening.
Decarbonisation
This is the long-term aim to create a society with minimal greenhouse gas emissions and is sometimes used to describe sector-specific action plans to reduce carbon emissions.
Emissions
This refers to the greenhouse gases released into the atmosphere due to your business activities. There are three types of emissions which businesses need to understand for their net zero plans:
- Scope 1 – direct emissions from your activities like fuel combustion and other emissions from your operations.
- Scope 2 – emissions from the production of purchased energy like electricity, heat, steam, or cooling.
- Scope 3 – indirect emissions generated from all activities upstream and downstream of your business (value chain) such as purchased goods and services, business travel and staff commuting, primary waste and end of life product disposal, transport and distribution, and more.
The greatest impact by your business is likely to be from Scope 3 emissions, which are also the hardest to accurately quantify.
Greenhouse gases
These are natural gases and human-produced gases causing the greenhouse effect where heat is trapped, leading to average global temperature rises. These have increased in the atmosphere over the last 150 years. Under climate change legislation, six greenhouse gases are defined:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O)
- hydrofluorocarbons (HFCs)
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6)
Just transition
This means tackling climate change in a way that distributes the benefits and costs in a fair way so that a net zero economy does not leave behind sections of society.
Science-based targets
These are business targets for greenhouse gas emissions reductions that align with the latest scientific advice on meeting the goals set out in the Paris Agreement to limit global warming.
Carbon literacy training for businesses
Business in the Community’s Carbon Literacy Training has been designed to raise awareness and explore the opportunities, risks and challenges that climate change will present.
Keep Northern Ireland Beautiful offers Carbon Literacy training to a wide range of groups to raise awareness of the climate change emergency and how to get involved in finding solutions.
If you want to deliver training in-house, you can build a Carbon Literacy course for your audience that complies with the Carbon Literacy Standard and have it certified by The Carbon Literacy Project.
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How to calculate your business carbon footprint
Set an accurate baseline for your business carbon footprint from which to monitor progress on your net zero actions
A carbon footprint is the total amount of greenhouse gases generated by your business activities.
Carbon footprints are used by businesses which have mandatory reporting requirements under carbon emissions trading and reporting schemes. They are also used voluntarily to show climate awareness and action by businesses.
Calculating your carbon footprint is the most important first step to becoming a net zero business. It allows your business to set baselines for your emissions reduction targets, and then to accurately measure progress against those targets.
How to calculate a business carbon footprint
There are five key steps to follow to calculate your organisational footprint. These are:
- Decide on the method to follow – a consistent method will help to ensure an accurate result.
- Define the organisational and operational boundaries – the operational boundary determines which emission sources you will quantify, so it's important to be realistic when choosing it.
- Collate the data – you'll need to collate consumption data for all the emission sources within your chosen boundary.
- Apply emissions factors – find the latest emissions factors on the Department for Environment, Food and Rural Affairs (Defra) website.
- Verify the results – this is optional, but it adds credibility to your calculation.
If you have taken action to reduce your carbon footprint you may want to verify this. This is optional, but independent certification will add credibility to your reduction claims.
Find carbon footprint calculators
The SME Climate Hub has created a free Business Carbon Calculator. You can use it to estimate your full carbon footprint and find quick actions to reduce emissions from your business.
The Carbon Trust have produced a downloadable guide to carbon footprints, and how should you measure, calculate, and communicate them – find out more (registration required).
Other tools are available on the market, and your business may benefit from the expertise of contracting a specialist carbon footprinting service.
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Set net zero targets for your business
How to make firm commitments to reducing carbon emissions and set achievable dates for becoming a net zero business
Your business is ready to make credible commitments to reduce greenhouse gas emissions when you’ve established a baseline – see how to calculate the carbon footprint of your business.
Make your net zero commitment
Making a public net zero commitment can help businesses stick to their plan and work to meet their targets. A commitment lets everyone involved in your business and value chain, and potential new customers and partners, know that you are serious about net zero and can demonstrate progress.
Your broad commitment should include the near-term target of halving emissions before 2030 and the long-term target of achieving net zero emissions before 2050.
The SME Climate Hub is a global initiative that aims to mainstream business climate action and build resilience. They have developed a standardised text as an example of how to commit to becoming a net zero business:
The SME Climate Commitment
Recognising that climate change poses a threat to the economy, nature and society-at-large, our company commits to take action immediately in order to:
- Halve our greenhouse gas emissions before 2030
- Achieve net zero emissions before 2050
- Disclose our progress on a yearly basis
In doing so, we are proud to be recognised by the United Nations Race to Zero campaign, and join governments, businesses, cities, regions, and universities around the world that share the same mission.
Learn more about the SME Climate Commitment (PDF, 249K).
You should then publish and communicate your commitment to staff, customers and suppliers, along with further details on how you will monitor progress and transparently report this on an annual basis.
Start to take action towards net zero
Once your business has made its net zero commitment, you should begin to take actions in the following months.
For example, you could start by developing a detailed action plan setting out how you intend to achieve your reduction targets.
Your net zero action plan should include detailed information on:
- existing Scope 1, 2 and 3 emissions – see carbon literacy for your business
- where reductions will be made
- overall timescales and interim checkpoints for reductions
- business growth projections and how you'll target any additional emissions that arise
The Cabinet Office has developed a Carbon Reduction Plan template for demonstrating net zero commitment when bidding for major government contracts – it can act as an example template for businesses wanting to develop their own net zero action plan (ODT, 73K).
You should then begin to take concrete actions to reduce your emissions in line with your action plan - find out more about how to cut your carbon emissions.
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Monitor and report on your net zero progress
How to measure the impact of net zero actions in your business and communicate progress to customers and investors
Announcing your business commitment to net zero sets the expectation that you will share your targets and the actions you will take to achieve them. There will be an expectation that you monitor your emissions reduction across the lifetime of your commitment and publish annual reports on your progress.
Customers, business partners, staff and other interested parties will expect your transparency. This openness can also improve your business brand and help to demonstrate the importance of net zero actions to your industry and society.
Ongoing monitoring and reporting can allow your business to regularly evaluate your results, plus help you take any corrective actions and make updates to your plan as circumstances change.
What to include in your net zero progress report
An annual report on net zero progress by your business should include:
- an overview of your headline commitment and targets, and any amendments
- a detailed disclosure of your greenhouse gas emissions in the last year
- the percentage reductions achieved along with the outlook for the near future
- the specific actions you’ve taken to cut your emissions
- details of how your business strategy is evolving to embed net zero
You should consider third-party auditing and verification of your reporting to enhance its credibility.
Net zero standards, certification and accreditation
Using published environmental standards can help your business to meet best practice in reporting and verification of your progress in cutting emissions.
100,000 free copies of BS ISO 50005 - Energy management systems are being sponsored by the Department for Business, Energy and Industrial Strategy (BEIS) as part of their commitment to support small and medium-sized organisations to manage their energy performance and help the United Kingdom to meet net zero.
The Carbon Trust has developed certification which can guide and support your business towards net zero and climate leadership called the Route to Net Zero Standard.
The UK Accreditation Service (UKAS) has published guidance on how to gain various accreditations to support your net zero plans.
The British Standards Institute (BSI) has published a guide on how adopting standards can help your business to achieve net zero.
Other environmental standards
ISO 14001: 2015 – Environmental Management Standard specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance – find out more about ISO 14001: 2015.
ISO 50001: 2018 – Energy Management Standard specifies requirements for establishing, implementing, maintaining and improving an energy management system – find out more about ISO 50001: 2018.
PAS 2060:2014 – Publicly Available Specification for the demonstration of carbon neutrality can be used for your entire business or to any uniquely identified subject, such as specific activities, products, services, buildings, projects, or events – find out more about PAS 2060:2014.
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Champion net zero through your business
How your business can become an advocate for net zero actions within your community and across wider society
Your business can be a climate leader by using your network and wider sphere of influence to help accelerate climate action in society. Advocating for wider climate action will naturally benefit the environment but can also make it easier to run a net zero business with more suppliers, partners and customers who want to do business with you.
How to be a net zero champion
You should spread the word about your own net zero commitment and the progress you are making each year. Your reports should include sharing your story with examples of how you’ve cut your greenhouse gas emissions, reduced your waste, etc.
You can invest in projects which take a nature-based approach to avoid or capture emissions, also known as carbon offsetting. Offsetting is an important part of balancing the toughest to cut emissions from your business, but you can get involved in local or international projects which go beyond your own business carbon balance needs. You could also devise and deliver your own nature-based solution on your business property or land as part of your action plan.
Getting your staff involved in climate action can spread the benefits of net zero action beyond your value chain, and help your employees to feel valued in their efforts.
The Climate Justice Playbook for Business is a practical guide that can help business leaders understand the intersection of climate action and social justice and advance a justice-centred approach to climate action.
Work with your sector to develop net zero roadmaps
Partnership working to achieve shared goals and benefits for all businesses, even with local competitor companies, can help to boost your overall industry sector.
The Net Zero Council has developed a new framework to help empower businesses to create tailored action plans to reduce emissions across their sector. The guidelines provide a robust, credible and consistent set of criteria for business sector roadmaps to ensure they can effectively reduce emissions - find out more about the net zero business sector roadmap guidelines.
Local opportunities to champion climate action
Business in the Community offers ways to get involved in local business community and wider societal actions through corporate social responsibility and climate schemes.
You can get involved in local networking events to spread the word about net zero business ambitions by joining Northern Ireland business networks.
You can find environmental business events for networking opportunities, or you can organise and list your own climate events, through our Events Finder tool.
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Advantages of becoming a net zero business
How becoming a net zero business can improve business resilience, attract customers, and improve social responsibility
Climate change is changing how the world does business due to unavoidable effects now, and in preparation for effects that may be on the way.
There are many benefits to your business of becoming net zero, beyond the positive effect on the environment of reducing your emissions.
Net zero business advantages
Recognition and marketing
If your business makes tough decisions and sets itself on a path to net zero, you should shout about it. Customers are becoming more and more climate-conscious and are attracted to products and services which have a low impact on the environment.
You can market the genuine environmental benefits of the actions taken by your business, and you can seek recognition through business awards - find out more about how to market your environmental credentials.
Businesses that make the SME Climate Commitment will have their name/logo featured on the SME Climate Hub and be recognised by the United Nations Race to Zero campaign.
Business in the Community celebrates local businesses which are demonstrating a significant commitment and contribution to climate action through their annual Responsible Business Awards.
Becoming more competitive
Businesses which can demonstrate an authentic commitment and progress towards net zero are more attractive to climate-conscious customers and can grow sales at the expense of competitors.
Public sector tendering competitions are increasingly setting business commitment to net zero as a minimum requirement to be considered for contracts. This is now the case for central UK government contracts over £5 million a year and is likely to become the norm for most, if not all, contracts between now and 2050.
Building business resilience
Climate change might appear to have greater impacts in other parts of the world, but businesses here will feel those effects. Extreme short-term weather and longer-term climate patterns can disrupt your supply chains.
Becoming a net zero business can go a long way to protecting against economic, climate and regulatory shocks now and in the future.
The UK Government publishes a climate change risk assessment (CCRA) every five years, which includes advice on adaptation actions for different sectors - you can download the Evidence for the third UK Climate Change Risk Assessment (CCRA3) Summary for Northern Ireland (PDF, 4.3MB).
Long-term cost reductions
Making changes to your way of doing business rarely comes without cost in the short term. However, you should seek to maximise the efficiencies which net zero businesses can find through reduced energy, waste and water costs. Businesses with minimal greenhouse gas emissions and environmental impacts may also find themselves able to avoid future carbon and waste taxes.
Attracting investment
Having a strong business strategy for the future with sustainability (both for business viability and the environment) at the centre is important for investors. Net zero plans are likely to become an essential element when making investment decisions – find out more about how to attract investment.
Early mover advantage
The potential advantages listed above come with risks attached in investing and working to achieve them, but becoming a net zero business can put you ahead of others in your industry and help you to establish a larger market share while others catch up.
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Barriers to becoming a net zero business
There are several challenges which many types of small business must overcome to make a successful journey to net zero
Awareness of climate change issues among small businesses is growing, as is the wish to join in climate action. However, many small businesses struggle to overcome barriers to reducing their carbon emissions. Understanding these barriers and finding practical solutions is critical to becoming a net zero business.
Key barriers to business net zero actions
Costs
Upfront capital costs to upgrade items such as machinery and vehicles can be difficult for small businesses to fund. The inability to purchase at scale can mean higher costs per unit for low-carbon raw materials, products, and services.
Ongoing costs can also place a burden on your business and add to worries about remaining competitive on price, especially if your competitors are not taking similar actions.
You should aim to attract customers who value net zero commitments, or business customers which need low-carbon suppliers as part of their own value chain reporting, by marketing your climate actions. You can also gain a competitive advantage in tendering for contracts, more of which are requiring verified net zero commitments.
Feasibility and credibility
Small businesses can often struggle to find net zero solutions that work for them. It can be difficult to accurately define (and therefore tackle) your carbon footprint, especially Scope 3 emissions across your value chain. Lack of access to accurate or cost-effective monitoring and verification tools can affect the credibility of your green claims and progress to net zero. An over-reliance on carbon offsetting could open your business to accusations of greenwashing.
Free carbon footprint tools are available to get you started, but you may benefit from the expertise of professional carbon footprinting service providers.
Capacity and skills
Many businesses are busy focusing on day-to-day tasks making it hard to devote significant time and resources to fundamental business change that may not positively impact profitability in the short term.
It can be challenging to see how small changes in your business can make a difference on a global scale. Also, to make a change, you may need investment in staff training or recruitment to fill dedicated roles focusing on net zero priorities.
The coronavirus pandemic showed how the short-term effort of making necessary changes to business operations can bring long-term benefits in terms of efficiencies and new ways of working. Setting medium-term goals, and quantifying the potential benefits of change, can provide focus.
Willingness and resistance
People within your organisation, and your supply chain, may have strong views opposing the science of climate change and, in contrast, do not see it as a problem. Key staff may resist business change based on short-term impact on revenue or the diversion of investment from profitable carbon-intensive activities.
Climate literacy can help people to understand wider issues, but as a business owner it’s important to set a clear and understandable direction that can help to attract and motivate staff who can deliver on your net zero ambitions.
Contractual obstacles
Your business may be limited in your scope for action by existing contracts such as with a service provider, supplier contract or a building tenancy agreement. These partners may be unwilling or simply unable to make the necessary adjustments to meet your net zero requirements.
You should approach your partners to discuss what’s possible in the short term and until your contract expires. You may be able to convince them of the joint marketing benefits of making positive actions on greenhouse gas emissions reductions.
If you ultimately need to find new providers, suppliers, or alternative arrangements for premises, you should weave these timescales into your net zero plan.
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Advisory and financial support for net zero businesses
Find practical support from expert advice and mentoring to loans and grants to enable your business journey to net zero.
Changing your business strategy and direction to become a net zero business can be daunting – but you don’t have to do it alone. A growing range of support schemes is available to help you on your journey.
The SME Climate Hub has guidance on sourcing financial support for reducing emissions, including from:
- customers/buyers
- banks
- grants and other government support
- balance sheet and investors
You can find more information on climate awareness programmes and events.
National support for net zero businesses
United Kingdom government-backed schemes are available to support businesses making innovative and game-changing investments in a green future for themselves, their sectors and customers.
Industrial Energy Efficiency Accelerator
Funding for industrial-scale demonstrations of novel technologies with the potential to reduce energy consumption, maximise resource efficiency and cut carbon emissions – find out more about the Industrial Energy Efficiency Accelerator.
Industrial Energy Transformation Fund
Financial support for businesses with high energy use to cut their energy bills and greenhouse gas emissions through investing in energy efficiency and low carbon technologies – find out more about the Industrial Energy Transformation Fund.
Workplace Charging Scheme
A voucher-based scheme that provides eligible applicants with support towards the upfront costs of the purchase and installation of electric vehicle charge points – find out more about the Workplace Charging Scheme.
Gigabit Broadband Voucher Scheme
A voucher-based scheme for businesses experiencing slow broadband speeds in rural areas to help to cover the costs of installing gigabit broadband – find out more about the Gigabit Broadband Voucher Scheme.
Local business support programmes for net zero
Several local support programmes for environmental action, climate mitigation and progressing towards net zero are available for businesses:
Cycle-Friendly Employer Accreditation Scheme
Scheme which helps organisations become cycle-friendly employers - find out more about the Cycle-Friendly Employer Accreditation Scheme.
Employer active travel support
Scheme which supports employers to encourage their employees to consider active travel in their daily routine - find out more about Employer active travel support.
Energy Efficiency Capital Grants
Invest Northern Ireland grant support to help businesses to buy and install energy efficient equipment - find out more about Energy Efficiency Capital Grants.
LiveSmart Community Environmental Grant Programme 2023-24
Causeway Coast and Glens Borough Council financial assistance to allow groups and organisations to improve the general cleanliness in their local area, particularly in respect of litter, to promote recycling, reuse and waste reduction, and to look at ways of reducing carbon footprint by taking simple, practical actions such as planting - find out more about the LiveSmart Community Environmental Grant Programme 2023-24.
Operational Excellence Solutions
Coaching support to help Northern Ireland companies improve their competitive advantage by increasing their productivity and profitability - find out more about Operational Excellence Solutions.
Sustainability Reports
Invest Northern Ireland support to give businesses an understanding of their environmental performance across several areas, such as raw materials, energy, carbon, packaging, biodiversity and waste - find out more about Sustainability Reports.
Resource Matching Service
Invest NI and International Synergies provide an opportunity to transfer business waste, unwanted materials and by-products from one business or organisation to be reused, recycled, reprocessed and repackaged by another - find out more about the Resource Matching Service.
Technical Consultancy Service for energy and waste management
Invest NI support to help you identify areas for increased efficiency and cost savings is available to all Northern Ireland businesses with an annual energy and resource spend more than £30,000 - find out more about the Invest NI's Technical Consultancy Service.
Find these and more support programmes through our Business Support Finder tool.
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How to become a net zero business
Setting net zero targets for our business - Kainos
Stephan Sakowicz explains what sustainability means to Kainos and how they plan to deliver on ambitious climate pledges.
Kainos Group plc is a United Kingdom-headquartered, global company that helps its customers deliver successful digital transformation projects. Kainos employs more than 2,900 people in 22 countries across Europe and the Americas.
In 2022 Kainos signed up for the Climate Pledge, co-founded by Amazon and Global Optimism. Through this initiative, signatory companies commit to taking collective action on positive climate change, eliminating carbon and supporting credible offsetting with real and permanent benefits.
Stephan Sakowicz, Leader of the Climate Action Group in Kainos, explains what sustainability means to Kainos and how they plan to deliver on their climate pledges.
Why sign the pledge?
"Kainos is an Amazon Web Services partner, so we have been tracking the roll-out of The Climate Pledge from the start. Sustainability is important to us. To play our part in reducing global temperatures, we needed to commit to an ambitious programme reducing our carbon footprint and offsetting emissions. We work with our customers, staff and suppliers to drive the sustainability agenda. We want to be proud of the legacy we leave."
"We have worked hard to achieve carbon neutrality in 2021. Our near-term carbon reduction plan has been approved by the Science Based Targets Initiative, so we knew that we could meet the 2040 deadline. In fact, we will be able to beat it by 15 years. We are committed to achieving net zero by 2025."
What prompted Kainos to commit to the shorter timeframe?
"As a global organisation, we believe we are responsible for positively impacting society, local communities and the environment. We know planting trees or donating to charity will not make a difference that reflects a business of our size. We want to make a meaningful difference sooner and do not think the Earth can wait. We believe that joint action with suppliers and customers is the way forward – and we are happy to take the lead on this."
What is Kainos doing to deliver on these targets?
"We are embedding best practice across our offices to reduce the environmental impact of our activities. We operate an activity-based working model. This approach reduces the need for business travel and day-to-day commuting, and we have started to engage with our supply chain to achieve end-to-end reductions across Scope 1, 2 and 3 emissions, not just our direct emissions."
"The organisation has also taken steps to help our clients tackle their carbon emissions. Innovations like our cloud carbon calculator make it easy for customers to understand and reduce their emissions through technology."
"While we strive towards net zero, we also invest in offsetting and removal schemes to compensate for our residual footprint. We have supported forest preservation, reforestation, wind power, landfill gas-to-energy and cooking stove programmes in Europe, North America, Africa and South America, and from 2022 onwards, have begun to invest in atmospheric carbon removal and avoidance schemes."
How did Kainos get everyone on board?
“We have a Climate Action Group comprising over 250 global staff members. This group, led by senior managers with oversight from the board, defines the vision and aims for Kainos, including the roadmap to net zero. This Climate Action Group is open to all employees who are encouraged to submit ideas, best practices or success stories on Kainos has helped our customers improve their environmental impact."
Why become an advocate for net zero?
“The organisation wants to understand the real impact our business activities have on the environment, and we want to reduce that impact in any way we can. We can use the knowledge that we have gained to help our customers, staff, and suppliers achieve their own low-carbon goals. Furthermore, by helping to digitise organisations and cutting down on manual or intensive working methods, we can reduce the carbon impact of doing business."
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Carbon literacy for your business
In this guide:
- How to become a net zero business
- What is a net zero business?
- Carbon literacy for your business
- How to calculate your business carbon footprint
- Set net zero targets for your business
- Monitor and report on your net zero progress
- Champion net zero through your business
- Advantages of becoming a net zero business
- Barriers to becoming a net zero business
- Advisory and financial support for net zero businesses
- Setting net zero targets for our business - Kainos
What is a net zero business?
Explanation of what a net zero business is and why this is important for your business, your community, and the climate
Net zero is a recent addition to the terminology around global warming, climate change and greenhouse gas emissions. It’s important to understand what net zero means to industry and small businesses.
What does net zero mean for business?
Becoming a net zero business means that your business activities and your value chain have no net impact on the climate from your greenhouse gas emissions.
To get involved and take action towards becoming a net zero business, you should focus on four main areas:
- minimising your own emissions
- reducing emissions in your supply chain
- integrating climate action into your business strategy
- working to promote climate action across society
In line with international commitments, under the Paris Agreement, to limit global temperature rises to no more than 1.5 degrees Celsius, businesses should aim to:
- halve their emissions by 2030
- reduce their emissions to close to zero before 2050
Find out more about how to set net zero targets for your business.
Any remaining emissions which cannot be eliminated from your business activities (ideally no more than ten per cent of your base year emissions) should be offset.
Is carbon offsetting a way to reach net zero?
Carbon offsetting means greenhouse gas emissions are being reduced somewhere else, by someone else, to make up for continued emissions from your business.
Offsetting is a recommended way to bridge the gap to full net zero where a small percentage of greenhouse gas emissions from your business cannot yet be eliminated. This should be through funding high quality and permanent carbon removal projects, which are approved by a recognised certification organisation.
However, carbon offsetting is not a substitute for cutting emissions from your business. Transferring your climate responsibility elsewhere while continuing to pump out greenhouse gases could be considered greenwashing - when your business falsely gives the impression it is addressing climate responsibility.
Introduction to net zero for businesses
The Carbon Trust has recorded an introductory webinar on net zero for businesses which can help you understand more about the concepts and terminology.
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Carbon literacy for your business
How becoming carbon literate in your business is an important step on the way to realising your net zero ambitions
Businesses with net zero ambitions need to learn and understand climate language and terminology to become carbon literate.
Carbon (or climate) literacy is awareness of the impact of everyday business activities and greenhouse gas emissions. It helps you to build knowledge and confidence to speak with authority on actions needed within your business to reduce emissions and tackle climate change.
Ten net zero terms your business should know
There are terms and concepts around climate change, carbon emissions and net zero action which you, your staff and your business supply partners should be familiar with.
1.5 degrees Celsius
The Paris Agreement was adopted in 2015, setting the world on a path to limiting global warming to well below 2 degrees Celsius, and trying to limit the rise to only 1.5 degrees Celsius, compared to pre-industrial global temperatures.
Carbon footprint
A carbon footprint is the total amount of greenhouse gases which a business (or individual) generates through its action. The first step to setting a net zero target for your business is to measure your carbon footprint fully and accurately.
Carbon offsetting
This is investing in carbon removal projects outside of your business to balance against the carbon you emit, capturing and storing carbon through natural projects (such as forests, bogs, coastal ecosystems) or innovative new technological projects.
Climate change adaptation
Effects of climate change are already being recorded through variable weather, and new effects will arrive as global temperatures rise over the coming decades. Adaptation actions are about recognising unavoidable disruptions and altering how you do business to cope with change.
Climate change mitigation
Mitigation is about the actions your business and society can take now to lessen greenhouse gas emissions to help prevent the worst-case scenarios of extreme global temperature rises from happening.
Decarbonisation
This is the long-term aim to create a society with minimal greenhouse gas emissions and is sometimes used to describe sector-specific action plans to reduce carbon emissions.
Emissions
This refers to the greenhouse gases released into the atmosphere due to your business activities. There are three types of emissions which businesses need to understand for their net zero plans:
- Scope 1 – direct emissions from your activities like fuel combustion and other emissions from your operations.
- Scope 2 – emissions from the production of purchased energy like electricity, heat, steam, or cooling.
- Scope 3 – indirect emissions generated from all activities upstream and downstream of your business (value chain) such as purchased goods and services, business travel and staff commuting, primary waste and end of life product disposal, transport and distribution, and more.
The greatest impact by your business is likely to be from Scope 3 emissions, which are also the hardest to accurately quantify.
Greenhouse gases
These are natural gases and human-produced gases causing the greenhouse effect where heat is trapped, leading to average global temperature rises. These have increased in the atmosphere over the last 150 years. Under climate change legislation, six greenhouse gases are defined:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O)
- hydrofluorocarbons (HFCs)
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6)
Just transition
This means tackling climate change in a way that distributes the benefits and costs in a fair way so that a net zero economy does not leave behind sections of society.
Science-based targets
These are business targets for greenhouse gas emissions reductions that align with the latest scientific advice on meeting the goals set out in the Paris Agreement to limit global warming.
Carbon literacy training for businesses
Business in the Community’s Carbon Literacy Training has been designed to raise awareness and explore the opportunities, risks and challenges that climate change will present.
Keep Northern Ireland Beautiful offers Carbon Literacy training to a wide range of groups to raise awareness of the climate change emergency and how to get involved in finding solutions.
If you want to deliver training in-house, you can build a Carbon Literacy course for your audience that complies with the Carbon Literacy Standard and have it certified by The Carbon Literacy Project.
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How to calculate your business carbon footprint
Set an accurate baseline for your business carbon footprint from which to monitor progress on your net zero actions
A carbon footprint is the total amount of greenhouse gases generated by your business activities.
Carbon footprints are used by businesses which have mandatory reporting requirements under carbon emissions trading and reporting schemes. They are also used voluntarily to show climate awareness and action by businesses.
Calculating your carbon footprint is the most important first step to becoming a net zero business. It allows your business to set baselines for your emissions reduction targets, and then to accurately measure progress against those targets.
How to calculate a business carbon footprint
There are five key steps to follow to calculate your organisational footprint. These are:
- Decide on the method to follow – a consistent method will help to ensure an accurate result.
- Define the organisational and operational boundaries – the operational boundary determines which emission sources you will quantify, so it's important to be realistic when choosing it.
- Collate the data – you'll need to collate consumption data for all the emission sources within your chosen boundary.
- Apply emissions factors – find the latest emissions factors on the Department for Environment, Food and Rural Affairs (Defra) website.
- Verify the results – this is optional, but it adds credibility to your calculation.
If you have taken action to reduce your carbon footprint you may want to verify this. This is optional, but independent certification will add credibility to your reduction claims.
Find carbon footprint calculators
The SME Climate Hub has created a free Business Carbon Calculator. You can use it to estimate your full carbon footprint and find quick actions to reduce emissions from your business.
The Carbon Trust have produced a downloadable guide to carbon footprints, and how should you measure, calculate, and communicate them – find out more (registration required).
Other tools are available on the market, and your business may benefit from the expertise of contracting a specialist carbon footprinting service.
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Set net zero targets for your business
How to make firm commitments to reducing carbon emissions and set achievable dates for becoming a net zero business
Your business is ready to make credible commitments to reduce greenhouse gas emissions when you’ve established a baseline – see how to calculate the carbon footprint of your business.
Make your net zero commitment
Making a public net zero commitment can help businesses stick to their plan and work to meet their targets. A commitment lets everyone involved in your business and value chain, and potential new customers and partners, know that you are serious about net zero and can demonstrate progress.
Your broad commitment should include the near-term target of halving emissions before 2030 and the long-term target of achieving net zero emissions before 2050.
The SME Climate Hub is a global initiative that aims to mainstream business climate action and build resilience. They have developed a standardised text as an example of how to commit to becoming a net zero business:
The SME Climate Commitment
Recognising that climate change poses a threat to the economy, nature and society-at-large, our company commits to take action immediately in order to:
- Halve our greenhouse gas emissions before 2030
- Achieve net zero emissions before 2050
- Disclose our progress on a yearly basis
In doing so, we are proud to be recognised by the United Nations Race to Zero campaign, and join governments, businesses, cities, regions, and universities around the world that share the same mission.
Learn more about the SME Climate Commitment (PDF, 249K).
You should then publish and communicate your commitment to staff, customers and suppliers, along with further details on how you will monitor progress and transparently report this on an annual basis.
Start to take action towards net zero
Once your business has made its net zero commitment, you should begin to take actions in the following months.
For example, you could start by developing a detailed action plan setting out how you intend to achieve your reduction targets.
Your net zero action plan should include detailed information on:
- existing Scope 1, 2 and 3 emissions – see carbon literacy for your business
- where reductions will be made
- overall timescales and interim checkpoints for reductions
- business growth projections and how you'll target any additional emissions that arise
The Cabinet Office has developed a Carbon Reduction Plan template for demonstrating net zero commitment when bidding for major government contracts – it can act as an example template for businesses wanting to develop their own net zero action plan (ODT, 73K).
You should then begin to take concrete actions to reduce your emissions in line with your action plan - find out more about how to cut your carbon emissions.
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Monitor and report on your net zero progress
How to measure the impact of net zero actions in your business and communicate progress to customers and investors
Announcing your business commitment to net zero sets the expectation that you will share your targets and the actions you will take to achieve them. There will be an expectation that you monitor your emissions reduction across the lifetime of your commitment and publish annual reports on your progress.
Customers, business partners, staff and other interested parties will expect your transparency. This openness can also improve your business brand and help to demonstrate the importance of net zero actions to your industry and society.
Ongoing monitoring and reporting can allow your business to regularly evaluate your results, plus help you take any corrective actions and make updates to your plan as circumstances change.
What to include in your net zero progress report
An annual report on net zero progress by your business should include:
- an overview of your headline commitment and targets, and any amendments
- a detailed disclosure of your greenhouse gas emissions in the last year
- the percentage reductions achieved along with the outlook for the near future
- the specific actions you’ve taken to cut your emissions
- details of how your business strategy is evolving to embed net zero
You should consider third-party auditing and verification of your reporting to enhance its credibility.
Net zero standards, certification and accreditation
Using published environmental standards can help your business to meet best practice in reporting and verification of your progress in cutting emissions.
100,000 free copies of BS ISO 50005 - Energy management systems are being sponsored by the Department for Business, Energy and Industrial Strategy (BEIS) as part of their commitment to support small and medium-sized organisations to manage their energy performance and help the United Kingdom to meet net zero.
The Carbon Trust has developed certification which can guide and support your business towards net zero and climate leadership called the Route to Net Zero Standard.
The UK Accreditation Service (UKAS) has published guidance on how to gain various accreditations to support your net zero plans.
The British Standards Institute (BSI) has published a guide on how adopting standards can help your business to achieve net zero.
Other environmental standards
ISO 14001: 2015 – Environmental Management Standard specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance – find out more about ISO 14001: 2015.
ISO 50001: 2018 – Energy Management Standard specifies requirements for establishing, implementing, maintaining and improving an energy management system – find out more about ISO 50001: 2018.
PAS 2060:2014 – Publicly Available Specification for the demonstration of carbon neutrality can be used for your entire business or to any uniquely identified subject, such as specific activities, products, services, buildings, projects, or events – find out more about PAS 2060:2014.
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Champion net zero through your business
How your business can become an advocate for net zero actions within your community and across wider society
Your business can be a climate leader by using your network and wider sphere of influence to help accelerate climate action in society. Advocating for wider climate action will naturally benefit the environment but can also make it easier to run a net zero business with more suppliers, partners and customers who want to do business with you.
How to be a net zero champion
You should spread the word about your own net zero commitment and the progress you are making each year. Your reports should include sharing your story with examples of how you’ve cut your greenhouse gas emissions, reduced your waste, etc.
You can invest in projects which take a nature-based approach to avoid or capture emissions, also known as carbon offsetting. Offsetting is an important part of balancing the toughest to cut emissions from your business, but you can get involved in local or international projects which go beyond your own business carbon balance needs. You could also devise and deliver your own nature-based solution on your business property or land as part of your action plan.
Getting your staff involved in climate action can spread the benefits of net zero action beyond your value chain, and help your employees to feel valued in their efforts.
The Climate Justice Playbook for Business is a practical guide that can help business leaders understand the intersection of climate action and social justice and advance a justice-centred approach to climate action.
Work with your sector to develop net zero roadmaps
Partnership working to achieve shared goals and benefits for all businesses, even with local competitor companies, can help to boost your overall industry sector.
The Net Zero Council has developed a new framework to help empower businesses to create tailored action plans to reduce emissions across their sector. The guidelines provide a robust, credible and consistent set of criteria for business sector roadmaps to ensure they can effectively reduce emissions - find out more about the net zero business sector roadmap guidelines.
Local opportunities to champion climate action
Business in the Community offers ways to get involved in local business community and wider societal actions through corporate social responsibility and climate schemes.
You can get involved in local networking events to spread the word about net zero business ambitions by joining Northern Ireland business networks.
You can find environmental business events for networking opportunities, or you can organise and list your own climate events, through our Events Finder tool.
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Advantages of becoming a net zero business
How becoming a net zero business can improve business resilience, attract customers, and improve social responsibility
Climate change is changing how the world does business due to unavoidable effects now, and in preparation for effects that may be on the way.
There are many benefits to your business of becoming net zero, beyond the positive effect on the environment of reducing your emissions.
Net zero business advantages
Recognition and marketing
If your business makes tough decisions and sets itself on a path to net zero, you should shout about it. Customers are becoming more and more climate-conscious and are attracted to products and services which have a low impact on the environment.
You can market the genuine environmental benefits of the actions taken by your business, and you can seek recognition through business awards - find out more about how to market your environmental credentials.
Businesses that make the SME Climate Commitment will have their name/logo featured on the SME Climate Hub and be recognised by the United Nations Race to Zero campaign.
Business in the Community celebrates local businesses which are demonstrating a significant commitment and contribution to climate action through their annual Responsible Business Awards.
Becoming more competitive
Businesses which can demonstrate an authentic commitment and progress towards net zero are more attractive to climate-conscious customers and can grow sales at the expense of competitors.
Public sector tendering competitions are increasingly setting business commitment to net zero as a minimum requirement to be considered for contracts. This is now the case for central UK government contracts over £5 million a year and is likely to become the norm for most, if not all, contracts between now and 2050.
Building business resilience
Climate change might appear to have greater impacts in other parts of the world, but businesses here will feel those effects. Extreme short-term weather and longer-term climate patterns can disrupt your supply chains.
Becoming a net zero business can go a long way to protecting against economic, climate and regulatory shocks now and in the future.
The UK Government publishes a climate change risk assessment (CCRA) every five years, which includes advice on adaptation actions for different sectors - you can download the Evidence for the third UK Climate Change Risk Assessment (CCRA3) Summary for Northern Ireland (PDF, 4.3MB).
Long-term cost reductions
Making changes to your way of doing business rarely comes without cost in the short term. However, you should seek to maximise the efficiencies which net zero businesses can find through reduced energy, waste and water costs. Businesses with minimal greenhouse gas emissions and environmental impacts may also find themselves able to avoid future carbon and waste taxes.
Attracting investment
Having a strong business strategy for the future with sustainability (both for business viability and the environment) at the centre is important for investors. Net zero plans are likely to become an essential element when making investment decisions – find out more about how to attract investment.
Early mover advantage
The potential advantages listed above come with risks attached in investing and working to achieve them, but becoming a net zero business can put you ahead of others in your industry and help you to establish a larger market share while others catch up.
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Barriers to becoming a net zero business
There are several challenges which many types of small business must overcome to make a successful journey to net zero
Awareness of climate change issues among small businesses is growing, as is the wish to join in climate action. However, many small businesses struggle to overcome barriers to reducing their carbon emissions. Understanding these barriers and finding practical solutions is critical to becoming a net zero business.
Key barriers to business net zero actions
Costs
Upfront capital costs to upgrade items such as machinery and vehicles can be difficult for small businesses to fund. The inability to purchase at scale can mean higher costs per unit for low-carbon raw materials, products, and services.
Ongoing costs can also place a burden on your business and add to worries about remaining competitive on price, especially if your competitors are not taking similar actions.
You should aim to attract customers who value net zero commitments, or business customers which need low-carbon suppliers as part of their own value chain reporting, by marketing your climate actions. You can also gain a competitive advantage in tendering for contracts, more of which are requiring verified net zero commitments.
Feasibility and credibility
Small businesses can often struggle to find net zero solutions that work for them. It can be difficult to accurately define (and therefore tackle) your carbon footprint, especially Scope 3 emissions across your value chain. Lack of access to accurate or cost-effective monitoring and verification tools can affect the credibility of your green claims and progress to net zero. An over-reliance on carbon offsetting could open your business to accusations of greenwashing.
Free carbon footprint tools are available to get you started, but you may benefit from the expertise of professional carbon footprinting service providers.
Capacity and skills
Many businesses are busy focusing on day-to-day tasks making it hard to devote significant time and resources to fundamental business change that may not positively impact profitability in the short term.
It can be challenging to see how small changes in your business can make a difference on a global scale. Also, to make a change, you may need investment in staff training or recruitment to fill dedicated roles focusing on net zero priorities.
The coronavirus pandemic showed how the short-term effort of making necessary changes to business operations can bring long-term benefits in terms of efficiencies and new ways of working. Setting medium-term goals, and quantifying the potential benefits of change, can provide focus.
Willingness and resistance
People within your organisation, and your supply chain, may have strong views opposing the science of climate change and, in contrast, do not see it as a problem. Key staff may resist business change based on short-term impact on revenue or the diversion of investment from profitable carbon-intensive activities.
Climate literacy can help people to understand wider issues, but as a business owner it’s important to set a clear and understandable direction that can help to attract and motivate staff who can deliver on your net zero ambitions.
Contractual obstacles
Your business may be limited in your scope for action by existing contracts such as with a service provider, supplier contract or a building tenancy agreement. These partners may be unwilling or simply unable to make the necessary adjustments to meet your net zero requirements.
You should approach your partners to discuss what’s possible in the short term and until your contract expires. You may be able to convince them of the joint marketing benefits of making positive actions on greenhouse gas emissions reductions.
If you ultimately need to find new providers, suppliers, or alternative arrangements for premises, you should weave these timescales into your net zero plan.
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Advisory and financial support for net zero businesses
Find practical support from expert advice and mentoring to loans and grants to enable your business journey to net zero.
Changing your business strategy and direction to become a net zero business can be daunting – but you don’t have to do it alone. A growing range of support schemes is available to help you on your journey.
The SME Climate Hub has guidance on sourcing financial support for reducing emissions, including from:
- customers/buyers
- banks
- grants and other government support
- balance sheet and investors
You can find more information on climate awareness programmes and events.
National support for net zero businesses
United Kingdom government-backed schemes are available to support businesses making innovative and game-changing investments in a green future for themselves, their sectors and customers.
Industrial Energy Efficiency Accelerator
Funding for industrial-scale demonstrations of novel technologies with the potential to reduce energy consumption, maximise resource efficiency and cut carbon emissions – find out more about the Industrial Energy Efficiency Accelerator.
Industrial Energy Transformation Fund
Financial support for businesses with high energy use to cut their energy bills and greenhouse gas emissions through investing in energy efficiency and low carbon technologies – find out more about the Industrial Energy Transformation Fund.
Workplace Charging Scheme
A voucher-based scheme that provides eligible applicants with support towards the upfront costs of the purchase and installation of electric vehicle charge points – find out more about the Workplace Charging Scheme.
Gigabit Broadband Voucher Scheme
A voucher-based scheme for businesses experiencing slow broadband speeds in rural areas to help to cover the costs of installing gigabit broadband – find out more about the Gigabit Broadband Voucher Scheme.
Local business support programmes for net zero
Several local support programmes for environmental action, climate mitigation and progressing towards net zero are available for businesses:
Cycle-Friendly Employer Accreditation Scheme
Scheme which helps organisations become cycle-friendly employers - find out more about the Cycle-Friendly Employer Accreditation Scheme.
Employer active travel support
Scheme which supports employers to encourage their employees to consider active travel in their daily routine - find out more about Employer active travel support.
Energy Efficiency Capital Grants
Invest Northern Ireland grant support to help businesses to buy and install energy efficient equipment - find out more about Energy Efficiency Capital Grants.
LiveSmart Community Environmental Grant Programme 2023-24
Causeway Coast and Glens Borough Council financial assistance to allow groups and organisations to improve the general cleanliness in their local area, particularly in respect of litter, to promote recycling, reuse and waste reduction, and to look at ways of reducing carbon footprint by taking simple, practical actions such as planting - find out more about the LiveSmart Community Environmental Grant Programme 2023-24.
Operational Excellence Solutions
Coaching support to help Northern Ireland companies improve their competitive advantage by increasing their productivity and profitability - find out more about Operational Excellence Solutions.
Sustainability Reports
Invest Northern Ireland support to give businesses an understanding of their environmental performance across several areas, such as raw materials, energy, carbon, packaging, biodiversity and waste - find out more about Sustainability Reports.
Resource Matching Service
Invest NI and International Synergies provide an opportunity to transfer business waste, unwanted materials and by-products from one business or organisation to be reused, recycled, reprocessed and repackaged by another - find out more about the Resource Matching Service.
Technical Consultancy Service for energy and waste management
Invest NI support to help you identify areas for increased efficiency and cost savings is available to all Northern Ireland businesses with an annual energy and resource spend more than £30,000 - find out more about the Invest NI's Technical Consultancy Service.
Find these and more support programmes through our Business Support Finder tool.
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How to become a net zero business
Setting net zero targets for our business - Kainos
Stephan Sakowicz explains what sustainability means to Kainos and how they plan to deliver on ambitious climate pledges.
Kainos Group plc is a United Kingdom-headquartered, global company that helps its customers deliver successful digital transformation projects. Kainos employs more than 2,900 people in 22 countries across Europe and the Americas.
In 2022 Kainos signed up for the Climate Pledge, co-founded by Amazon and Global Optimism. Through this initiative, signatory companies commit to taking collective action on positive climate change, eliminating carbon and supporting credible offsetting with real and permanent benefits.
Stephan Sakowicz, Leader of the Climate Action Group in Kainos, explains what sustainability means to Kainos and how they plan to deliver on their climate pledges.
Why sign the pledge?
"Kainos is an Amazon Web Services partner, so we have been tracking the roll-out of The Climate Pledge from the start. Sustainability is important to us. To play our part in reducing global temperatures, we needed to commit to an ambitious programme reducing our carbon footprint and offsetting emissions. We work with our customers, staff and suppliers to drive the sustainability agenda. We want to be proud of the legacy we leave."
"We have worked hard to achieve carbon neutrality in 2021. Our near-term carbon reduction plan has been approved by the Science Based Targets Initiative, so we knew that we could meet the 2040 deadline. In fact, we will be able to beat it by 15 years. We are committed to achieving net zero by 2025."
What prompted Kainos to commit to the shorter timeframe?
"As a global organisation, we believe we are responsible for positively impacting society, local communities and the environment. We know planting trees or donating to charity will not make a difference that reflects a business of our size. We want to make a meaningful difference sooner and do not think the Earth can wait. We believe that joint action with suppliers and customers is the way forward – and we are happy to take the lead on this."
What is Kainos doing to deliver on these targets?
"We are embedding best practice across our offices to reduce the environmental impact of our activities. We operate an activity-based working model. This approach reduces the need for business travel and day-to-day commuting, and we have started to engage with our supply chain to achieve end-to-end reductions across Scope 1, 2 and 3 emissions, not just our direct emissions."
"The organisation has also taken steps to help our clients tackle their carbon emissions. Innovations like our cloud carbon calculator make it easy for customers to understand and reduce their emissions through technology."
"While we strive towards net zero, we also invest in offsetting and removal schemes to compensate for our residual footprint. We have supported forest preservation, reforestation, wind power, landfill gas-to-energy and cooking stove programmes in Europe, North America, Africa and South America, and from 2022 onwards, have begun to invest in atmospheric carbon removal and avoidance schemes."
How did Kainos get everyone on board?
“We have a Climate Action Group comprising over 250 global staff members. This group, led by senior managers with oversight from the board, defines the vision and aims for Kainos, including the roadmap to net zero. This Climate Action Group is open to all employees who are encouraged to submit ideas, best practices or success stories on Kainos has helped our customers improve their environmental impact."
Why become an advocate for net zero?
“The organisation wants to understand the real impact our business activities have on the environment, and we want to reduce that impact in any way we can. We can use the knowledge that we have gained to help our customers, staff, and suppliers achieve their own low-carbon goals. Furthermore, by helping to digitise organisations and cutting down on manual or intensive working methods, we can reduce the carbon impact of doing business."
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Set net zero targets for your business
In this guide:
- How to become a net zero business
- What is a net zero business?
- Carbon literacy for your business
- How to calculate your business carbon footprint
- Set net zero targets for your business
- Monitor and report on your net zero progress
- Champion net zero through your business
- Advantages of becoming a net zero business
- Barriers to becoming a net zero business
- Advisory and financial support for net zero businesses
- Setting net zero targets for our business - Kainos
What is a net zero business?
Explanation of what a net zero business is and why this is important for your business, your community, and the climate
Net zero is a recent addition to the terminology around global warming, climate change and greenhouse gas emissions. It’s important to understand what net zero means to industry and small businesses.
What does net zero mean for business?
Becoming a net zero business means that your business activities and your value chain have no net impact on the climate from your greenhouse gas emissions.
To get involved and take action towards becoming a net zero business, you should focus on four main areas:
- minimising your own emissions
- reducing emissions in your supply chain
- integrating climate action into your business strategy
- working to promote climate action across society
In line with international commitments, under the Paris Agreement, to limit global temperature rises to no more than 1.5 degrees Celsius, businesses should aim to:
- halve their emissions by 2030
- reduce their emissions to close to zero before 2050
Find out more about how to set net zero targets for your business.
Any remaining emissions which cannot be eliminated from your business activities (ideally no more than ten per cent of your base year emissions) should be offset.
Is carbon offsetting a way to reach net zero?
Carbon offsetting means greenhouse gas emissions are being reduced somewhere else, by someone else, to make up for continued emissions from your business.
Offsetting is a recommended way to bridge the gap to full net zero where a small percentage of greenhouse gas emissions from your business cannot yet be eliminated. This should be through funding high quality and permanent carbon removal projects, which are approved by a recognised certification organisation.
However, carbon offsetting is not a substitute for cutting emissions from your business. Transferring your climate responsibility elsewhere while continuing to pump out greenhouse gases could be considered greenwashing - when your business falsely gives the impression it is addressing climate responsibility.
Introduction to net zero for businesses
The Carbon Trust has recorded an introductory webinar on net zero for businesses which can help you understand more about the concepts and terminology.
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Carbon literacy for your business
How becoming carbon literate in your business is an important step on the way to realising your net zero ambitions
Businesses with net zero ambitions need to learn and understand climate language and terminology to become carbon literate.
Carbon (or climate) literacy is awareness of the impact of everyday business activities and greenhouse gas emissions. It helps you to build knowledge and confidence to speak with authority on actions needed within your business to reduce emissions and tackle climate change.
Ten net zero terms your business should know
There are terms and concepts around climate change, carbon emissions and net zero action which you, your staff and your business supply partners should be familiar with.
1.5 degrees Celsius
The Paris Agreement was adopted in 2015, setting the world on a path to limiting global warming to well below 2 degrees Celsius, and trying to limit the rise to only 1.5 degrees Celsius, compared to pre-industrial global temperatures.
Carbon footprint
A carbon footprint is the total amount of greenhouse gases which a business (or individual) generates through its action. The first step to setting a net zero target for your business is to measure your carbon footprint fully and accurately.
Carbon offsetting
This is investing in carbon removal projects outside of your business to balance against the carbon you emit, capturing and storing carbon through natural projects (such as forests, bogs, coastal ecosystems) or innovative new technological projects.
Climate change adaptation
Effects of climate change are already being recorded through variable weather, and new effects will arrive as global temperatures rise over the coming decades. Adaptation actions are about recognising unavoidable disruptions and altering how you do business to cope with change.
Climate change mitigation
Mitigation is about the actions your business and society can take now to lessen greenhouse gas emissions to help prevent the worst-case scenarios of extreme global temperature rises from happening.
Decarbonisation
This is the long-term aim to create a society with minimal greenhouse gas emissions and is sometimes used to describe sector-specific action plans to reduce carbon emissions.
Emissions
This refers to the greenhouse gases released into the atmosphere due to your business activities. There are three types of emissions which businesses need to understand for their net zero plans:
- Scope 1 – direct emissions from your activities like fuel combustion and other emissions from your operations.
- Scope 2 – emissions from the production of purchased energy like electricity, heat, steam, or cooling.
- Scope 3 – indirect emissions generated from all activities upstream and downstream of your business (value chain) such as purchased goods and services, business travel and staff commuting, primary waste and end of life product disposal, transport and distribution, and more.
The greatest impact by your business is likely to be from Scope 3 emissions, which are also the hardest to accurately quantify.
Greenhouse gases
These are natural gases and human-produced gases causing the greenhouse effect where heat is trapped, leading to average global temperature rises. These have increased in the atmosphere over the last 150 years. Under climate change legislation, six greenhouse gases are defined:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O)
- hydrofluorocarbons (HFCs)
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6)
Just transition
This means tackling climate change in a way that distributes the benefits and costs in a fair way so that a net zero economy does not leave behind sections of society.
Science-based targets
These are business targets for greenhouse gas emissions reductions that align with the latest scientific advice on meeting the goals set out in the Paris Agreement to limit global warming.
Carbon literacy training for businesses
Business in the Community’s Carbon Literacy Training has been designed to raise awareness and explore the opportunities, risks and challenges that climate change will present.
Keep Northern Ireland Beautiful offers Carbon Literacy training to a wide range of groups to raise awareness of the climate change emergency and how to get involved in finding solutions.
If you want to deliver training in-house, you can build a Carbon Literacy course for your audience that complies with the Carbon Literacy Standard and have it certified by The Carbon Literacy Project.
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How to calculate your business carbon footprint
Set an accurate baseline for your business carbon footprint from which to monitor progress on your net zero actions
A carbon footprint is the total amount of greenhouse gases generated by your business activities.
Carbon footprints are used by businesses which have mandatory reporting requirements under carbon emissions trading and reporting schemes. They are also used voluntarily to show climate awareness and action by businesses.
Calculating your carbon footprint is the most important first step to becoming a net zero business. It allows your business to set baselines for your emissions reduction targets, and then to accurately measure progress against those targets.
How to calculate a business carbon footprint
There are five key steps to follow to calculate your organisational footprint. These are:
- Decide on the method to follow – a consistent method will help to ensure an accurate result.
- Define the organisational and operational boundaries – the operational boundary determines which emission sources you will quantify, so it's important to be realistic when choosing it.
- Collate the data – you'll need to collate consumption data for all the emission sources within your chosen boundary.
- Apply emissions factors – find the latest emissions factors on the Department for Environment, Food and Rural Affairs (Defra) website.
- Verify the results – this is optional, but it adds credibility to your calculation.
If you have taken action to reduce your carbon footprint you may want to verify this. This is optional, but independent certification will add credibility to your reduction claims.
Find carbon footprint calculators
The SME Climate Hub has created a free Business Carbon Calculator. You can use it to estimate your full carbon footprint and find quick actions to reduce emissions from your business.
The Carbon Trust have produced a downloadable guide to carbon footprints, and how should you measure, calculate, and communicate them – find out more (registration required).
Other tools are available on the market, and your business may benefit from the expertise of contracting a specialist carbon footprinting service.
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Set net zero targets for your business
How to make firm commitments to reducing carbon emissions and set achievable dates for becoming a net zero business
Your business is ready to make credible commitments to reduce greenhouse gas emissions when you’ve established a baseline – see how to calculate the carbon footprint of your business.
Make your net zero commitment
Making a public net zero commitment can help businesses stick to their plan and work to meet their targets. A commitment lets everyone involved in your business and value chain, and potential new customers and partners, know that you are serious about net zero and can demonstrate progress.
Your broad commitment should include the near-term target of halving emissions before 2030 and the long-term target of achieving net zero emissions before 2050.
The SME Climate Hub is a global initiative that aims to mainstream business climate action and build resilience. They have developed a standardised text as an example of how to commit to becoming a net zero business:
The SME Climate Commitment
Recognising that climate change poses a threat to the economy, nature and society-at-large, our company commits to take action immediately in order to:
- Halve our greenhouse gas emissions before 2030
- Achieve net zero emissions before 2050
- Disclose our progress on a yearly basis
In doing so, we are proud to be recognised by the United Nations Race to Zero campaign, and join governments, businesses, cities, regions, and universities around the world that share the same mission.
Learn more about the SME Climate Commitment (PDF, 249K).
You should then publish and communicate your commitment to staff, customers and suppliers, along with further details on how you will monitor progress and transparently report this on an annual basis.
Start to take action towards net zero
Once your business has made its net zero commitment, you should begin to take actions in the following months.
For example, you could start by developing a detailed action plan setting out how you intend to achieve your reduction targets.
Your net zero action plan should include detailed information on:
- existing Scope 1, 2 and 3 emissions – see carbon literacy for your business
- where reductions will be made
- overall timescales and interim checkpoints for reductions
- business growth projections and how you'll target any additional emissions that arise
The Cabinet Office has developed a Carbon Reduction Plan template for demonstrating net zero commitment when bidding for major government contracts – it can act as an example template for businesses wanting to develop their own net zero action plan (ODT, 73K).
You should then begin to take concrete actions to reduce your emissions in line with your action plan - find out more about how to cut your carbon emissions.
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Monitor and report on your net zero progress
How to measure the impact of net zero actions in your business and communicate progress to customers and investors
Announcing your business commitment to net zero sets the expectation that you will share your targets and the actions you will take to achieve them. There will be an expectation that you monitor your emissions reduction across the lifetime of your commitment and publish annual reports on your progress.
Customers, business partners, staff and other interested parties will expect your transparency. This openness can also improve your business brand and help to demonstrate the importance of net zero actions to your industry and society.
Ongoing monitoring and reporting can allow your business to regularly evaluate your results, plus help you take any corrective actions and make updates to your plan as circumstances change.
What to include in your net zero progress report
An annual report on net zero progress by your business should include:
- an overview of your headline commitment and targets, and any amendments
- a detailed disclosure of your greenhouse gas emissions in the last year
- the percentage reductions achieved along with the outlook for the near future
- the specific actions you’ve taken to cut your emissions
- details of how your business strategy is evolving to embed net zero
You should consider third-party auditing and verification of your reporting to enhance its credibility.
Net zero standards, certification and accreditation
Using published environmental standards can help your business to meet best practice in reporting and verification of your progress in cutting emissions.
100,000 free copies of BS ISO 50005 - Energy management systems are being sponsored by the Department for Business, Energy and Industrial Strategy (BEIS) as part of their commitment to support small and medium-sized organisations to manage their energy performance and help the United Kingdom to meet net zero.
The Carbon Trust has developed certification which can guide and support your business towards net zero and climate leadership called the Route to Net Zero Standard.
The UK Accreditation Service (UKAS) has published guidance on how to gain various accreditations to support your net zero plans.
The British Standards Institute (BSI) has published a guide on how adopting standards can help your business to achieve net zero.
Other environmental standards
ISO 14001: 2015 – Environmental Management Standard specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance – find out more about ISO 14001: 2015.
ISO 50001: 2018 – Energy Management Standard specifies requirements for establishing, implementing, maintaining and improving an energy management system – find out more about ISO 50001: 2018.
PAS 2060:2014 – Publicly Available Specification for the demonstration of carbon neutrality can be used for your entire business or to any uniquely identified subject, such as specific activities, products, services, buildings, projects, or events – find out more about PAS 2060:2014.
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Champion net zero through your business
How your business can become an advocate for net zero actions within your community and across wider society
Your business can be a climate leader by using your network and wider sphere of influence to help accelerate climate action in society. Advocating for wider climate action will naturally benefit the environment but can also make it easier to run a net zero business with more suppliers, partners and customers who want to do business with you.
How to be a net zero champion
You should spread the word about your own net zero commitment and the progress you are making each year. Your reports should include sharing your story with examples of how you’ve cut your greenhouse gas emissions, reduced your waste, etc.
You can invest in projects which take a nature-based approach to avoid or capture emissions, also known as carbon offsetting. Offsetting is an important part of balancing the toughest to cut emissions from your business, but you can get involved in local or international projects which go beyond your own business carbon balance needs. You could also devise and deliver your own nature-based solution on your business property or land as part of your action plan.
Getting your staff involved in climate action can spread the benefits of net zero action beyond your value chain, and help your employees to feel valued in their efforts.
The Climate Justice Playbook for Business is a practical guide that can help business leaders understand the intersection of climate action and social justice and advance a justice-centred approach to climate action.
Work with your sector to develop net zero roadmaps
Partnership working to achieve shared goals and benefits for all businesses, even with local competitor companies, can help to boost your overall industry sector.
The Net Zero Council has developed a new framework to help empower businesses to create tailored action plans to reduce emissions across their sector. The guidelines provide a robust, credible and consistent set of criteria for business sector roadmaps to ensure they can effectively reduce emissions - find out more about the net zero business sector roadmap guidelines.
Local opportunities to champion climate action
Business in the Community offers ways to get involved in local business community and wider societal actions through corporate social responsibility and climate schemes.
You can get involved in local networking events to spread the word about net zero business ambitions by joining Northern Ireland business networks.
You can find environmental business events for networking opportunities, or you can organise and list your own climate events, through our Events Finder tool.
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Advantages of becoming a net zero business
How becoming a net zero business can improve business resilience, attract customers, and improve social responsibility
Climate change is changing how the world does business due to unavoidable effects now, and in preparation for effects that may be on the way.
There are many benefits to your business of becoming net zero, beyond the positive effect on the environment of reducing your emissions.
Net zero business advantages
Recognition and marketing
If your business makes tough decisions and sets itself on a path to net zero, you should shout about it. Customers are becoming more and more climate-conscious and are attracted to products and services which have a low impact on the environment.
You can market the genuine environmental benefits of the actions taken by your business, and you can seek recognition through business awards - find out more about how to market your environmental credentials.
Businesses that make the SME Climate Commitment will have their name/logo featured on the SME Climate Hub and be recognised by the United Nations Race to Zero campaign.
Business in the Community celebrates local businesses which are demonstrating a significant commitment and contribution to climate action through their annual Responsible Business Awards.
Becoming more competitive
Businesses which can demonstrate an authentic commitment and progress towards net zero are more attractive to climate-conscious customers and can grow sales at the expense of competitors.
Public sector tendering competitions are increasingly setting business commitment to net zero as a minimum requirement to be considered for contracts. This is now the case for central UK government contracts over £5 million a year and is likely to become the norm for most, if not all, contracts between now and 2050.
Building business resilience
Climate change might appear to have greater impacts in other parts of the world, but businesses here will feel those effects. Extreme short-term weather and longer-term climate patterns can disrupt your supply chains.
Becoming a net zero business can go a long way to protecting against economic, climate and regulatory shocks now and in the future.
The UK Government publishes a climate change risk assessment (CCRA) every five years, which includes advice on adaptation actions for different sectors - you can download the Evidence for the third UK Climate Change Risk Assessment (CCRA3) Summary for Northern Ireland (PDF, 4.3MB).
Long-term cost reductions
Making changes to your way of doing business rarely comes without cost in the short term. However, you should seek to maximise the efficiencies which net zero businesses can find through reduced energy, waste and water costs. Businesses with minimal greenhouse gas emissions and environmental impacts may also find themselves able to avoid future carbon and waste taxes.
Attracting investment
Having a strong business strategy for the future with sustainability (both for business viability and the environment) at the centre is important for investors. Net zero plans are likely to become an essential element when making investment decisions – find out more about how to attract investment.
Early mover advantage
The potential advantages listed above come with risks attached in investing and working to achieve them, but becoming a net zero business can put you ahead of others in your industry and help you to establish a larger market share while others catch up.
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Barriers to becoming a net zero business
There are several challenges which many types of small business must overcome to make a successful journey to net zero
Awareness of climate change issues among small businesses is growing, as is the wish to join in climate action. However, many small businesses struggle to overcome barriers to reducing their carbon emissions. Understanding these barriers and finding practical solutions is critical to becoming a net zero business.
Key barriers to business net zero actions
Costs
Upfront capital costs to upgrade items such as machinery and vehicles can be difficult for small businesses to fund. The inability to purchase at scale can mean higher costs per unit for low-carbon raw materials, products, and services.
Ongoing costs can also place a burden on your business and add to worries about remaining competitive on price, especially if your competitors are not taking similar actions.
You should aim to attract customers who value net zero commitments, or business customers which need low-carbon suppliers as part of their own value chain reporting, by marketing your climate actions. You can also gain a competitive advantage in tendering for contracts, more of which are requiring verified net zero commitments.
Feasibility and credibility
Small businesses can often struggle to find net zero solutions that work for them. It can be difficult to accurately define (and therefore tackle) your carbon footprint, especially Scope 3 emissions across your value chain. Lack of access to accurate or cost-effective monitoring and verification tools can affect the credibility of your green claims and progress to net zero. An over-reliance on carbon offsetting could open your business to accusations of greenwashing.
Free carbon footprint tools are available to get you started, but you may benefit from the expertise of professional carbon footprinting service providers.
Capacity and skills
Many businesses are busy focusing on day-to-day tasks making it hard to devote significant time and resources to fundamental business change that may not positively impact profitability in the short term.
It can be challenging to see how small changes in your business can make a difference on a global scale. Also, to make a change, you may need investment in staff training or recruitment to fill dedicated roles focusing on net zero priorities.
The coronavirus pandemic showed how the short-term effort of making necessary changes to business operations can bring long-term benefits in terms of efficiencies and new ways of working. Setting medium-term goals, and quantifying the potential benefits of change, can provide focus.
Willingness and resistance
People within your organisation, and your supply chain, may have strong views opposing the science of climate change and, in contrast, do not see it as a problem. Key staff may resist business change based on short-term impact on revenue or the diversion of investment from profitable carbon-intensive activities.
Climate literacy can help people to understand wider issues, but as a business owner it’s important to set a clear and understandable direction that can help to attract and motivate staff who can deliver on your net zero ambitions.
Contractual obstacles
Your business may be limited in your scope for action by existing contracts such as with a service provider, supplier contract or a building tenancy agreement. These partners may be unwilling or simply unable to make the necessary adjustments to meet your net zero requirements.
You should approach your partners to discuss what’s possible in the short term and until your contract expires. You may be able to convince them of the joint marketing benefits of making positive actions on greenhouse gas emissions reductions.
If you ultimately need to find new providers, suppliers, or alternative arrangements for premises, you should weave these timescales into your net zero plan.
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Advisory and financial support for net zero businesses
Find practical support from expert advice and mentoring to loans and grants to enable your business journey to net zero.
Changing your business strategy and direction to become a net zero business can be daunting – but you don’t have to do it alone. A growing range of support schemes is available to help you on your journey.
The SME Climate Hub has guidance on sourcing financial support for reducing emissions, including from:
- customers/buyers
- banks
- grants and other government support
- balance sheet and investors
You can find more information on climate awareness programmes and events.
National support for net zero businesses
United Kingdom government-backed schemes are available to support businesses making innovative and game-changing investments in a green future for themselves, their sectors and customers.
Industrial Energy Efficiency Accelerator
Funding for industrial-scale demonstrations of novel technologies with the potential to reduce energy consumption, maximise resource efficiency and cut carbon emissions – find out more about the Industrial Energy Efficiency Accelerator.
Industrial Energy Transformation Fund
Financial support for businesses with high energy use to cut their energy bills and greenhouse gas emissions through investing in energy efficiency and low carbon technologies – find out more about the Industrial Energy Transformation Fund.
Workplace Charging Scheme
A voucher-based scheme that provides eligible applicants with support towards the upfront costs of the purchase and installation of electric vehicle charge points – find out more about the Workplace Charging Scheme.
Gigabit Broadband Voucher Scheme
A voucher-based scheme for businesses experiencing slow broadband speeds in rural areas to help to cover the costs of installing gigabit broadband – find out more about the Gigabit Broadband Voucher Scheme.
Local business support programmes for net zero
Several local support programmes for environmental action, climate mitigation and progressing towards net zero are available for businesses:
Cycle-Friendly Employer Accreditation Scheme
Scheme which helps organisations become cycle-friendly employers - find out more about the Cycle-Friendly Employer Accreditation Scheme.
Employer active travel support
Scheme which supports employers to encourage their employees to consider active travel in their daily routine - find out more about Employer active travel support.
Energy Efficiency Capital Grants
Invest Northern Ireland grant support to help businesses to buy and install energy efficient equipment - find out more about Energy Efficiency Capital Grants.
LiveSmart Community Environmental Grant Programme 2023-24
Causeway Coast and Glens Borough Council financial assistance to allow groups and organisations to improve the general cleanliness in their local area, particularly in respect of litter, to promote recycling, reuse and waste reduction, and to look at ways of reducing carbon footprint by taking simple, practical actions such as planting - find out more about the LiveSmart Community Environmental Grant Programme 2023-24.
Operational Excellence Solutions
Coaching support to help Northern Ireland companies improve their competitive advantage by increasing their productivity and profitability - find out more about Operational Excellence Solutions.
Sustainability Reports
Invest Northern Ireland support to give businesses an understanding of their environmental performance across several areas, such as raw materials, energy, carbon, packaging, biodiversity and waste - find out more about Sustainability Reports.
Resource Matching Service
Invest NI and International Synergies provide an opportunity to transfer business waste, unwanted materials and by-products from one business or organisation to be reused, recycled, reprocessed and repackaged by another - find out more about the Resource Matching Service.
Technical Consultancy Service for energy and waste management
Invest NI support to help you identify areas for increased efficiency and cost savings is available to all Northern Ireland businesses with an annual energy and resource spend more than £30,000 - find out more about the Invest NI's Technical Consultancy Service.
Find these and more support programmes through our Business Support Finder tool.
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How to become a net zero business
Setting net zero targets for our business - Kainos
Stephan Sakowicz explains what sustainability means to Kainos and how they plan to deliver on ambitious climate pledges.
Kainos Group plc is a United Kingdom-headquartered, global company that helps its customers deliver successful digital transformation projects. Kainos employs more than 2,900 people in 22 countries across Europe and the Americas.
In 2022 Kainos signed up for the Climate Pledge, co-founded by Amazon and Global Optimism. Through this initiative, signatory companies commit to taking collective action on positive climate change, eliminating carbon and supporting credible offsetting with real and permanent benefits.
Stephan Sakowicz, Leader of the Climate Action Group in Kainos, explains what sustainability means to Kainos and how they plan to deliver on their climate pledges.
Why sign the pledge?
"Kainos is an Amazon Web Services partner, so we have been tracking the roll-out of The Climate Pledge from the start. Sustainability is important to us. To play our part in reducing global temperatures, we needed to commit to an ambitious programme reducing our carbon footprint and offsetting emissions. We work with our customers, staff and suppliers to drive the sustainability agenda. We want to be proud of the legacy we leave."
"We have worked hard to achieve carbon neutrality in 2021. Our near-term carbon reduction plan has been approved by the Science Based Targets Initiative, so we knew that we could meet the 2040 deadline. In fact, we will be able to beat it by 15 years. We are committed to achieving net zero by 2025."
What prompted Kainos to commit to the shorter timeframe?
"As a global organisation, we believe we are responsible for positively impacting society, local communities and the environment. We know planting trees or donating to charity will not make a difference that reflects a business of our size. We want to make a meaningful difference sooner and do not think the Earth can wait. We believe that joint action with suppliers and customers is the way forward – and we are happy to take the lead on this."
What is Kainos doing to deliver on these targets?
"We are embedding best practice across our offices to reduce the environmental impact of our activities. We operate an activity-based working model. This approach reduces the need for business travel and day-to-day commuting, and we have started to engage with our supply chain to achieve end-to-end reductions across Scope 1, 2 and 3 emissions, not just our direct emissions."
"The organisation has also taken steps to help our clients tackle their carbon emissions. Innovations like our cloud carbon calculator make it easy for customers to understand and reduce their emissions through technology."
"While we strive towards net zero, we also invest in offsetting and removal schemes to compensate for our residual footprint. We have supported forest preservation, reforestation, wind power, landfill gas-to-energy and cooking stove programmes in Europe, North America, Africa and South America, and from 2022 onwards, have begun to invest in atmospheric carbon removal and avoidance schemes."
How did Kainos get everyone on board?
“We have a Climate Action Group comprising over 250 global staff members. This group, led by senior managers with oversight from the board, defines the vision and aims for Kainos, including the roadmap to net zero. This Climate Action Group is open to all employees who are encouraged to submit ideas, best practices or success stories on Kainos has helped our customers improve their environmental impact."
Why become an advocate for net zero?
“The organisation wants to understand the real impact our business activities have on the environment, and we want to reduce that impact in any way we can. We can use the knowledge that we have gained to help our customers, staff, and suppliers achieve their own low-carbon goals. Furthermore, by helping to digitise organisations and cutting down on manual or intensive working methods, we can reduce the carbon impact of doing business."
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Monitor and report on your net zero progress
In this guide:
- How to become a net zero business
- What is a net zero business?
- Carbon literacy for your business
- How to calculate your business carbon footprint
- Set net zero targets for your business
- Monitor and report on your net zero progress
- Champion net zero through your business
- Advantages of becoming a net zero business
- Barriers to becoming a net zero business
- Advisory and financial support for net zero businesses
- Setting net zero targets for our business - Kainos
What is a net zero business?
Explanation of what a net zero business is and why this is important for your business, your community, and the climate
Net zero is a recent addition to the terminology around global warming, climate change and greenhouse gas emissions. It’s important to understand what net zero means to industry and small businesses.
What does net zero mean for business?
Becoming a net zero business means that your business activities and your value chain have no net impact on the climate from your greenhouse gas emissions.
To get involved and take action towards becoming a net zero business, you should focus on four main areas:
- minimising your own emissions
- reducing emissions in your supply chain
- integrating climate action into your business strategy
- working to promote climate action across society
In line with international commitments, under the Paris Agreement, to limit global temperature rises to no more than 1.5 degrees Celsius, businesses should aim to:
- halve their emissions by 2030
- reduce their emissions to close to zero before 2050
Find out more about how to set net zero targets for your business.
Any remaining emissions which cannot be eliminated from your business activities (ideally no more than ten per cent of your base year emissions) should be offset.
Is carbon offsetting a way to reach net zero?
Carbon offsetting means greenhouse gas emissions are being reduced somewhere else, by someone else, to make up for continued emissions from your business.
Offsetting is a recommended way to bridge the gap to full net zero where a small percentage of greenhouse gas emissions from your business cannot yet be eliminated. This should be through funding high quality and permanent carbon removal projects, which are approved by a recognised certification organisation.
However, carbon offsetting is not a substitute for cutting emissions from your business. Transferring your climate responsibility elsewhere while continuing to pump out greenhouse gases could be considered greenwashing - when your business falsely gives the impression it is addressing climate responsibility.
Introduction to net zero for businesses
The Carbon Trust has recorded an introductory webinar on net zero for businesses which can help you understand more about the concepts and terminology.
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Carbon literacy for your business
How becoming carbon literate in your business is an important step on the way to realising your net zero ambitions
Businesses with net zero ambitions need to learn and understand climate language and terminology to become carbon literate.
Carbon (or climate) literacy is awareness of the impact of everyday business activities and greenhouse gas emissions. It helps you to build knowledge and confidence to speak with authority on actions needed within your business to reduce emissions and tackle climate change.
Ten net zero terms your business should know
There are terms and concepts around climate change, carbon emissions and net zero action which you, your staff and your business supply partners should be familiar with.
1.5 degrees Celsius
The Paris Agreement was adopted in 2015, setting the world on a path to limiting global warming to well below 2 degrees Celsius, and trying to limit the rise to only 1.5 degrees Celsius, compared to pre-industrial global temperatures.
Carbon footprint
A carbon footprint is the total amount of greenhouse gases which a business (or individual) generates through its action. The first step to setting a net zero target for your business is to measure your carbon footprint fully and accurately.
Carbon offsetting
This is investing in carbon removal projects outside of your business to balance against the carbon you emit, capturing and storing carbon through natural projects (such as forests, bogs, coastal ecosystems) or innovative new technological projects.
Climate change adaptation
Effects of climate change are already being recorded through variable weather, and new effects will arrive as global temperatures rise over the coming decades. Adaptation actions are about recognising unavoidable disruptions and altering how you do business to cope with change.
Climate change mitigation
Mitigation is about the actions your business and society can take now to lessen greenhouse gas emissions to help prevent the worst-case scenarios of extreme global temperature rises from happening.
Decarbonisation
This is the long-term aim to create a society with minimal greenhouse gas emissions and is sometimes used to describe sector-specific action plans to reduce carbon emissions.
Emissions
This refers to the greenhouse gases released into the atmosphere due to your business activities. There are three types of emissions which businesses need to understand for their net zero plans:
- Scope 1 – direct emissions from your activities like fuel combustion and other emissions from your operations.
- Scope 2 – emissions from the production of purchased energy like electricity, heat, steam, or cooling.
- Scope 3 – indirect emissions generated from all activities upstream and downstream of your business (value chain) such as purchased goods and services, business travel and staff commuting, primary waste and end of life product disposal, transport and distribution, and more.
The greatest impact by your business is likely to be from Scope 3 emissions, which are also the hardest to accurately quantify.
Greenhouse gases
These are natural gases and human-produced gases causing the greenhouse effect where heat is trapped, leading to average global temperature rises. These have increased in the atmosphere over the last 150 years. Under climate change legislation, six greenhouse gases are defined:
- carbon dioxide (CO2)
- methane (CH4)
- nitrous oxide (N2O)
- hydrofluorocarbons (HFCs)
- perfluorocarbons (PFCs)
- sulphur hexafluoride (SF6)
Just transition
This means tackling climate change in a way that distributes the benefits and costs in a fair way so that a net zero economy does not leave behind sections of society.
Science-based targets
These are business targets for greenhouse gas emissions reductions that align with the latest scientific advice on meeting the goals set out in the Paris Agreement to limit global warming.
Carbon literacy training for businesses
Business in the Community’s Carbon Literacy Training has been designed to raise awareness and explore the opportunities, risks and challenges that climate change will present.
Keep Northern Ireland Beautiful offers Carbon Literacy training to a wide range of groups to raise awareness of the climate change emergency and how to get involved in finding solutions.
If you want to deliver training in-house, you can build a Carbon Literacy course for your audience that complies with the Carbon Literacy Standard and have it certified by The Carbon Literacy Project.
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How to calculate your business carbon footprint
Set an accurate baseline for your business carbon footprint from which to monitor progress on your net zero actions
A carbon footprint is the total amount of greenhouse gases generated by your business activities.
Carbon footprints are used by businesses which have mandatory reporting requirements under carbon emissions trading and reporting schemes. They are also used voluntarily to show climate awareness and action by businesses.
Calculating your carbon footprint is the most important first step to becoming a net zero business. It allows your business to set baselines for your emissions reduction targets, and then to accurately measure progress against those targets.
How to calculate a business carbon footprint
There are five key steps to follow to calculate your organisational footprint. These are:
- Decide on the method to follow – a consistent method will help to ensure an accurate result.
- Define the organisational and operational boundaries – the operational boundary determines which emission sources you will quantify, so it's important to be realistic when choosing it.
- Collate the data – you'll need to collate consumption data for all the emission sources within your chosen boundary.
- Apply emissions factors – find the latest emissions factors on the Department for Environment, Food and Rural Affairs (Defra) website.
- Verify the results – this is optional, but it adds credibility to your calculation.
If you have taken action to reduce your carbon footprint you may want to verify this. This is optional, but independent certification will add credibility to your reduction claims.
Find carbon footprint calculators
The SME Climate Hub has created a free Business Carbon Calculator. You can use it to estimate your full carbon footprint and find quick actions to reduce emissions from your business.
The Carbon Trust have produced a downloadable guide to carbon footprints, and how should you measure, calculate, and communicate them – find out more (registration required).
Other tools are available on the market, and your business may benefit from the expertise of contracting a specialist carbon footprinting service.
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Set net zero targets for your business
How to make firm commitments to reducing carbon emissions and set achievable dates for becoming a net zero business
Your business is ready to make credible commitments to reduce greenhouse gas emissions when you’ve established a baseline – see how to calculate the carbon footprint of your business.
Make your net zero commitment
Making a public net zero commitment can help businesses stick to their plan and work to meet their targets. A commitment lets everyone involved in your business and value chain, and potential new customers and partners, know that you are serious about net zero and can demonstrate progress.
Your broad commitment should include the near-term target of halving emissions before 2030 and the long-term target of achieving net zero emissions before 2050.
The SME Climate Hub is a global initiative that aims to mainstream business climate action and build resilience. They have developed a standardised text as an example of how to commit to becoming a net zero business:
The SME Climate Commitment
Recognising that climate change poses a threat to the economy, nature and society-at-large, our company commits to take action immediately in order to:
- Halve our greenhouse gas emissions before 2030
- Achieve net zero emissions before 2050
- Disclose our progress on a yearly basis
In doing so, we are proud to be recognised by the United Nations Race to Zero campaign, and join governments, businesses, cities, regions, and universities around the world that share the same mission.
Learn more about the SME Climate Commitment (PDF, 249K).
You should then publish and communicate your commitment to staff, customers and suppliers, along with further details on how you will monitor progress and transparently report this on an annual basis.
Start to take action towards net zero
Once your business has made its net zero commitment, you should begin to take actions in the following months.
For example, you could start by developing a detailed action plan setting out how you intend to achieve your reduction targets.
Your net zero action plan should include detailed information on:
- existing Scope 1, 2 and 3 emissions – see carbon literacy for your business
- where reductions will be made
- overall timescales and interim checkpoints for reductions
- business growth projections and how you'll target any additional emissions that arise
The Cabinet Office has developed a Carbon Reduction Plan template for demonstrating net zero commitment when bidding for major government contracts – it can act as an example template for businesses wanting to develop their own net zero action plan (ODT, 73K).
You should then begin to take concrete actions to reduce your emissions in line with your action plan - find out more about how to cut your carbon emissions.
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Monitor and report on your net zero progress
How to measure the impact of net zero actions in your business and communicate progress to customers and investors
Announcing your business commitment to net zero sets the expectation that you will share your targets and the actions you will take to achieve them. There will be an expectation that you monitor your emissions reduction across the lifetime of your commitment and publish annual reports on your progress.
Customers, business partners, staff and other interested parties will expect your transparency. This openness can also improve your business brand and help to demonstrate the importance of net zero actions to your industry and society.
Ongoing monitoring and reporting can allow your business to regularly evaluate your results, plus help you take any corrective actions and make updates to your plan as circumstances change.
What to include in your net zero progress report
An annual report on net zero progress by your business should include:
- an overview of your headline commitment and targets, and any amendments
- a detailed disclosure of your greenhouse gas emissions in the last year
- the percentage reductions achieved along with the outlook for the near future
- the specific actions you’ve taken to cut your emissions
- details of how your business strategy is evolving to embed net zero
You should consider third-party auditing and verification of your reporting to enhance its credibility.
Net zero standards, certification and accreditation
Using published environmental standards can help your business to meet best practice in reporting and verification of your progress in cutting emissions.
100,000 free copies of BS ISO 50005 - Energy management systems are being sponsored by the Department for Business, Energy and Industrial Strategy (BEIS) as part of their commitment to support small and medium-sized organisations to manage their energy performance and help the United Kingdom to meet net zero.
The Carbon Trust has developed certification which can guide and support your business towards net zero and climate leadership called the Route to Net Zero Standard.
The UK Accreditation Service (UKAS) has published guidance on how to gain various accreditations to support your net zero plans.
The British Standards Institute (BSI) has published a guide on how adopting standards can help your business to achieve net zero.
Other environmental standards
ISO 14001: 2015 – Environmental Management Standard specifies the requirements for an environmental management system that an organisation can use to enhance its environmental performance – find out more about ISO 14001: 2015.
ISO 50001: 2018 – Energy Management Standard specifies requirements for establishing, implementing, maintaining and improving an energy management system – find out more about ISO 50001: 2018.
PAS 2060:2014 – Publicly Available Specification for the demonstration of carbon neutrality can be used for your entire business or to any uniquely identified subject, such as specific activities, products, services, buildings, projects, or events – find out more about PAS 2060:2014.
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Champion net zero through your business
How your business can become an advocate for net zero actions within your community and across wider society
Your business can be a climate leader by using your network and wider sphere of influence to help accelerate climate action in society. Advocating for wider climate action will naturally benefit the environment but can also make it easier to run a net zero business with more suppliers, partners and customers who want to do business with you.
How to be a net zero champion
You should spread the word about your own net zero commitment and the progress you are making each year. Your reports should include sharing your story with examples of how you’ve cut your greenhouse gas emissions, reduced your waste, etc.
You can invest in projects which take a nature-based approach to avoid or capture emissions, also known as carbon offsetting. Offsetting is an important part of balancing the toughest to cut emissions from your business, but you can get involved in local or international projects which go beyond your own business carbon balance needs. You could also devise and deliver your own nature-based solution on your business property or land as part of your action plan.
Getting your staff involved in climate action can spread the benefits of net zero action beyond your value chain, and help your employees to feel valued in their efforts.
The Climate Justice Playbook for Business is a practical guide that can help business leaders understand the intersection of climate action and social justice and advance a justice-centred approach to climate action.
Work with your sector to develop net zero roadmaps
Partnership working to achieve shared goals and benefits for all businesses, even with local competitor companies, can help to boost your overall industry sector.
The Net Zero Council has developed a new framework to help empower businesses to create tailored action plans to reduce emissions across their sector. The guidelines provide a robust, credible and consistent set of criteria for business sector roadmaps to ensure they can effectively reduce emissions - find out more about the net zero business sector roadmap guidelines.
Local opportunities to champion climate action
Business in the Community offers ways to get involved in local business community and wider societal actions through corporate social responsibility and climate schemes.
You can get involved in local networking events to spread the word about net zero business ambitions by joining Northern Ireland business networks.
You can find environmental business events for networking opportunities, or you can organise and list your own climate events, through our Events Finder tool.
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Advantages of becoming a net zero business
How becoming a net zero business can improve business resilience, attract customers, and improve social responsibility
Climate change is changing how the world does business due to unavoidable effects now, and in preparation for effects that may be on the way.
There are many benefits to your business of becoming net zero, beyond the positive effect on the environment of reducing your emissions.
Net zero business advantages
Recognition and marketing
If your business makes tough decisions and sets itself on a path to net zero, you should shout about it. Customers are becoming more and more climate-conscious and are attracted to products and services which have a low impact on the environment.
You can market the genuine environmental benefits of the actions taken by your business, and you can seek recognition through business awards - find out more about how to market your environmental credentials.
Businesses that make the SME Climate Commitment will have their name/logo featured on the SME Climate Hub and be recognised by the United Nations Race to Zero campaign.
Business in the Community celebrates local businesses which are demonstrating a significant commitment and contribution to climate action through their annual Responsible Business Awards.
Becoming more competitive
Businesses which can demonstrate an authentic commitment and progress towards net zero are more attractive to climate-conscious customers and can grow sales at the expense of competitors.
Public sector tendering competitions are increasingly setting business commitment to net zero as a minimum requirement to be considered for contracts. This is now the case for central UK government contracts over £5 million a year and is likely to become the norm for most, if not all, contracts between now and 2050.
Building business resilience
Climate change might appear to have greater impacts in other parts of the world, but businesses here will feel those effects. Extreme short-term weather and longer-term climate patterns can disrupt your supply chains.
Becoming a net zero business can go a long way to protecting against economic, climate and regulatory shocks now and in the future.
The UK Government publishes a climate change risk assessment (CCRA) every five years, which includes advice on adaptation actions for different sectors - you can download the Evidence for the third UK Climate Change Risk Assessment (CCRA3) Summary for Northern Ireland (PDF, 4.3MB).
Long-term cost reductions
Making changes to your way of doing business rarely comes without cost in the short term. However, you should seek to maximise the efficiencies which net zero businesses can find through reduced energy, waste and water costs. Businesses with minimal greenhouse gas emissions and environmental impacts may also find themselves able to avoid future carbon and waste taxes.
Attracting investment
Having a strong business strategy for the future with sustainability (both for business viability and the environment) at the centre is important for investors. Net zero plans are likely to become an essential element when making investment decisions – find out more about how to attract investment.
Early mover advantage
The potential advantages listed above come with risks attached in investing and working to achieve them, but becoming a net zero business can put you ahead of others in your industry and help you to establish a larger market share while others catch up.
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Barriers to becoming a net zero business
There are several challenges which many types of small business must overcome to make a successful journey to net zero
Awareness of climate change issues among small businesses is growing, as is the wish to join in climate action. However, many small businesses struggle to overcome barriers to reducing their carbon emissions. Understanding these barriers and finding practical solutions is critical to becoming a net zero business.
Key barriers to business net zero actions
Costs
Upfront capital costs to upgrade items such as machinery and vehicles can be difficult for small businesses to fund. The inability to purchase at scale can mean higher costs per unit for low-carbon raw materials, products, and services.
Ongoing costs can also place a burden on your business and add to worries about remaining competitive on price, especially if your competitors are not taking similar actions.
You should aim to attract customers who value net zero commitments, or business customers which need low-carbon suppliers as part of their own value chain reporting, by marketing your climate actions. You can also gain a competitive advantage in tendering for contracts, more of which are requiring verified net zero commitments.
Feasibility and credibility
Small businesses can often struggle to find net zero solutions that work for them. It can be difficult to accurately define (and therefore tackle) your carbon footprint, especially Scope 3 emissions across your value chain. Lack of access to accurate or cost-effective monitoring and verification tools can affect the credibility of your green claims and progress to net zero. An over-reliance on carbon offsetting could open your business to accusations of greenwashing.
Free carbon footprint tools are available to get you started, but you may benefit from the expertise of professional carbon footprinting service providers.
Capacity and skills
Many businesses are busy focusing on day-to-day tasks making it hard to devote significant time and resources to fundamental business change that may not positively impact profitability in the short term.
It can be challenging to see how small changes in your business can make a difference on a global scale. Also, to make a change, you may need investment in staff training or recruitment to fill dedicated roles focusing on net zero priorities.
The coronavirus pandemic showed how the short-term effort of making necessary changes to business operations can bring long-term benefits in terms of efficiencies and new ways of working. Setting medium-term goals, and quantifying the potential benefits of change, can provide focus.
Willingness and resistance
People within your organisation, and your supply chain, may have strong views opposing the science of climate change and, in contrast, do not see it as a problem. Key staff may resist business change based on short-term impact on revenue or the diversion of investment from profitable carbon-intensive activities.
Climate literacy can help people to understand wider issues, but as a business owner it’s important to set a clear and understandable direction that can help to attract and motivate staff who can deliver on your net zero ambitions.
Contractual obstacles
Your business may be limited in your scope for action by existing contracts such as with a service provider, supplier contract or a building tenancy agreement. These partners may be unwilling or simply unable to make the necessary adjustments to meet your net zero requirements.
You should approach your partners to discuss what’s possible in the short term and until your contract expires. You may be able to convince them of the joint marketing benefits of making positive actions on greenhouse gas emissions reductions.
If you ultimately need to find new providers, suppliers, or alternative arrangements for premises, you should weave these timescales into your net zero plan.
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Advisory and financial support for net zero businesses
Find practical support from expert advice and mentoring to loans and grants to enable your business journey to net zero.
Changing your business strategy and direction to become a net zero business can be daunting – but you don’t have to do it alone. A growing range of support schemes is available to help you on your journey.
The SME Climate Hub has guidance on sourcing financial support for reducing emissions, including from:
- customers/buyers
- banks
- grants and other government support
- balance sheet and investors
You can find more information on climate awareness programmes and events.
National support for net zero businesses
United Kingdom government-backed schemes are available to support businesses making innovative and game-changing investments in a green future for themselves, their sectors and customers.
Industrial Energy Efficiency Accelerator
Funding for industrial-scale demonstrations of novel technologies with the potential to reduce energy consumption, maximise resource efficiency and cut carbon emissions – find out more about the Industrial Energy Efficiency Accelerator.
Industrial Energy Transformation Fund
Financial support for businesses with high energy use to cut their energy bills and greenhouse gas emissions through investing in energy efficiency and low carbon technologies – find out more about the Industrial Energy Transformation Fund.
Workplace Charging Scheme
A voucher-based scheme that provides eligible applicants with support towards the upfront costs of the purchase and installation of electric vehicle charge points – find out more about the Workplace Charging Scheme.
Gigabit Broadband Voucher Scheme
A voucher-based scheme for businesses experiencing slow broadband speeds in rural areas to help to cover the costs of installing gigabit broadband – find out more about the Gigabit Broadband Voucher Scheme.
Local business support programmes for net zero
Several local support programmes for environmental action, climate mitigation and progressing towards net zero are available for businesses:
Cycle-Friendly Employer Accreditation Scheme
Scheme which helps organisations become cycle-friendly employers - find out more about the Cycle-Friendly Employer Accreditation Scheme.
Employer active travel support
Scheme which supports employers to encourage their employees to consider active travel in their daily routine - find out more about Employer active travel support.
Energy Efficiency Capital Grants
Invest Northern Ireland grant support to help businesses to buy and install energy efficient equipment - find out more about Energy Efficiency Capital Grants.
LiveSmart Community Environmental Grant Programme 2023-24
Causeway Coast and Glens Borough Council financial assistance to allow groups and organisations to improve the general cleanliness in their local area, particularly in respect of litter, to promote recycling, reuse and waste reduction, and to look at ways of reducing carbon footprint by taking simple, practical actions such as planting - find out more about the LiveSmart Community Environmental Grant Programme 2023-24.
Operational Excellence Solutions
Coaching support to help Northern Ireland companies improve their competitive advantage by increasing their productivity and profitability - find out more about Operational Excellence Solutions.
Sustainability Reports
Invest Northern Ireland support to give businesses an understanding of their environmental performance across several areas, such as raw materials, energy, carbon, packaging, biodiversity and waste - find out more about Sustainability Reports.
Resource Matching Service
Invest NI and International Synergies provide an opportunity to transfer business waste, unwanted materials and by-products from one business or organisation to be reused, recycled, reprocessed and repackaged by another - find out more about the Resource Matching Service.
Technical Consultancy Service for energy and waste management
Invest NI support to help you identify areas for increased efficiency and cost savings is available to all Northern Ireland businesses with an annual energy and resource spend more than £30,000 - find out more about the Invest NI's Technical Consultancy Service.
Find these and more support programmes through our Business Support Finder tool.
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How to become a net zero business
Setting net zero targets for our business - Kainos
Stephan Sakowicz explains what sustainability means to Kainos and how they plan to deliver on ambitious climate pledges.
Kainos Group plc is a United Kingdom-headquartered, global company that helps its customers deliver successful digital transformation projects. Kainos employs more than 2,900 people in 22 countries across Europe and the Americas.
In 2022 Kainos signed up for the Climate Pledge, co-founded by Amazon and Global Optimism. Through this initiative, signatory companies commit to taking collective action on positive climate change, eliminating carbon and supporting credible offsetting with real and permanent benefits.
Stephan Sakowicz, Leader of the Climate Action Group in Kainos, explains what sustainability means to Kainos and how they plan to deliver on their climate pledges.
Why sign the pledge?
"Kainos is an Amazon Web Services partner, so we have been tracking the roll-out of The Climate Pledge from the start. Sustainability is important to us. To play our part in reducing global temperatures, we needed to commit to an ambitious programme reducing our carbon footprint and offsetting emissions. We work with our customers, staff and suppliers to drive the sustainability agenda. We want to be proud of the legacy we leave."
"We have worked hard to achieve carbon neutrality in 2021. Our near-term carbon reduction plan has been approved by the Science Based Targets Initiative, so we knew that we could meet the 2040 deadline. In fact, we will be able to beat it by 15 years. We are committed to achieving net zero by 2025."
What prompted Kainos to commit to the shorter timeframe?
"As a global organisation, we believe we are responsible for positively impacting society, local communities and the environment. We know planting trees or donating to charity will not make a difference that reflects a business of our size. We want to make a meaningful difference sooner and do not think the Earth can wait. We believe that joint action with suppliers and customers is the way forward – and we are happy to take the lead on this."
What is Kainos doing to deliver on these targets?
"We are embedding best practice across our offices to reduce the environmental impact of our activities. We operate an activity-based working model. This approach reduces the need for business travel and day-to-day commuting, and we have started to engage with our supply chain to achieve end-to-end reductions across Scope 1, 2 and 3 emissions, not just our direct emissions."
"The organisation has also taken steps to help our clients tackle their carbon emissions. Innovations like our cloud carbon calculator make it easy for customers to understand and reduce their emissions through technology."
"While we strive towards net zero, we also invest in offsetting and removal schemes to compensate for our residual footprint. We have supported forest preservation, reforestation, wind power, landfill gas-to-energy and cooking stove programmes in Europe, North America, Africa and South America, and from 2022 onwards, have begun to invest in atmospheric carbon removal and avoidance schemes."
How did Kainos get everyone on board?
“We have a Climate Action Group comprising over 250 global staff members. This group, led by senior managers with oversight from the board, defines the vision and aims for Kainos, including the roadmap to net zero. This Climate Action Group is open to all employees who are encouraged to submit ideas, best practices or success stories on Kainos has helped our customers improve their environmental impact."
Why become an advocate for net zero?
“The organisation wants to understand the real impact our business activities have on the environment, and we want to reduce that impact in any way we can. We can use the knowledge that we have gained to help our customers, staff, and suppliers achieve their own low-carbon goals. Furthermore, by helping to digitise organisations and cutting down on manual or intensive working methods, we can reduce the carbon impact of doing business."
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