Nine in ten businesses are concerned about costs of funding the transition to net zero amid a spike in energy prices, revealed the latest research from Npower Business Solutions (NBS).
The company’s report – Business Energy Tracker – revealed nearly half of UK businesses (49 per cent) believe the current crisis will harm progress towards reaching climate goals, such as reaching net zero carbon emissions by 2050.
More than half (55 per cent) revealed that energy efficiency and energy management would be their most important investment priority over the coming 12 months, as businesses look to cut down their energy use.
Two-thirds of respondents (67 per cent) still consider net zero to be an achievable goal with businesses in favour of sustainability measures.
Anthony Ainsworth, chief operating officer at NBS, said the government needed to provide more clarity and more support for businesses if the UK was to reach its environmental targets.
He said: “While businesses are navigating multiple pressures and increased costs, we are also being warned that the next ten years must be a ‘decade of delivery’ when it comes to climate change and hitting our net zero emissions target by 2050.”
“This research shows that businesses back net zero, and they recognise the environmental, commercial and reputational benefits it can bring, However, the current pressures mean that confidence is starting to wane. If the government wants to keep the support of businesses to help them achieve their net zero targets, then they need to intervene now with policies to support them.”
The company asked 200 large organisations about the impact of the energy crunch on their confidence to invest in decarbonisation and other measures, as well as how they are managing energy risk.
It revealed that energy costs have overtaken the recovery from Covid-19 as the top concern for UK businesses. and that 77 per cent of businesses say energy is now their biggest concern, followed by the ongoing rebound from the pandemic (72 per cent).
The report showed that nine out of 10 businesses are predicting the cost of energy to their business will increase over the next 12 months, 80 per cent of businesses reported that energy is now a major board-level issue.
A huge 82 per cent of businesses believe more needs to be done in terms of policy and incentives, and within this, one in five (21 per cent) currently believe nothing is being done at all.
Ainsworth said: “Businesses are currently facing huge challenges, and are emerging from two years of upheaval into even more uncertainty. Rising inflation, the reduction in government pandemic support and increased energy market volatility are all having an impact on confidence.”
“While some progress has been made, the message coming through loud and clear from this research is that current policy is not doing the job it needs to do to support businesses at a time when energy is their biggest concern.
“What we are hearing is that certainty and with it, investor confidence, is in short supply.”
Unlike households, businesses are not protected by the consumer price cap – which limits the maximum charge providers can charge domestic consumers.
Instead, businesses agree contracts with providers that can increase out-of-contract rates to reflect soaring wholesale costs.
Gas prices remain historically elevated – having peaked at an eye-watering of £8 per therm – and remain elevated at £2.05 per therm this summer.
For context, gas was trading at 48p per therm this time last year.