Decarbonisation insight from L.E.K. Consulting

Cost is a key barrier to decarbonisation.
45% of UK executives report they have changed their business model due to decarbonisation commitments, and 47% say they plan to, L.E.K report finds

Global strategy consultants L.E.K. Consulting surveyed 400 leaders of global companies to gain insight into decarbonisation strategy and challenges. 

The majority of leaders surveyed for Navigating The Journey To Decarbonisation held sustainability leadership positions (55%), with 18% in C-Suite roles, 34% in the industrials sector, 24% in healthcare, 21% in consumer products, 15%  in transportation and 8% in energy.

The report shows that the majority of UK business leaders are making aggressive plans to eliminate carbon emissions, with 95% — higher than the global average of 82% — having established a formal decarbonisation strategy. UK leaders have also reported the most ambitious targets, with 70% of UK businesses targeting net zero on Scope 1 (direct), 2 (indirect) and 3 (supply chain) by 2050. Furthermore, 82% of UK businesses report being on track or ahead of their targets, compared to a 73% global average.

“The recent UK environmental policy changes reaffirm that companies need to consider the business case for sustainability more broadly than regulation. Results from L.E.K.'s 2023 Decarbonisation survey reveal that firms with more ambitions, and with goals rooted in values, are better aligned to drive growth, achieve a competitive strategic position against rivals, attract talent, and have a lower cost of capital,” Rebecca Scottorn, Partner and co-founder of the L.E.K. Sustainability Centre of Excellence shares with Sustainability Magazine.

“Customers, employees and investors continue to demand decarbonisation. These drivers very much remain, regardless of a changing policy environment. Despite the increase in uncertainty created by long-term targets moving, it will be important for leaders to develop realistic and tangible roadmaps to make progress in the short-term – overcoming challenges around funding the transformation required.”

Cost is a key barrier to decarbonisation

Most leaders in the UK (77%) cite lack of funding as a barrier.  

“Decarbonisation is such a significant issue facing businesses, and whilst many companies now have a plan, not many have fully costed it,” Scottorn notes.

“Taking a strategic approach and recognising the trade-offs required greatly increases the likelihood of their success.”

What is the major goal of your decarbonisation efforts?

Global strategy consultants L.E.K. Consulting surveyed 400 leaders of global companies to gain insight into decarbonisation strategy and challenges. 

The majority of leaders surveyed for Navigating The Journey To Decarbonisation held sustainability leadership positions (55%), with 18% in C-Suite roles, 34% in the industrials sector, 24% in healthcare, 21% in consumer products, 15%  in transportation and 8% in energy. 

 

The report shows that the majority of UK business leaders are making aggressive plans to eliminate carbon emissions, with 95% — higher than the global average of 82% — having established a formal decarbonisation strategy. UK leaders have also reported the most ambitious targets, with 70% of UK businesses targeting net zero on Scope 1 (direct), 2 (indirect) and 3 (supply chain) by 2050. Furthermore, 82% of UK businesses report being on track or ahead of their targets, compared to a 73% global average. 

 

“The recent UK environmental policy changes reaffirm that companies need to consider the business case for sustainability more broadly than regulation. Results from L.E.K.'s 2023 Decarbonisation survey reveal that firms with more ambitions, and with goals rooted in values, are better aligned to drive growth, achieve a competitive strategic position against rivals, attract talent, and have a lower cost of capital,” Rebecca Scottorn, Partner and co-founder of the L.E.K. Sustainability Centre of Excellence shares with Sustainability Magazine.

“Customers, employees and investors continue to demand decarbonisation. These drivers very much remain, regardless of a changing policy environment. Despite the increase in uncertainty created by long-term targets moving, it will be important for leaders to develop realistic and tangible roadmaps to make progress in the short-term – overcoming challenges around funding the transformation required.” 

Cost is a key barrier to decarbonisation

Most leaders in the UK (77%) cite lack of funding as a barrier.  

 

“Decarbonisation is such a significant issue facing businesses, and whilst many companies now have a plan, not many have fully costed it,” Scottorn notes.

“Taking a strategic approach and recognising the trade-offs required greatly increases the likelihood of their success.” 

 

More specifically, when asked about barriers to decarbonisation, most leaders, including those in the UK, cited the cost of decarbonising (77%), the lack of affordable alternatives (72%) and the difficulty of obtaining capital to fund their decarbonisation investments (78%) as barriers.

The findings demonstrate the extent to which leaders are prioritising sustainability initiatives, with 42% of global respondents stating that their firms should pursue decarbonisation at the expense of short-term profitability. While just 37% of UK business leaders believe the same, the majority of UK respondents (65%) state that their firm should consider divesting a profitable business if it undermines sustainability goals, in comparison to a 41% global average.  

“It is tempting to delay investment, especially in the face of economic challenges, but the stakes are clear – firms that are farther along in their decarbonisation journeys are already realising benefits, and delaying investment is likely to put your firm at a competitive disadvantage,” adds John Goddard, Senior Partner and Vice Chair, Sustainability at L.E.K. Consulting. 

“The time to invest — and to act — is now”.

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Other magazines that may be of interest - EV Magazine | Energy Digital

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