Top business groups urge government to plot 'just transition' to net zero

CBI, Make UK, Institute of Directors, the Federation of Small Businesses, and the British Chamber of Commerce call for joined-up approach to decarbonisation that manages impact on high carbon industries

Five of the UK’s leading business groups have joined forces in calling for a ‘just transition’ to net zero emissions by 2050, urging the government to set a “fairness test” for climate policy to ensure no companies or workers are ‘left behind’ in the shift to a greener economy.

In a letter to the government today, the Federation of Small Businesses (FSB), the Confederation of British Industry (CBI), Make UK, the Institute of Directors (IoD), and British Chambers of Commerce (BCC) argue businesses of all sizes and their workers must play roles in the shift to a carbon neutral economy.

It comes alongside a joint report from the five business bodies setting out the core principles needed to achieve a ‘just transition’, which argues that a joined-up approach to government policy that is aligned with long-term climate targets is critical to ensuring fairness is at the heart of the UK’s net zero vision.

There have already been signs of the challenges facing companies and workers in higher carbon industries as markets, regulation, and consumer demand lead to a shift away from high carbon products and practices. Last year, for example, Honda announced plans to close its car factory in Swindon in 2021, putting 3,500 jobs at risk, with the company citing the market shift to electric vehicle manufacturing rather than petrol or diesel cars as a major driver behind the decision. Meanwhile, a number of leading oil companies are embarking on restructuring plans amidst speculation oil demand may soon peak as demand for electric vehicles and renewables soars. 

As such, trade unions have stepped up calls for the government to develop a ‘just transition’ strategy that would seek to mobilise investment in retraining programmes, maximise the job creation that will result from the shift to net zero emissions, and ensure the costs and impacts of emission reduction policies are spread fairly across the country.

A number of businesses have also embraced the approach and are pursuing just transition policies and green skills programmes. For example, energy giant SSE recently became one of the first utilities to pledge to deliver a detailed ‘just transition’ plan for impacted workers, consumers, and communities, as the firm shifts away from fossil fuels in pursuit of net zero.

But while larger corporates tend to have bigger budgets to invest in green projects and shifting towards a net zero footing, smaller companies need greater support “to make sure they don’t get left behind”, according to the letter from business groups.

“At a time when all political parties support the target that the UK should be carbon free by 2050, it’s now down to the government to ensure businesses aren’t disproportionately hit,” a joint statement from the business groups reads. “We believe that such an approach can provide a robust policy framework enabling the UK to maintain its current domestic and global ambitions, whilst being accountable, credible, and fair. With the right support they can play a critical role in helping the UK reach its green targets and shore up supply through a just transition.”

It comes amid increasing calls for a much bigger focus from the government on smoothing the path to net zero for workers and businesses. For example, the citizens’ Climate Assembly UK convened by Parliament this year similarly concluded that fairness should be a top priority for green policymaking.

Meanwhile, the Scottish Government has set up its own Just Transition Commission to try and manage the challenges in shifting towards net zero, which are expected to be particularly acute for the country’s North Sea oil and gas industry.

No such initiative has yet been announced by the government in Westminster, although it yesterday unveiled plans to create two million new green jobs by 2030, as it held the first meeting of a new Green Jobs Taskforce aimed at training up the workforce to fill the glaring green skills deficit in the UK.

Among top priorities for the Taskforce, which is being chaired by Energy and Clean Growth Minister Kwasi Kwarteng and Skills Minister Gillian Keegan, are plotting a long-term green skills plan for good quality jobs, and supporting a ‘just transition’ for workers on the path to net zero, the government said. Business and trade union representatives have been appointed to the taskforce.

The Department for Business, Energy and Industrial Strategy (BEIS) said the government wanted “everyone to feel the full benefits of this green industrial revolution as we meet our commitment for net zero carbon emissions by 2050”.

“We are taking every opportunity to build on the UK’s fantastic track record for tackling climate change, putting billions into developing our low carbon economy, supporting renewable energy projects and transforming the energy efficiency of homes and public buildings,” BEIS added in a statement.

Read more: