Net zero: prepare today or play catch-up tomorrow

COMMENT Political decisions taken in the near term to reduce carbon emissions will have long-term operational and investment consequences across various sectors – especially in the built environment. Proactive business leaders must remain on the front foot to ensure they can adapt their operations to meet these net zero policy challenges and opportunities. Any clues or insights into what is coming down the track are therefore highly valuable and those that take notice will be well placed to capitalise on new technologies, engage investors and grow their market share. Fortunately, this year has already introduced a raft of proposals that have the potential to turn into concrete policies and regulations. Former energy minister Chris Skidmore’s 340-page review of the UK’s opportunity to seize net zero set out 129 recommendations for “turbocharging growth” and decarbonisation across the UK’s core sectors, including the built environment.  These recommendations provide unprecedented insight into the transformation that could potentially be undertaken across all parts of the sector to address its significant carbon footprint. This is mostly from the heat and energy that buildings consume, but also from the production of energy-intensive products and materials that are widely used within the industry, especially concrete. Addressing these emissions will require sweeping changes that will likely affect every business in some form or another.  Business disruption Some of the review’s headlines captured the media’s attention, such as the recommendation for regulation to end new and replacement gas boilers by 2033 at the latest. Others may have flown under the radar but deserve equal consideration.  A recommendation for government to bring forward all consultations and work to mandate the Future Homes Standard by 2025 and for all homes to be EPC C by 2033 could have a surprisingly immediate affect on housebuilders. The suggestion of a Net Zero Homes Standard, which could cover everything from fabrics to low-carbon heating measures, will have even further-reaching consequences and represents a fundamental transformation to how we build the nation’s homes. For the wider construction sector, the review’s suggestions could be equally disruptive for businesses that aren’t paying attention. Calls to implement the government’s Construction Playbook, which includes a requirement for whole-life carbon assessments of projects that meet certain criteria, will add a highly valuable requirement for securing long term pathways to carbon reductions.  A call for the government to develop a public procurement plan for low-carbon construction and the use of low-carbon materials by the end of 2023 could necessitate accelerated investment into commercially untested products and solutions. Stay ready While we wait to hear from the government regarding which parts of the review it might take forward through the legislative or regulatory process, our message to businesses is simple: take heed and prepare for these net zero changes today to avoid playing catch-up tomorrow. The companies best placed to capitalise from the net zero transition are already taking such steps, including logistics facilities investor Prologis, one of our members for more than a decade. By committing to achieve net zero across its entire value chain by 2040, Prologis has orientated its business towards managing every challenge and opportunity the government may place before it to meet the nation’s overall net zero target. By setting interim targets such as securing 1GW of solar generation capacity by 2025, achieving carbon-neutral construction by 2025 and net-zero operations by 2030, it has certainty of where it needs to direct capex, as well as the skills and capabilities it needs to develop to make it net zero ready. As a result, there will have been very few surprises in the net zero review for Prologis that it wasn’t already taking action on. We recommend every business across the sector, no matter its size, develop its own thinking and approach to net zero so they too not only survive the transition but instead capture the bold commercial opportunities that will be found in creating a low-carbon built environment. The net zero review gives vital insight into what this could look like and as such should guide strategic thinking in 2023. Steve Malkin is the founder of Planet Mark