In late June 2021, 38% of businesses reported that they are taking at least one action to reduce their greenhouse gas emissions, while 24% reported that they are intending to act in the next 12 months.
Nearly half of businesses who are currently taking actions to reduce emissions are more likely to take action in the coming year (46%), also in late June, compared with those that are not yet taking action (11%).
The most recent data on businesses net zero actions in early October says ‘implementing change being costly’ was the main barrier preventing businesses from acting (20%), while over 1 in 10 (13%) of those not taking action were ‘unsure of how to measure their emissions’.
Over a quarter of businesses (28%) also reported producing no emissions in October 2021.
Businesses’ spending on energy as a proportion of total purchases varied between 3% and 25% across industries on average in 2018; the transport and storage sector had the highest average proportion, at 25%.
The UK Government has committed to reaching net zero by 2050, as part of a commitment to the global 2015 Paris Agreement to keep rises in average global temperatures to below 2°C and as close to 1.5°C as possible.
The UK Government has urged businesses to take action to reduce emissions to contribute to the UK-wide net zero by 2050 target. In 2020, businesses accounted for 18% of all UK greenhouse gas emissions, based on provisional BEIS territorial emissions data (see the UK climate change statistics portal for an explanation of the main UK emissions measures).
As part of the United Nations’ race to zero campaign, large companies are encouraged to register and pledge to the business ambition of 1.5°C. As of May 2021, over 106 large UK companies had done so. The UK Government’s Climate Change Business hub supports small and medium-sized enterprise (SME) to commit to halving their greenhouse gas emissions by 2030 and achieve net zero emissions by 2050. SMEs made up 99.9% of the UK’s private businesses in 2019, accounting for over half of employment and turnover.
This article looks at:
businesses actions and intentions to act to reduce their emissions in the next 12 months and what actions they may be taking, using the Office for National Statistics’ (ONS) rapid-response Business Insights and Conditions Survey (BICS); and
patterns of energy use across industries using existing data from other ONS business surveys.
The following section includes analysis of two waves of the Business Insights and Conditions Survey (BICS). These results have been created using the BICS microdata. Due to a lack of imputed data, these estimates may differ from published estimates. A detailed description of the weighting methodology can be found in the recently published Quality and Methodology information report.
Questions on net zero appear every 4 waves in BICS. During 14 to 27 June 2021 (Wave 33) businesses were asked about current actions and future intentions to reduce emissions. Between 4 to 17 October 2021 (Wave 41) businesses were asked about current actions that prevented further action. Due to changes in response options on the net zero questions we did not compare results across waves or use earlier waves of BICS which included these questions.
Actions and intentions
The most common action to reduce emissions currently being taken by businesses is switching to low emission lightbulbs (29%). The least likely actions that businesses reported are installation of own renewable electricity or heating (2%) and installation of charging points (3%).
The most planned action by businesses in the year ahead is switching to low emission lightbulbs (11%), while installation of their own renewable electricity or heating sources remains the option reported the least (1%).
Among those businesses acting, 17% reported currently taking one action with 15% intending to take one action in the next 12 months. Some 9% of businesses acting are currently taking three or more actions, and 3% are planning to take three or more actions in future.
Nearly half of all businesses reported they are taking no current action to reduce their emissions (46%), and a further 16% reported they are ‘not sure’. Some 41% are not planning any future action, and 34% are unsure about whether they may act in the future.
Of the 46% of businesses taking no current action, 70% are not intending to take any action in the next 12 months, and 11% intend to act in the next 12 months. For the 38% of businesses that are currently taking 1 or more action, 46% reported their intention to continue to act in the coming year.
Action by industry
In early October 2021, businesses were given the option to report that they 'did not produce any emissions' when asked about their actions taken to reduce emissions. Businesses self-reporting that they produce no emissions does not mean that the business produced no emissions or that they are 'net zero' businesses (for example reducing emissions to close to zero and offsetting any residual emissions). It may mean that some businesses are not aware of the emissions that they produce.
Responses in October varied widely across different industrial sectors, with more than a quarter of businesses (28%) reporting producing no emissions and over a third of businesses (37%) reporting taking at least one action to reduce emissions across all industries.
In the manufacturing industry, 8% of businesses reported producing no emissions – this is the lowest proportion, followed by the accommodation and food service activities at 13%. Almost half (47%) of businesses in the arts, entertainment and recreation industry and 37% of those in administrative and support service activities industry reported producing no emissions.
Over half of businesses in the real estate (57%), accommodation and food service activities (54%), education (58%) and manufacturing industries (51%) reporting taking at least one action to reduce their emissions. By comparison, over a quarter of businesses in the construction (30%) and manufacturing (26%) industries reported not currently acting.
Additionally, in early October 2021 businesses were asked what prevented them from taking action. The following section explores the challenges that businesses mentioned.
Challenges facing businesses in reducing emissions
For businesses that reported not acting to reduce their emissions, more than a third (39%) reported that ‘nothing was preventing them from taking action’. Uncertainty around measuring emissions’ was reported by 13% of businesses not taking action, while 29% were ‘unsure’. The most reported issue preventing action being taken by businesses not currently acting was the ‘cost of implementation’ (20%).
‘Cost of implementation’ was also the most common issue preventing further action being taken for those already acting (21%). A similar number of those taking action were also ‘unsure’ of issues preventing further action (29%).
Energy use by businesses is a major source of their emissions. Analysing businesses’ spending on energy relative to other inputs can help us understand how different types of businesses and sectors might be affected by requirements to reduce emissions.Nôl i'r tabl cynnwys
Data from the Office for National Statistics’ (ONS) Annual Business Survey (ABS) provides historical context for the more recent business actions and intentions on emissions from the Business Insights and Conditions Survey (BICS).
The ABS covers the non-financial business economy, which is approximately two-thirds of the UK economy. Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the ABS Quality and Methodology Information report and ABS technical report, published on the ABS methodology page.
We find that businesses in the energy sector spend the most on energy on average, followed by the mining and quarrying sector. The average proportion of businesses’ total purchases spent on energy changes slowly over time, and industry averages mask substantial variation within industries.
Overall energy expenditure
The business level data in the ABS allows average spending on energy used for running the business to be calculated across all sampled businesses in each industry. This does not include purchases of energy for resale and distribution without further processing. For example, it would capture the energy used by a fuel wholesaler to operate and distribute the fuel, but not the cost of the wholesaler’s purchase of the fuel itself, which is sold on directly to customers.
Businesses in the electricity, gas, steam and air conditioning supply industry spent the most on energy in 2018: £494,000 per business on average. This likely reflects the importance of energy inputs for producing energy outputs, and that businesses in this sector tend to be larger than average.
Spending on energy used for running the business can be divided by total purchases of energy, goods, materials and services to calculate the share of a business’ total purchases, which are spent on energy. The industry sectors with the lowest average expenditure on energy were professional, scientific and technical activities (£3,000 per business) and administrative and support service activities (£4,000 per business).
In 2018, businesses in the transportation and storage sector had the largest share of purchases spent on energy, on average (25%), followed by mining and quarrying (14%) and agriculture, forestry and fishing (13%). Businesses in the wholesale and retail trade, repair of motor vehicles and motorcycles sector had the lowest average proportion of purchases on energy (3%).
Energy expenditure also varies widely across firms within industry sectors, especially in those sectors with the highest proportion of overall expenditure on energy. In transportation and storage, a thicker upper tail of the distribution (capturing firms spending proportionally more on energy) brings up the average proportion of spending on energy. A similar proportion of firms with a high-energy input mix can also be seen in the agriculture, forestry and fishing industry, while industries that use a smaller share of their overall expenditure on energy, such as wholesale and retail, information and communication, and administrative and support service activities, tend to be more similar across firms. In the histograms in Figure 8, this can be seen by the higher peaks at the left side of the charts.
Figure 8: There is substantial variation of energy shares within industries
Industry-level histograms of energy input shares, UK, 2006 to 2018
Coverage reflects the Annual Business Survey (ABS), which excludes the financial and insurance sector, public sector organisations and part of the agriculture sector. More details can be found in the ABS Quality and Methodology Information. Histograms capture the distribution of energy shares across broad industry groups, pooled across 2006 to 2018.
In these industry-level histograms, bins containing less than ten firms have been suppressed to zero to prevent disclosure.
Download the data
There was no overall trend across industries’ average share of business expenditure on energy between 2006 and 2018. The mining and quarrying sector saw the largest increases in the share of spending on energy over the period; water supply, sewerage, waste management and remediation activities and agriculture, forestry and fishing saw the largest decline.
Nôl i'r tabl cynnwys
Business insights and impact on the UK economy
Dataset | Released 4 November 2021
Weighted estimates from the voluntary fortnightly Business Insights and Conditions Survey (BICS) about financial performance, workforce, prices, trade, and business resilience.
This article makes use of the following data sources:
- Business Insights and Conditions Survey (BICS) 2021 (two waves)
- Annual Business Survey (ABS) 2006 to 2018
- Annual Purchases Survey (APS) 2015 to 2018
Analysis of businesses’ current and intended actions to reduce emissions, as well as the challenges preventing them from reducing emissions, uses the Business Insights and Conditions Survey (BICS). The survey is voluntary, and the results are experimental. Businesses could also provide “other” responses detailing ways they were reducing their carbon emissions, which are not captured in the BICS microdata. Businesses could select multiple responses for questions on actions to, and challenges on, reducing emissions. Not all responses may be relevant to all businesses, for example “electrifying your vehicle fleet” will not be applicable for businesses that do not have business vehicles. Analysis has been done for businesses that are currently trading, temporarily closed or paused trading. Businesses that have permanently stopped trading have not been included.
Weighting and Imputation
All results are weighted by count to ensure businesses between 0 and 249 employees are representative of the UK business population. Figures may not match published Business Insight and Conditions (BICS) results as the microdata used does not include imputations.
More information on the imputation and weighting methodology is available in the Business Impact of Coronavirus (COVID-19) Survey (BICS): preliminary weighted results.
Changes to the relevant questions in the Business Insights and Conditions Survey (BICS)
The Business Insights and Conditions Survey (BICS) rotates questions on net zero every four waves.
The first wave of questions used here are from Wave 33 and included these questions:
- which of the following actions, if any, have you taken to reduce your business' emissions?
- which of the following actions, if any, does your business intend to take in the next 12 months to reduce emissions?
The second round of net zero questions used (Wave 41) the following questions:
- which of the following actions, if any, have you taken to reduce your business' emissions?
- do any of the following prevent action being taken by your business to reduce its carbon emissions?
The next set of net zero questions is due to appear in Wave 45 (29 November to 12 December 2021).Nôl i'r tabl cynnwys
We are working on further analysis to investigate within-sector variation in energy use and the responses of UK firms to energy price changes.
We will explore how data on businesses’ energy spending compares across the Annual Business Survey (ABS), the Low Carbon and Renewable Energy Economy survey and the Annual Purchases Survey, alongside other sources on energy prices, use and expenditure. Using firm-level and industry-level data from these surveys, we will investigate how firms have adjusted to rising fuel costs in their production processes and input choices, and the impact this could have on the UK’s transition to net zero.Nôl i'r tabl cynnwys
Manylion cyswllt ar gyfer y Erthygl
Ffôn: +44 1633 455539