A Blueprint For Action: Microsoft UK On Easing The Journey To Net-Zero
Craig Wellman, Director of Financial Services at Microsoft UK, explains how the company is helping UK businesses achieve their net-zero targets.
Following the close of COP26, sustainability is at the forefront of everyone’s minds. The conference highlighted the need for organisations to drive greater investment, focus and action to make the world a more sustainable place to live.
Microsoft: Accelerating The Journey To Net-Zero
Ahead of the conference, Microsoft published an academic study in partnership with Dr Chris Brauer, Goldsmiths, University of London, that painted a picture of the UK’s current sustainability climate and a blueprint to accelerate action. Its findings offered a stark warning – despite strong sustainability commitments and ambitions – only 41% of UK organisations are set to hit the government’s 2050 net-zero target, currently.
Why Are UK Businesses Struggling With Sustainability?
In benchmarking UK organisations’ progress on sustainability, the findings illustrated that UK leaders are struggling to turn sustainability commitments into tangible action and the financial services industry is no exception. When looking specifically at sector data, the team of academics found that currently, only 16% of financial institutions surveyed will be net-zero by 2050 – a number far below the national average of 41%. Although every organisation must play their part in reducing global warming, the UK’s financial institutions are in a unique position to drive change, not just for themselves, but for the entire UK economy. The financial services sector has the power to lead by example and by reducing their exposure to high carbon sectors, using tools to measure the impact of investments on the planet, they can encourage sustainable growth and investment across the nation. Before diving into how financial institutions can turn their commitments into action, it’s important to understand where exactly they’re struggling.
For the majority, financial organisations are failing to set out policies that enact their sustainability strategies, for example, our research found that only 29% of UK financial organisations currently apply environmental standards in their supply chain. Second to that was a lack of in-house skills and expertise in sustainable practises, followed by a struggle to shift their corporate thinking towards more sustainable business operations. Many also found it difficult to identify the right technology to help, while calculating costs was another problem area.
A Blueprint To Achieve Net-Zero
Despite the struggle to create a clear path to a greener future, the appetite for improvement is there, the UK’s financial institutions are willing to change, they just need help to get there. This is in part thanks to growing pressures from regulators, customers and even employees to become more sustainable.
To support the sector in accelerating its journey to net-zero, we worked with academics led by Dr Chris Brauer, Goldsmiths, University of London, to create a series of short and long-term steps – a blueprint – that financial organisations can follow to help achieve net-zero; these steps not only explain how financial institutions can improve their own sustainability performance but how they can play a part in building the wider net-zero economy.
The blueprint includes steps such as integrating the negative impact of climate change into extended risk assessments across the whole organisation to boost financing for investment in net-zero measures. Organisations should also include an environmental sustainability disclosure in all corporate reporting and accounting metrics. The financial service sector can also explore linking executive pay to progress on climate issues as an incentive for sustainable development. They should also work to improve access to finance for green investment by helping the Government establish robust, long-term policy frameworks and removing market barriers. Other measures laid out in the blueprint include accounting for natural capital, investing in sustainable infrastructures such as energy systems, water and transport networks and supporting greater supply chain resilience through innovative financial instruments and new, green investment portfolios.
Finally, the blueprint calls for increased investment in technological innovation by switching to less energy-intensive digital infrastructure and harnessing more sophisticated, environmentally friendly solutions, such as machine learning, digital twin, and cloud-based technologies.
The above may look like a lot of work, but it’s an investment that won’t fall short to pay its worth back, both for the planet and for the organisation. What’s more, potential employees – particularly the younger workforce – are increasingly demanding employers place sustainability and ethics higher up the corporate agenda. Our research found that only 22% of financial services employees believe their work premises are as friendly as their own home, and over half of them also said the strength of a firms’ sustainability plan would impact where they chose to work.
Organisations already reaping the benefits of following more sustainable practices include NatWest, which, together with Microsoft, are helping UK businesses better understand their carbon footprint through innovative measurement tools and tailored action plans to reduce their carbon emissions. This approach allows NatWest to reduce their own carbon footprint by helping their customers, a prime example of the ripple effect that financial services institutions can have on the UK economy by placing sustainability high on their priority list.
Ultimately, we all need to work together to solve the climate crisis and financial institutions must play their part in helping create a better, cleaner world for everyone. Whether that be implementing new data measurement tools to help customers and the organisation itself track sustainability progress, or helping identify new ways for customers to discover green investment opportunities, each step will help a business do their bit to improve the planet, while they reap the rewards in terms of reputation, talent acquisition and more.