Net Zero and regulations

The United Kingdom has committed to reducing its carbon emissions to net zero by 2050, which means that the amount of carbon dioxide produced will be the same as, or less than, the amount of carbon dioxide that’s removed. Effectively, no further carbon dioxide will be added to our atmosphere. To support this, the Government has committed to reducing carbon emissions by 78% by 2035, and to decarbonise our power system by the same year.

In York and North Yorkshire, the Routemap to Carbon Negative sets out the region’s ambitious plans to be net zero carbon by 2034 and carbon negative by 2040. The

These ambitious goals is part of a broader international effort to combat climate change and transition to a more sustainable and environmentally responsible society. While the net zero target represents a significant stride toward a greener future, it also has substantial implications for businesses operating in the UK, though our understanding of what this means in practice is still evolving as the national and local policies are being developed.

As public awareness, coverage and understanding of net zero grows, you might worry that you have missed important policy changes, but much of the regulation that will help the UK achieve net zero has actually been in place for some time, and is achievable for many businesses – you may already be doing it! On this page, we’ll look at the some of the changes to be aware of when planning for your business’ future.

Financial implications

Net zero will have financial implications for businesses. While transitioning to sustainable practices can involve costs, there are also financial incentives available for businesses that invest in green technologies and meet carbon reduction targets. Making the change will also save money by reducing energy usage in the future, and consumers are increasingly looking for products and services that can show their commitment to sustainability.

Stricter carbon emission limits

One of the most immediate impacts of net zero regulations on UK businesses is the introduction of stricter carbon emission limits. Companies will be required to significantly reduce their carbon footprint as part of our overall effort to reduce emissions, making it essential for industries with high emissions, such as energy, transportation, and manufacturing, to adapt their practices and invest in cleaner technologies. Conducting a sustainability audit will help you identify where you may be generating the most emissions in your business, and where you can make a difference, such as through implementing energy-saving measures in your premises or switching to a green energy tariff.

Increased reporting requirements

Businesses will face more rigorous compliance and reporting requirements under net zero regulations. Currently, large companies (defined as quotes companies, or companies with either a turnover of £36 million or more, a balance sheet of £18 million or more; or 250 employees or more) must monitor and report their carbon emissions through the Streamlined Energy and Carbon Reporting (SECR) scheme. Though there is currently no requirement for SMEs to do the same, they may be asked to share their emissions if they are part of a larger company’s supply chain. It will also be a useful exercise to help identify savings, gain a competitive advantage, demonstrate their sustainability commitment, and potentially access sustainability-related funding. You may want to look into how you collect your energy data – this report from Edie examines how to optimise your data collection through a cost-effective metering and data collection solution.

Transition to clean energy

The push for net zero requires a transition to cleaner and more sustainable energy sources. Businesses must consider investing in renewable energy, energy-efficient technologies such as electric vehicles (particularly with sales of new petrol and diesel cars to be ended up 2030), new heating systems (businesses can apply for boiler upgrades), and green infrastructure. This shift can lead to increased upfront costs but will save money in the longer-term and is essential to reduce your carbon footprint and energy consumption. There is funding available to support this switch, Ofgem have a list of advice and links to energy efficiency grants and schemes.

Supply chain

As part of net-zero strategies, businesses will need to scrutinise their supply chains to ensure they meet sustainable criteria. This means assessing the environmental impact of suppliers and making changes to align with responsible sourcing practices. Warwick Business School has written a longer introductory guide on reducing your supply chain’s carbon footprint, and you can also read our guide on reducing waste in your supply chain.

The impact of net zero on UK businesses is profound and far-reaching. While it presents challenges and changes, it also create opportunities for innovation, market differentiation, and long-term sustainability. Businesses that proactively adapt to these regulations by reducing carbon emissions, adopting cleaner technologies, and aligning with responsible sourcing practices can not only meet regulatory requirements but also position themselves as leaders in a greener, more sustainable future.

Learn more

Check out our net zero toolkit for businesses

Find out what being a sustainable business means

See the latest regional developments in the York and North Yorkshire Net Zero Hub