Net Zero: we have the ingredients, now we need the ambition

By Michael Lewis, CEO at E.ON UK

Crisis often brings people together and this has been exemplified by our nation’s united front against the coronavirus pandemic, supported by UK manufacturers meeting the nation’s demand for essential supplies such as food and drink.

Yet, the immense toll the pandemic has taken on the manufacturing industry has been evidenced by the Make UK/ BDO Manufacturing Outlook Q3 survey, which revealed that the balance on investment intentions fell to -32 per cent from -26 per cent in the last quarter.[1]

As food and drink manufacturers devise recovery plans to build back better in the face of financial hardship, they cannot afford to lose sight of the other critical challenge we’re facing: the Government’s ambitious target of reaching net zero emissions by 2050.

Ultimately, it will be the actions of industry, and manufacturing in particular, that will define our success in delivering on this. As the UK’s largest manufacturing sector, the food and drink industry has a critical role to play.

Our latest report, conducted in partnership with Make UK serves as both a timely reminder of the momentum growing across the manufacturing industry and a blueprint to accelerate towards the UK’s pathway to net zero.

The path has been paved for a greener future

The encouraging findings from our research, undertaken before the coronavirus outbreak, show that the industry’s awareness of net zero is high and manufacturers who are investing in energy efficiency are already enjoying commercial benefits.

A greener future was evidently on the minds of business leaders as we entered 2020, and despite the economic crisis which continues to unfold as a result of the pandemic, it still commands a place at the forefront. Our recovery plans must be built on renewed sustainable progress – because investing in more sustainable infrastructure brings economic recovery which translates directly into jobs and skills.

The fact 40 per cent of manufacturers report increased margins, and 30% increased competitiveness, as a result of sustainability initiatives also vindicates the case for green investment to spur the nation’s post-coronavirus recovery and proves that energy must be held as a strategic imperative for all businesses.

A strategic imperative

Undoubtedly, there is considerable progress to be made and this will require overcoming barriers to further investment. These barriers are being felt more keenly than ever before and if our economy is to recover in a way that supports the UK’s net zero target, both government and the energy industry must find a way to break them down.

As a critical first step, the Government must set the agenda by demonstrating that our long-term trajectory to net zero emissions remains paramount, with renewed investment to encourage businesses to put the net zero target at the heart of their strategy.

Furthermore, growing consumer demand for sustainability indicates that business leaders must embrace the fact that ‘spend to save’ investment will be required and factor this into their long-term capital, or operational, expenditure plans.

Our industries, together, have a pivotal role

Whilst businesses weigh up the long-term opportunity cost of such investment, it’s positive to note that manufacturers continue to secure better deals, which in turn enable them to make immediate savings, by renegotiating energy contracts. However, our report also underlines a greater role for the energy industry in helping to address the lack of expertise on the benefits of improved energy efficiency.

It is vital that energy suppliers help food and drink producers of all sizes, with varying levels of existing sustainability measures, to fully appreciate the range of tailored solutions and scalable options available.

At E.ON, we offer 100 per cent renewables-backed electricity to eligible small business customers across Britain.[2] As the Food and Drink Federation’s recent report highlighted, 96 per cent of the UK’s 7,400 food and drink manufacturing businesses are SMEs – so this might present many with a vital first step towards a more sustainable and personalised energy system.[3]

The solutions scale rapidly; from high-efficiency LED lighting, HVAC upgrades and building management systems through to solar panels and battery storage, electric vehicles, and heat pumps. By working closer with energy providers, food and drink manufacturers can improve sustainability through smart and bespoke solutions that minimise operational expenditure.

Now is the time to accelerate sustainability

While rebuilding after coronavirus rightly remains the immediate priority for manufacturers, the UK’s net zero target remains by far the most significant challenge for our future. We must now navigate through this crisis, while holding our gaze firmly on the net zero ambition and deliver a green recovery.

Our report with Make UK signals that, while awareness of the net zero by 2050 target may be high, manufacturers are yet to fully appreciate that it is economically prudent to place sustainability at the heart of their business strategy. Clearly, both Government and the energy industry must do more to promote sustainable investment to help them drive our nation towards a greener future. Now is the time to advance the effort to reach net zero by 2050.

[1] Make UK/BDO Manufacturing Outlook 2020 Q3, Make UK

[2] Electricity sourced from E.ON’s renewable generation assets, supply agreements with independent UK wind generators and the purchase of renewable electricity certificates. The electricity supplied to homes and businesses comes from the National Grid.

[3] Food and Drink Industry Report 2020, The Food and Drink Federation

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