In a landmark case, the UK High Court recently ruled that the UK Government’s Net Zero Strategy (NZS) is not up to scratch. While the legislative environment is different here in Australia, there’s an important lesson we can all take from this ruling.
What was this net zero lawsuit about?
A lawsuit was brought against the UK Government by a collective of environmental groups, being Friends of the Earth, ClientEarth and the Good Law Project. They claimed the government’s net zero strategy “failed to include the policies it needed to deliver the promised emission cuts”.
While not opposed to the decision to set a net zero target or strategy, the organisations that brought the claim alleged the government failed to comply with further requirements of the UK’s Climate Change Act by not providing sufficient detail to explain how it was going to achieve its targets.
The net zero strategy in question, titled Build Back Greener, was initially published in October 2021. It took a systems approach, including electric vehicles, increasing offshore wind energy generation and hydrogen energy, residential initiatives, industry-led initiatives, natural resources, waste management and other matters to reduce the UK’s carbon emissions towards net zero.
What is a net zero strategy?
It’s been globally acknowledged that humans' impact on the environment needs to change to slow global warming. Governments around the world have set a target of net zero emissions by 2050, with interim targets also nominated for 2030 to assess progress. In response, organisations and agencies worldwide are developing strategies to reduce their carbon emissions. This process is often referred to as decarbonisation.
A net zero strategy first requires an organisation’s emissions ‘baseline’ to determine a benchmark from which to assess future progress. The strategy also needs to address how and where emissions can be actively reduced. To reach net zero, many organisations may need to offset any remaining emissions they cannot remove from their processes through the purchase of carbon credits or similar methods.
What was the ruling?
Ultimately, the UK High Court determined that the government’s NZS breaches the Climate Change Act. They did this by failing to provide the details required to explain or support how the government planned to achieve the targets.
The Secretary of State is now required to produce a new, detailed report outlining the quantifiable ways the carbon budgets will be met, which it must deliver to Parliament by the end of March 2023. The plans are required to stand up to scrutiny from the Climate Change Committee.
What can we learn from this ruling?
While the legislative landscape is different here in Australia, there is an important lesson we can all take from this ruling – no matter our size or location, or good intentions.
It’s critical to ensure any net zero or sustainability strategy has a clear, robust plan on how the organisation will achieve its targets. A high-level statement might seem well-intentioned but could land any organisation in hot water without the relevant supporting detail to outline how it will achieve its goals. A lack of sufficient detail could be seen as greenwashing — the practice of portraying a company or product as being more environmentally or socially friendly than it is—and a risk to reputation. Or worse, organisations could find themselves in trouble with regulators (or the courts, as in this case) for making misleading statements.
Australian regulators have been very clear for some time that greenwashing is high on their agenda to stamp out. Late last year, Australian Securities and Investments Commission (ASIC) released the Corporate Finance Update – Issue 6. This publication clarified ASIC’s expectations on net zero greenhouse gas emission reporting, noting that forward-looking statements but may be misleading if not underpinned by reasonable grounds.
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