The Institute of Directors has published a white paper, ‘The Green Incentive: How to Put Net Zero at the Heart of Business Planning’.
The policy paper outlines four specific medium-term recommendations that will encourage business and especially small businesses, To play their role in decarbonizing the economy.
The government has set a target of national climate change by 2050. Lack of effective incentives and support for small and medium sized businesses to achieve their own net zero.
Therefore, IOD urges the UK Government to:
- Explain clearly that it wants every business to achieve net zero in its operations.
- Introduce several years of notice, lower corporate tax rates than companies that have achieved net zero.. This recommendation does not necessarily require greater use of taxpayer resources or, conversely, increases taxes for other companies. What’s important is that there is a wedge between the two to act as a clear financial incentive to achieve the desired change.
- Create a system for carbon footprint accounting that is consistent with existing methods for declaring company profits. Limited companies need to keep records and report their carbon footprint and use the information to determine which corporation is eligible for the tax band.
- Make an assessment of the suitability of the support available to companies for the net to be zero. Additional measures should be considered, such as the development of a recognized Kitemark scheme for companies to signal their progress towards the net zero, a strong professional path for zero carbon advisers, and measures to fill the reporting gaps as applicable for commercial homeowners. Inform SME tenants about the carbon footprint of their building use.
Kitty Usher, chief economist at the Institute of Directors and author of the report, says: “Since the government has introduced its net zero target, there is no structural policy initiative to increase the number of small businesses taking their own steps. Instead, SME’s support for decarbonization relies primarily on firms that make an active decision to find out.
“This does not mean that SMEs do not want to play their role. Our own research shows that business leaders are keen to understand what they need to do, but there is uncertainty in the short-term business world for change, especially here and now, with other pressures on their organization’s available time and resources. .
“Peacemail and sector-based initiatives can only go so far. By creating a future wedge between the corporation tax paid by businesses that are net zero and those that are not, there will be a clear impetus for all businesses to achieve the desired change. If implemented, we believe that this simple but important policy change will be a huge step forward in meeting the country’s climate change goals. “