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KPMG: UK ranks top in G7 for net zero readiness

Author: ICAEW Insights

Published: 20 Oct 2021

The UK has been named most advanced of the world’s leading economies in terms of reaching net zero by 2050, according to a recent report, but faces significant challenges ahead.

KPMG recently published its first-ever Net Zero Readiness Index (NZRI), created to assess countries’ readiness to transition to net zero. The UK leads the G7, with only Norway judged to be better prepared. 

The report compares the progress of a selection of countries in reducing the greenhouse gas emissions that cause climate change and assesses their preparedness and ability to achieve net zero by 2050.

It uses 103 indicators, recognised as key drivers to achieving net zero, and features the top 25 performing countries and seven ‘countries to watch’ were identified, with Norway, the UK and Sweden filling the top three spots.

Simon Virley, Vice Chair and Head of Energy and Natural Resources at KPMG in the UK said: “The UK has made great strides on decarbonisation, particularly in the power sector, over the past decade and we are now halfway to net zero. We also have a strong political consensus and a world-leading framework for tracking progress put in place by the Climate Change Act.”

Significant challenges

While the Climate Change Committee has highlighted in its latest annual report that the UK is not currently on track to hit its 4th, 5th or 6th carbon budgets, the Index highlights that it, along with some other countries, is relatively further advanced than some of its peers.

Virley continued: “However, as the Climate Change Committee has said, there are many challenges ahead and the next phase of decarbonisation is going to be far more difficult than the progress made over the past decade. The focus now has to be on delivery against the ambitious targets the government has set.”

The UK, which is preparing to host the COP26 Climate Summit, took overall second place despite facing particular challenges around the decarbonisation of heat and buildings. It is recognised for the fact that net zero enjoys cross-party political support and for having clear, legally-backed targets that have enabled the comparatively swift decarbonisation of the country’s power generation sector.

How Norway made the number one spot

Despite being one of the world’s largest oil and gas exporters, Norway topped this year’s NZRI, partly due to private and public investment in renewable energy and electrified transport across the country.

In 2016, the Norwegian Parliament voted to bring forward its target date for carbon neutrality from 2050 to 2030. However, despite its top ranking, the nation still faces significant decisions over how it continues to tackle challenges in its transition to net zero.

Neighbours to Norway, Sweden, is ranked third for being ‘highly ambitious’ and an international advocate for climate policy, green energy and technology. The country’s next step to net zero is to reduce its continued reliance on agricultural exports and imports.

Richard Threlfall, Global Head of KPMG IMPACT, said that climate change is the existential challenge facing humanity, and that it is vital that every individual, organisation, and country collaborates to an unprecedented degree, and with transparency and honesty. “I hope that the NZRI will encourage countries that have a long way to go to learn from those who are making the most progress and encourage everyone who reads it to play their part in getting us to net zero”, said Threlfall.

The KPMG 2021 Net Zero Readiness Index was produced by KPMG IMPACT, established last year to support, and empower the global organisation and KPMG firms’ clients in delivering on the UN’s Sustainable Development Goals – from ESG & Sustainability to Economic & Social Development, Sustainable Finance, Climate Change and Decarbonisation and Measurement, Assurance & Reporting.

Useful links

ICAEW’s Climate Summit is a five-day virtual summit of events, videos, podcasts and articles running between 18 -22 October 2021 to help chartered accountants act on climate. This is the first such summit bringing ICAEW members from across the profession together on the issue of climate change. To register or for more information click here.

Members who want to explore more climate change content can be part of the Sustainability and Climate Change Community and visit ICAEW’s COP26 Hub: acting together on climate.

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