UK transport: driving sustainability into day-to-day decision making

Driving down emissions and building sustainability within the transport industry is a vital part of the UK’s race to net zero and an endeavour laden with opportunity for both public and private sector alike.

There are challenges to overcome, of course, which is why Deloitte’s transport team has been hosting a series of round-table events – gathering figureheads of industry to drill down into the detail and seek solutions which can accelerate action.

During the latest event – the second held this year – attendees shared their views on the major benefits, and key challenges, of building sustainability into day-to-day operations.

Across the organisations present, it was evident that the ambition, strategy, and structure are all in place, with many highlighting the ongoing challenge of weaving sustainability into the fabric of such vast organisations. Whilst all organisations had a sustainability strategy, putting it into action beyond the central sustainability function was proving more challenging.

There is undoubtedly a desire to decarbonise but uncertainty about how to approach this; firms are concerned by the possibility of stranded investments, and they are looking for increased support and guidance from policy makers. Challenges also exist for regulators – how to align to changing Government action whilst ensuring proportionality of cost and action for industry.

We’ve distilled the discussions down to three ‘key challenges’ set out by industry leaders, highlighting the key challenges that transport organisations face in the drive to net zero.

Key Challenges

Organisations seek clarity from Government

A common theme across the organisations present is that they need clarity from Government on the long-term direction of travel. Though held in advance of the UK’s Climate Change Committee having released its annual report on the UK’s progress on net zero, many of the points made by those in the room were reflected in its findings.

That report called for greater transparency from Government to industry, and tallied with calls from attendees who highlighted that with no clear steer from Government, organisations do not know how to position themselves strategically to support the delivery of the transition and commercially benefit from it.

Regulators need more clarity from policymakers to remove the ambiguity from their role and provide organisations with the confidence they need to invest.

There was wide recognition of the need for local and central government to work together, particularly as it is the local authorities' actions that drive the most impact. Organisations noted the need for the public sector to draw on the expertise within the private sector to respond to sustainability objectives. Investment in the public sector is needed to coordinate and develop proposals which will create a huge opportunity for the private sector to deliver.

The challenge of measuring sustainability

Many organisations struggle with how to measure sustainability and tracking the indirect effects of their sustainability initiatives. There is increasing regulatory pressure for organisations to report on their entire value chain and the indirect effects on their supply chains and economies of other countries. Organisations need clear, internationally recognised methods of measuring the impact of their sustainability policies and Scope 3 targets must be embedded into all decision-making.

As part of the European Green Deal, the Corporate Sustainability Reporting Directive (CSRD) will transform how companies report on sustainability matters, aiming to improve the availability and reliability of sustainability information.

One of the central pillars of the CSRD is the requirement for in-scope companies to produce disclosures in accordance with the European Sustainability Reporting Standards (ESRS), which will involve reporting on a broad range of sustainability topics applying a “double materiality” approach, in which the risks and opportunities of the undertaking and the impacts of the undertaking represent a separate materiality perspective. The directive will also make it mandatory for reported sustainability information to be assured.

The challenge of supporting supply chains

The challenge for many organisations is tackling the carbon emissions within their supply chains. Known as Scope 3 emissions, these cover all associated emissions for the company that it is indirectly responsible for up and down its value chain - making them notoriously more difficult to understand and track.

Effectively monitoring Scope 3 emissions requires a consistent framework to be embedded into every project and programme across the entire organisation. Organisations should prioritise focus on their emissions hotspots, decide who within their organisations will be responsible for Scope 3 emissions and collaborate with suppliers and competitors alike to create awareness and encourage them to have better attitudes and behaviours.

Within the room there was collective agreement that understanding the indirect effect of supply chains was vital to their broader sustainability efforts. Similarly, it is becoming widely recognised that organisations which reduce their own emissions stand themselves in good stead to become preferred suppliers too, by virtue of assisting clients reduce their overall environmental impact.

Finally, organisations noted the importance of embedding social value in sustainability agendas as part of a wider education piece. Organisations need to be able to measure the value delivered to the wider community as part of their sustainability agendas to ensure that initiatives become firmly embedded in day-to-day business.