Business calls for government policies to unlock net-zero investment

The vast majority (91%) of business leaders see the transition to net zero as an investment opportunity, but just 1% of 250 executives from big global firms say the transition is on track. Publishing a report based on a survey of firms with a combined market capitalisation of more than $2trn, the World Business Council for Sustainable Development (WBCSD) calls for bold government policy to drive the next wave of large-scale investments in the transition to net zero. “Achieving plans to halve emissions by 2030 and meet the 1.5°C climate target hinges on private sector investment,” the WBCSD says in its report, which is published in partnership with Bain & Company, the Breakthrough Agenda and the Marrakech Partnership. Three-quarters (74%) of businesses surveyed have boosted their investment in the net-zero transition over the past three years and 35% have committed more than half of their capital investments. But the survey finds 90% would invest more if governments implemented policies that addressed some of the pressing barriers to investment. According to the report, businesses are frustrated with current policy and market structures that fail to reward low-carbon investments. The report says governments could do more to encourage decarbonisation in sectors such as steel, cement, aviation, shipping and chemicals. The report highlights how governments can unlock substantial private-sector investment by tackling market barriers to deploying low-carbon technology. Two-thirds (66%) of those surveyed say the lack of a strong investment case and slow scale-up of infrastructure are the most significant barriers to accelerating large-scale investment. The WBCSD says governments can unlock more private sector investment. “Businesses identify the need for sector-specific industrial policies with a focus on streamlined permitting, mandated demand, revenue guarantees for early-stage technologies, government investment in infrastructure and innovation support,” the report says. Businesses also say macroeconomic challenges are delaying project development, including 50% inflation in plant capital expenditure costs and rising renewable energy prices. At the same time, the WBCSD criticises limited supply of low-carbon fuel, the slow rollout of charging networks and uncertain revenue models for putting the next wave of investments to achieve net-zero goals at risk. Peter Bakker, president and CEO of WBCSD, said: “This report is the first pulse-check on the net-zero transition from a business perspective, offering a clear snapshot of where we stand and where we’re falling short. “It shows the critical gaps we need to close to make the net-zero transition possible. Businesses are stepping up, but without decisive government action, we risk missing out on the unprecedented investment opportunities ahead.” The survey also reveals that 85% of respondents believe greater international cooperation is important for the net-zero transition, but only 25% say this is currently working. “Deeper and more effective coordination among major economies, particularly on harmonised definitions and standards, demand mandates, fit-for-purpose international trade rules and cross-border infrastructure”, is needed going forward, the report says. Cate Hight, partner at Bain & Company, said there has been progress but that this needs to accelerate. “The technologies are available, and we see strong policy, including standards, subsidies and direct investment, in place in some geographies; these are putting wind in the sails of the investment case for energy transition. However, we’re not moving quickly enough,” she said. “Additional policy support is crucial to set the market conditions necessary to enable a clear business case for adoption of lower carbon technologies, at scale, in this crucial decade,” she added.

Business calls for government policies to unlock net-zero investment

90% of large global firms would invest more in transition if supported by stronger policies

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