UK leads G7 in KPMG’s first-ever Net Zero Readiness Index
Nation deemed the G7 member ‘most prepared’ and ‘ready’ to reach Net Zero by 2050
Nation deemed the G7 member ‘most prepared’ and ‘ready’ to reach Net Zero by 2050
- First ever Net Zero Readiness Index (‘NZRI’) created to assess countries’ readiness to transition to Net Zero
- UK the most advanced of the world’s leading economies in terms of Net Zero Readiness, but faces significant challenges ahead
- Norway, UK and Sweden make up the three most prepared nations globally
- A lack of delivery capability is a weak point in global Net Zero emissions ambitions
The UK has been ranked as the leading G7 nation in KPMG’s first-ever Net Zero Readiness Index (NZRI).
Only Norway is judged to be better prepared by the report, which 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.
Using 103 indicators, recognised as key drivers to achieving Net Zero, the top 25 performing countries and seven ‘countries to watch’ were identified, with Norway, the UK and Sweden filling the top three spots.
While the Climate Change Committee has highlighted in its latest annual report that the UK is not currently on track to hit the 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.
Of the countries surveyed, which together account for approximately eight percent of global emissions, only nine have legally binding commitments in place.
To stimulate delivery capability at the sector level, these targets need to be backed by robust strategies, policies and support mechanisms. In most jurisdictions, a nation’s NZRI preparedness is mirrored by the level of readiness at the sector level.
A lack of delivery capability is also a weak point. The Index shows that those countries with a Net Zero target in place – whether it is legally binding or policy – demonstrate stronger capability across sectors.
The report also shows a correlation between prosperity and the readiness to achieve Net Zero, highlighting the need to do more to support developing economies.
Insights from all surveyed nations show that whilst the global financial sector is increasingly factoring climate risk into its investment and lending decisions, governments have a critical role to play in enhancing access to such financing by creating enabling environments such as sustainable finance strategies, policies and regulatory frameworks.
These country insights also help to highlight the importance of political alignment and public support in the success of key decarbonisation initiatives.
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.
Similarly the UK, which is preparing to host the COP26 Climate Summit next month, 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.
Norway’s Nordic neighbor, 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.
The NZRI top 25 countries were:
1) Norway 2) United Kingdom 3) Sweden 4) Denmark 5) Germany
6) France 7) Japan 8) Canada 9) New Zealand 10) Italy 11) South Korea
12) Spain 13) Hungary 14) United States of America 15) Singapore 16) Chile 17) Australia
18) Brazil 19) Poland 20) China 21) Malaysia 22) Argentina 23) Mexico 24) Turkey
25) United Arab Emirates
Richard Threlfall
Global Head of KPMG IMPACT
KPMG in the UK
Simon Virley CB FEI
Vice Chair and Head of Energy and Natural Resources
KPMG in the UK
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The seven countries to watch were:
India , Indonesia , Nigeria ,Russia , Saudi Arabia , South Africa , Thailand
The publication of the Net Zero Readiness Index comes ahead of November’s crucial COP26 Climate Summit in Glasgow.
The United Nations outlines that greenhouses gases in the atmosphere are at their highest level for three million years, driving a global temperature increase of 0.85 degrees Celsius between 1880 and 2012 and a rise in sea-levels of 19cm. Political and business leaders are becoming increasingly aligned that immediate action is required to stop the catastrophic social, environmental and economic impacts further temperature rises could have on the planet.
Richard Threlfall, Global Head of KPMG IMPACT, said: “Climate change is the existential challenge facing humanity. But we need to face what seems like an overwhelming challenge with positivity and a sense of collective responsibility. 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.”
Simon Virley, Vice Chair and Head of Energy and Natural Resources at KPMG in the UK, added: “The UK has made great strides on decarbonisation, particularly in the power sector, over the past decade and we are now half way 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.
“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 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.
-ENDS-
For media queries, please contact:
Brian O’Neill, Senior Manager, Global External Communications
T: +44 7823 668 689
E: Brian.O’Neill@kpmg.co.uk
About the Net Zero Readiness Index (NZRI)
The Net Zero Readiness Index (NZRI) is a tool that compares the progress of 32 countries in reducing the greenhouse gas emissions that cause climate change and assesses their preparedness and ability to achieve Net Zero by 2050. The 32 participating countries have been grouped into two categories: the top-performing 25 countries in the race to Net Zero based on progress to-date and established initiatives; and seven countries to watch where there are significant opportunities to advance decarbonisation efforts through large scale projects and emerging escalation initiatives. For each of the 32 countries, the NZRI considers 103 indicators that KPMG considers as key drivers to achieving Net Zero. The indicators have been split between national preparedness and sector readiness. National preparedness considers a country’s national commitment to decarbonise, its past decarbonisation performance, country-specific drivers of emissions such as population growth, and the national enabling environment for decarbonisation. Sector readiness covers electricity and heat; transport; buildings; industry; and agriculture, land use, land use change and forestry (in the report referred to as agriculture, land use and forestry). The index looks at the indicators for sector readiness through three lenses: decarbonisation status, government action and delivery capability. The indicators are aligned to the fifth assessment report of the UN’s Intergovernmental Panel on Climate Change published in 2014[i] and insights from KPMG experts in each country providing local context and insight into challenges, successes and imminent initiatives. The intended audience for the NZRI is governments and the public sector, multilateral organisations, investors and financial institutions, the private sector and the general public. It is likely to be of particular interest to any entity, department, business or person with an interest or responsibility in advancing the Net Zero agenda. This study uses the World Resources Institute definition of ‘Net Zero’. Primarily, this involves reducing greenhouse gas emissions caused by humans as close as possible to zero. Remaining emissions are balanced by an equivalent amount of carbon removal from the atmosphere, effectively neutralising humanity’s future impact on the world’s climate. The main greenhouse gas is carbon dioxide, and work towards Net Zero is often called ‘decarbonisation’ to reflect the focus on this gas, which is released when fossil fuels are burnt. However, emissions of methane and nitrous oxide also make significant contributions to climate change and are included in this index.
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About KPMG IMPACT
Launched in June 2020, KPMG IMPACT is a platform to support and empower KPMG professionals to assist clients in fulfilling their purpose and helping deliver on the UN Sustainable Development Goals. It helps clients across ESG & Sustainability, Economic & Social Development, Sustainable Finance, Climate Change & Decarbonisation, and Measurement, Assurance & Reporting.
Click here to read more about KPMG IMPACT.