What Is the Climate Change Act 2008 | Does It Apply to My Business?

The Climate Change Act 2008 was cutting edge legislation which set out the UK national framework to reduce greenhouse gas (GHG) emissions and adapt to our changing climate. The more recent amendment, The Climate Change Act 2008 (2050 Target Amendment) Order 2019, contains the UK net zero commitment. Whilst it is for the Government to meet this target, collaboration is key to success and UK businesses play a pivotal role.

The Climate Change Act 2008

The Act was passed by an overwhelming cross-party majority and contains four core pillars:

• Goal: 2050 Emissions Target (initially an 80% reduction in GHG emissions) and Climate Change Risk Assessment
• Pathway: Carbon budgets and National Adaptation Programme
• Toolkit: Governmental policies
• Monitoring framework:  The Climate Change Committee (CCC)

Every 5 years the independent CCC advises the Government on carbon reduction policies in its Carbon Budget Report. The Government then sets the binding carbon budgets to cap GHG emissions to enable the UK to meet its 2050 target. These budgets underpin governmental policy on cost-effective carbon reduction programmes to mitigate (reduce emissions) and to address risks identified in the Climate Change Risk Assessment. The CCC also advises on emissions reduction annually and how to adapt to climate change biennially.

The Paris Connection

The 2008 Act was amended following the Paris Agreement, 2015 arising from COP 21. The legally binding Agreement, applicable to its 194 current members, implemented a framework to track progress on emissions reduction and hold countries to account. It established a regular cycle for countries to update and enhance their Nationally Determined Contributions (NDCs). These are their climate pledges which are essential to keep within the Agreement’s commitment of limiting temperature increases to well below 2^oC and if possible, under 1.5^oC compared with pre-industrialised levels.

The Climate Change Act 2008 (2050 Target Amendment) Order 2019 followed on from the Paris Agreement to include the UK’s 2050 net zero commitment using 1990 as the baseline year. The UK’s current NDC is a commitment of an 81% reduction by 2035.

The Seventh Carbon Budget for 2038-2042 has been produced by the CCC in collaboration with stakeholders including businesses. The recommendations were adopted by Parliament in June 2026, setting a legally binding target of ~87% emissions reduction in the period between 2038 and 2042.

What Are the Recommendations to Achieve this Target?

The CCC Report outlined five routes to emissions reductions and a thriving green economy:

• electrification and low-carbon electricity supply encouraging the uptake of electric vehicles (EVs), heat pumps and renewables
• the use of low-carbon fuels in difficult to decarbonise sectors including aviation and shipping and carbon capture and storage (CCS) in the chemical and construction industries
• tapping into nature-based solutions such as increasing woodlands and peatland restoration   
• developing infrastructure for engineered removals such as CCS
• reducing demand for high-carbon goods and services through increased efficiency and the ability to make low-carbon choices.

The Green Economy

The Climate Change Act and adopted CCC recommendations has helped pave the way to a greener economy by setting out the Government’s path to net zero creating certainty for businesses and investors. It has demonstrated that it is possible to grow the economy and reduce emissions at the same time.

The CCC found that between 1990 and 2019 the UK had reduced emissions by 41% while the economy grew by 78%. The most recent budget is estimated to cost 0.2% of GDP per year primarily funded by private investors. This investment will help fund renewable energy projects which provides economic security against international fuel price shocks and create green jobs. In addition to providing energy security these measures can reduce energy bills and local air pollution.   

Transport is the highest emitting sector in the UK and produced 29% of emissions in 2023. The Government’s commitment to transition to zero emission vehicles (ZEV) helps drive the green economy and underpins the phasing out of new petrol and diesel cars sales from 2030 and a complete ban from 2035. Sales of ZEV are increasing with over 381,000 electric cars sold in the UK in 2024.

What are the Benefits to my Business?

Not only does decarbonising mitigate the impact of climate change, it also reduces local air pollution. Human-made air pollution can worsen respiratory and cardiovascular disease and is reported to contribute to a staggering 28,000 – 36,000 UK deaths every year. As well as reducing the impacts of climate related extreme weather events, reducing emissions is good for human health and wellbeing.

In addition, your business can save money from adopting energy efficiency measures. Investing in renewable energy can reduce costs as well as provide price stability. It can enhance your reputation and attract new environmentally aware clients and employees. Fundamentally, understanding your businesses’ carbon footprint can help ensure that you are legally compliant.

What Decarbonisation Legislation Applies to my Business?

Whilst the Climate Change Act does not directly apply to businesses, a whole raft of legislation has evolved to assist the government in meeting Net Zero commitments. Businesses must understand their legal obligations to encourage energy efficiency savings and a move to renewable energy. Further details are set out in the Policy and Legislation table below, but the main requirements are as follows:

• Finance Act 2000 – applicable to the industrial, commercial, agricultural and public services sectors.  A Climate Change Levy is charged for energy use. Discounts are available for some energy-intensive sectors that enter a Climate Change Agreement
• The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 - companies quoted on the stock exchange (small company exemption) are to publicly disclose their global carbon footprint (scope 1 and 2) as part of their annual reports
• The Energy Savings Opportunity Scheme (Amendment) Regulations 2023 – large undertakings are to undertake energy audits to encourage energy efficiency
• The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 – streamlined energy and carbon reporting (SECR) framework requirement for large undertakings to verify data set out in support of scope 1 + 2 emissions audits
• The Greenhouse Gas Trading Scheme Order 2020 – GHGE permit or an HSE permit required for large scale power and heat generation, energy intensive industries and aviation
• The Companies (Strategic Report)(Climate-related Financial Disclosure) Regs 2022 and The Limited Liability Partnerships (Climate-related Financial Disclosure) Regs 2022 - in scope large undertakings must disclose governance, strategy, risk management and metrics and targets in annual report. Disclosures on climate change related risks and opportunities to be included if material.

Climate Change Policy and Legislation at a Glance

How Astutis Can Help

Understanding your obligations under the UK’s net zero framework is the first step towards turning compliance into opportunity.

Whether you need to get to grips with carbon reporting, build the knowledge to drive emissions reductions across your organisation, or develop the skills to lead on sustainability and resilience, our environmental and energy management training gives your people the practical expertise to act with confidence.

To find out more about how we can support your business with its environmental targets, browse our ISEP course library.