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The UK has long been a climate leader, moving early to decarbonize its economy and hosting a raft of leading climate and sustainability firms. With London Climate Action Week upon us, we examined one of the UK’s natural advantages as a host for climate action – its companies’ high carbon productivity.
To assess carbon productivity – defined as a company’s profits per tonne of carbon emitted – we examined a sample of around 12,000 companies across the G20 economies1. There are many other factors that influence the overall uptake of climate solutions within countries and sectors, such as production costs and policy incentives, but carbon productivity is a central driver of overall uptake.
Companies with higher carbon productivity are better positioned to absorb the additional cost of low-carbon solutions. As such, carbon productivity can help identify early movers, where low-carbon solutions require a premium over conventional alternatives due to higher costs or market barriers. Companies with higher carbon productivity tend to be more active participants in markets for carbon credits, sustainable aviation fuels, and green metals.
Within G20 countries (excluding the EU) the UK has the highest overall carbon productivity, measured by the median carbon productivity of a country’s companies covered in our dataset. This is in part driven by its large Financial and Business Services sectors, which tend to have lower production emissions – with emissions mainly associated with business travel, office heating, and electricity consumption – and therefore tend to exhibit higher carbon productivity than other sectors.
Some of these results are surprising, with countries like Brazil, Türkiye, Mexico and South Africa featuring high in these ratings. This is largely due to the high number of consumer and finance firms for these countries in the dataset – with each having a higher penetration than the UK’s 43 percent of firms in these industries. At the same time, countries with a significant manufacturing base such as Japan, Germany and Korea feature relatively low on this indicator, having among the highest shares of industrial manufacturing in the dataset, and relatively fewer finance and consumer firms. But the UK’s strong result is not just about sectoral composition – the UK is consistently among the top performers across both service and industrial sectors.
The UK’s Finance and Technology companies rank second for carbon productivity among the G20, while its Business Services and Consumer firms rank fifth and sixth highest respectively. These companies are strongly positioned as demand sources for current high-cost climate solutions such as Sustainable Aviation Fuels, a key mitigation measure for their Scope 3 business travel emissions, and for durable Carbon Dioxide Removals (CDRs), which often come at a significant cost premium compared to traditional carbon credits. While US headquartered companies such as Microsoft, JP Morgan, and Boston Consulting Group are seen as early adopters for these solutions, UK-based companies are following as corporate net zero target dates approach and supportive policies, like the UK SAF Mandate, take effect. Fastmarkets has highlighted strong fundamental tailwinds, with an emerging CDR affordability boom which will put these currently high-cost solutions within reach of a much larger segment of the economy.
Within industrial sectors the UK also ranks highly, with the highest carbon productivity in the Automotive sector and third highest carbon productivity in the broader Industry and Manufacturing sectors. This has important implications for upstream suppliers, particularly in steel and aluminium, where low-carbon producers are seeking a green premium to switch away from conventional, higher carbon production methods. UK manufacturers and consumer goods firms are financially equipped to potentially absorb these green premiums. Fastmarkets pricing suggests current green premiums in Europe are approximately $185 per tonne for steel and $10 per tonne for aluminium, suggesting an emerging willingness to pay for low-carbon metals that is reinforced by policies like emissions trading and carbon border adjustment mechanisms that reward lower carbon production.
The UK’s strong carbon productivity positions its firms as early movers in scaling early-stage climate solutions. This financial headroom gives UK-based buyers the potential to play an outsized role in accelerating emerging markets for low-carbon materials, CDR and clean technologies, helping drive early volumes, derisk supply and reduce long-run costs. The UK’s robust decarbonisation policies play an important role in complementing the UK’s natural economic advantages, by meaningfully pricing carbon emissions and supporting the uptake of green commodities. As 2030 climate targets loom, and many corporates re-examine their sustainability commitments, the UK is positioned to maintain its climate leadership and drive meaningful decarbonisation across supply chains.
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