Support long term, sustainable business models where people and the environment are considered before profit, and the carbon footprint of working practices are reduced.

Scottish businesses have much to gain from being at the forefront of the transition to a net zero economy. Decarbonising our economy in and just and fair way will help businesses to grow and compete in the economy of the future, benefit from new investment and export opportunities, create new and quality jobs and grow closer to their customers and the communities in which they are based.

Emissions from businesses constitute a large proportion of Scotland’s total emissions – 17% in 2019, making them the second largest emitting sector that is reported against, after domestic transport. So we know that emissions from industry need to continue to decline significantly.

To support businesses to take advantage of the economic opportunities of moving towards a net zero nation and transition to more sustainable models, the Scottish Government has:

  • Provided support for businesses operating in the Negative Emissions Technology and CCS sectors;
  • Announced a £180 million Emerging Energy Technologies Fund to support the development of hydrogen and carbon capture and storage (CCS);
  • Developed a £5 million Carbon Capture and Utilisation Challenge Fund to boost early stage work in this area; and
  • Supported business innovation through the Scottish Industrial Energy Transformation Fund and Low Carbon Manufacturing Challenge Fund.

Following analysis of the Assembly’s recommendations, the Scottish Government will take the following actions:

  • We have committed to develop: a set of wellbeing indicators to ensure that environmental, economic, human and social capitals are embedded; creation of a green industrial catalyst fund; and provision of tailored support for businesses with alternative ownership models.
  • We will continue to explore options to support award schemes and/or provide funding to support sustainable practices and innovation adaptation in businesses.

Recommendation 60: Eliminate Frequent Flyer and Air Mile Bonuses

Eliminate frequent flier and air-mile bonuses to reduce the number of flights taken for business, encouraging the use of alternatives like video conferencing for meetings.

 

Scottish Government Response

The Scottish Government supports the increased use of digital alternatives for meetings.

 

We are seeking to make video conferencing more accessible through our commitment to extend superfast broadband to rural communities, reducing the need for travel to meetings. See Recommendation 66 for further details.

The Scottish Government does not have the legal powers to ban frequent flyer or air mile bonuses. As set out in other Recommendations including 32 and 34, as part of our work to develop an aviation strategy we are considering what further actions might be needed to accelerate the transition to low and zero emission aviation and we have already committed to work to decarbonise schedule passenger flights within Scotland by 2040.


Recommendation 61: Incentivise Cooperative Models of Land Use

Incentivise cooperative models of land use / land management, and partnerships between farming and other uses, that drive sustainable agriculture and move away from intensive farming and reliance on pesticides.

 

Scottish Government Response

The Scottish Government supports this recommendation and commits to encouraging the use and management of land in a more sustainable and environmentally friendly way.

 

This recommendation is linked closely to Recommendation 46 which centres on incentivising landowners to expand the land available for carbon sink use. Incentivising landowners to maximise their land in a way that is sustainable and helps combat climate change will require a cross-government approach. It is also linked to Recommendation 47 which considers the need for a new subsidy regime that encourages farmers to transition to more sustainable land management practices.

As previously mentioned at Recommendation 47, our vision for farming and crofting in Scotland is a positive one – we will transform how we support farming and food production in Scotland to become a global leader in sustainable and regenerative agriculture.

We have committed £213 million through the Agri-Environment Climate Scheme (AECS) since 2015, and we continue to prioritise agri-environment support following significant cuts to the budget by the UK Government, reflecting our commitment to ensure that farmers and crofters are not financially disadvantaged as a result of leaving the EU.

The AECS will reopen for funding in 2022 which will underpin the ambition of doubling the amount of land used for organic farming by 2026, alongside a suite of other measures aimed at promoting low carbon farming and protecting the environment. Work tied to the Agriculture Reform Implementation Oversight Board (see Recommendation 47) and the NatureScot’s Natural Capital Pilot Programme (NCAPP) will ensure a sustainable, long-term approach that addresses the specific needs of Scotland’s rural landscapes.

Scottish Forestry support the Integrating Trees Network which aims to raise awareness of the multiple benefits that tree planting can bring to agricultural businesses, including: providing shelter for livestock; habitat for wildlife; increasing biodiversity; reducing carbon foot print; providing diversification opportunities for future business income; and flood prevention. This farmer/crofter-led initiative has built up a strong network of six farm woodland demonstration sites across Scotland, and hosts regular practical events for all Scottish farmers and crofters to share practical knowledge, experiences and advice about the processes, objectives, challenges and outcomes of planting trees. The Integrating Trees Network is encouraging more trees to be planted on Scottish farm land: in the right place; for the right reasons; and where appropriate, provides guidance on how this can be achieved, practically.

The Farm Advisory Service (FAS) will continue to provide bespoke advice to farmers, crofters and land managers through a range of grant-based support. This includes Specialist Advice, Carbon Audits and Integrated Land Management Plans which advise businesses on environmental management, organic farming, soil and nutrient management. Additionally, the FAS offers more generic support on these topics through: open events, helpline support, discussion groups, the organic newsletter, technical notes, videos and podcasts all of which can be accessed through the FAS website.

Farming for a Better Climate (FFBC) offers practical guides on a range of subjects related to climate change, farm profitability, climate impacts and adaptation measures. FFBC also supports a farmer-led soil regenerative agriculture network bringing together five farmers to establish how best to support, enhance and protect their farm soils, with the aim of improving production and tailoring inputs, which will in turn maximise profitability. The group have trialled new approaches to allow them to improve production whilst delivering wider benefits such as building soil resilience, improving water retention, storing carbon and enhancing biodiversity. This approach, which showcases farmers’ taking action, can act as a major driver of behaviour change amongst their peers.

Regional Land Use Partnership (RLUP) pilots, once established, aim to support partnership working between stakeholders to develop regional land use priorities and facilitate collaboration on regional land use issues to help meet Scotland’s climate and environmental targets.


Recommendation 62: Incentivise Green Business Models

Provide government incentives for green business models, such as bronze/silver/gold awards or funding to reward sustainable practices and innovation for adaptation to climate change impacts.

 

Scottish Government Response

The Scottish Government supports the principle of the Assembly’s recommendation to provide incentives, including through awards schemes, for business models which showcase sustainable practices and innovation relating to adaptation to climate change impacts.

 

Work is already taking place in this regard. This year’s Unlocking Ambition entrepreneurs, from Scotland’s flagship entrepreneurial development programme, were specifically chosen for their potential to contribute to Scotland’s continuing economic recovery from COVID-19 and Scotland’s journey towards a net zero economy.

In addition, there are established programmes, which also contribute to this end; for example, Scottish EDGE, which includes one of its five special awards – Circular Economy EDGE, as well as its Net Zero Edge awards, where the Scottish Government, working with partners, invests in and looks to nurture ideas which transform lives and build a stronger Scotland. Consideration of a business’s positive environmental impact and net zero strategy are part of the criterion for assessing these applications.

A number of broader programmes exist to support businesses to innovate, change their operating models and to adopt new technologies. All of these schemes will be useful to support businesses to be less carbon intensive. An example is the £25 million Digital Boost Grant programme which provides cash grants to help smaller businesses invest in the digital technologies necessary to trade online and invest in improved infrastructure. A further example is the £100 million Green Jobs Fund which is investing in a range of projects which aim to stimulate the supply chains and infrastructure necessary to grow green industries and create new employment opportunities. We expect that improved support for smaller businesses and realising the opportunities of a net zero economy will also be a key theme in the forthcoming National Strategy for Economic Transformation.

Increasingly, the Scottish Government is also looking to work with our most cutting edge start-ups to develop and commercialise the new technologies necessary for our economy to transition and thrive. An example is the forthcoming £42 million tech-scaler network – new infrastructure that will provide first rate entrepreneurial schooling to Scottish start-ups. It is intended that these facilities will prioritise the entry of start-ups which specialise in net zero technologies and solutions.

Following the recommendation and as part of our wider work, we will continue to explore what other options there are to support award schemes and/or funding with which to support sustainable practices and innovation in adaptation. Support for such models is in-keeping with the just transition principles outlined in our climate change legislation. We will keep this work under review so that we can be as ambitious as possible to meet the Assembly’s recommendations.


Recommendation 63: Well-being Before Profit

Prioritise funding and support for businesses that:

  • look after well-being before profit;
  • provide community benefits; and /or
  • are staff owned or cooperatives.

 

Scottish Government Response

The Scottish Government supports the principle of the Assembly’s recommendation to support organisations that look after wellbeing, provide community benefits and/or are staff owned or cooperatives.

 

A green recovery is an opportunity to take ambitious action that will deliver our transition to net zero across multiple objectives, reducing emissions while strengthening our economy, protecting and creating new jobs and building an economy and society that prioritises wellbeing. Consideration of wider social impacts is in-keeping with the just transition principles outlined in our climate change legislation.

As part of the agreement between the Scottish Government and the Scottish Green Party, and influenced by the Assembly’s recommendations, we have committed to develop: a set of wellbeing indicators to ensure that environmental, economic, human and social capitals are embedded; creation of a green industrial catalyst fund; and provision of tailored support for businesses with alternative ownership models.

Our COVID-19 Recovery Strategy commits us to creating the conditions for fair work and a just transition to net zero, including making payment of the real Living Wage to all employees a condition of public grants by Summer 2022. In addition, in all Scottish Government procurement exercises, it is mandatory for bidding companies to articulate the environmental and community benefits that they will deliver as part of the contract.

The Scottish Government recognises the critical role co-operative business models can play in economic recovery, supporting the Scottish Government’s aim to create a fairer, stronger and more democratic economy. We will continue to work through Co-operative Development Scotland and the enterprise agencies to support the growth of co-operative and other alternative business models.

Furthermore, our response to Recommendation 43 also recognises the environmental, health and well-being benefits that a four-day working week could have and our commitment to a pilot scheme that will explore these benefits further.

We will keep this work under review as we progress to ensure it is having its intended impact.


Recommendation 64: Universal Basic Income

Explore introduction of a Universal Basic Income to help improve the fairness of reducing hours at work, combined with a practical pilot/feasibility study which includes measuring environmental impact.

Children’s Parliament: Make sure people are paid fairly to help with bills.

 

Scottish Government Response

The Scottish Government recognises the benefits of a Universal Basic Income, but recognises it is not currently feasible to pilot due to a lack of devolved powers. We are exploring the potential of a Minimum Income Guarantee as an alternative.

 

During the last parliament, the Scottish Government funded a steering group to establish the feasibility of delivering a Citizens Basic Income, also known as a Universal Basic Income (UBI) in Scotland. The group published their final report in June 2020 which broadly stated that piloting a UBI would be desirable though ultimately not feasible with the current levels of devolved powers. Following on from these findings, the 2021 Programme for Government committed to commencing work to deliver a Minimum Income Guarantee (MIG).

While some overlap exists between the two, a UBI and MIG are distinct policies. A UBI is for everyone, irrespective of income and individual needs e.g. disability, and is paid through the social security system. A MIG is a guarantee that everyone will receive a minimum level of income that enables them to live a dignified life, and this can be met through employment, tax changes and/or social security benefits, and is targeted at those on low incomes.

We know that this will not be possible to deliver overnight, but we are determined to make step changes, using our existing powers, to help ensure that everyone in Scotland can lead healthy, secure and fulfilling lives. On 17 August 2021, the Scottish Government laid the foundations for this work, by holding the first meeting of a Steering Group set up to consider design and delivery of a MIG. The Steering Group’s work may include consideration of the various externalities of a MIG, including the environmental and economic impacts of the policy.

The recently launched Living Income campaign suggests that a living income (similar to a MIG) would support an economically and socially stable way in which to transition workers out of jobs that become less viable due to climate change or as we transition away from fossil fuels.


Recommendation 65: Four Day Working Week

Introduce a 4-day (or 32 hour) working week as standard, based on research to explore where and in what sectors it would work best, and backed by incentives to compensate for the cost of employing more people.

Children’s Parliament: Shorten work and school hours. This is so people can have more time to do things like grow their own food, plant trees and repair things at home or in their area.

 

Scottish Government Response

The Scottish Government supports this recommendation in principle, although it cannot be legislated for by the Scottish Parliament given that employment law is a reserved matter.

 

Employment law is not something that has been devolved to the Scottish Parliament and so to give effect to this recommendation, any scheme would need to be delivered on a voluntary basis, in collaboration with employers in Scotland.

The Scottish Government recognises the research that correlates higher working hours with a greater carbon footprint. We also recognise, as well as the associated environmental benefits, the health and well-being benefits and efficiency gains that a four-day working week could bring. However, for some sectors efficiency gains are highly unlikely to be of a scale that fully offsets the effect of lost working hours and therefore the costs of implementing a four-day week across society are likely to be significant.

The pandemic has served to intensify interest in, and support for, more flexible working practices. This could include a shift to a four-day working week as standard where appropriate. Reductions in the working week could help sustain more and better quality jobs.

Given that employment law is a reserved matter, the Scottish Government does not currently have the powers to mandate a shorter working week. However, we are in the early stages of designing a £10 million pilot scheme that will help employers explore the benefits and costs of moving to a four-day working week. This pilot will enable us to develop a better understanding of the implications of a broader shift to a shorter working week across the Scottish economy.

The Scottish Government has been engaging with a wide variety of organisations to inform development of the pilot: business representative groups and individual businesses interested in participating; trade unions; think-tanks; academics; four-day week campaign groups; voluntary organisations; and governments in other countries who have piloted approaches to shorter working weeks.

In the short term, the current Public Sector Pay Policy offers the opportunity for public bodies to consider standardising to a 35 hour working week, if and when it is practical to do so. This is an option only and is not mandated. It recognises the different contexts across the public sector and that each public body will need to consider its workforce, ways of working, impact on productivity and service demands.

Photo of Kate Forbes MSP

Cabinet Secretary for Finance and the Economy, Kate Forbes MSP

“The Assembly’s recommendations demonstrate the underlying desire by the public for us to transition to a net zero and climate ready nation as we develop and grow our economy. We want to support businesses to innovate and change to realise these economic opportunities.”