Sustainability growth and challenges for UK tech companies

Innovation is key to solving today’s major sustainability challenges—and tech companies are at the forefront of innovation. The tech industry intersects with all sectors, contributing not just to its own transition to net zero but also that of the sectors it services. 

Our Technology Outlook, based on findings from over 300 respondents from AI and software companies across the UK, reveals that tech companies acknowledge this dual responsibility, with AI companies prioritising operational sustainability while software companies look more towards supporting customer sustainability. The survey also highlights some of the key sustainability challenges these companies are facing—a lack of leadership diversity in London, the rise of regulatory requirements, and a growing skills gap.

Products and services: sustainability concerns and opportunities

AI and software companies both view the sustainability impact of their products and services as a topic of key importance. 

The prioritisation of this topic likely stems from one or more of the key concern and opportunity areas outlined below:

• AI-driven emissions: AI-driven services require considerably more computer power—and therefore electricity—than standard online activity, leading to drastic increases in global emissions. AI companies are likely prioritising this topic from a mitigation perspective (ie needing to mitigate emissions they are generating).
• Low-carbon technologies: as customers work towards meeting their own sustainability commitments and regulatory requirements, tech products and services with lower emissions compared to competitors are more appealing to customers who are seeking to reduce their scope 3 emissions. 
• Sustainability-focused technologies: systems such as telematics for logistics companies to identify the most efficient (and therefore low-carbon) routes, or HR systems that track diversity data or support the roll-out of employee engagement surveys, are increasing in popularity.
• Sustainability reporting technologies: sustainability data and reporting tools that leverage AI to support companies in tracking and reporting data in response to reporting regulations are becoming increasingly common. However, many of these tools are far from maturity, and AI-driven technology has complex sustainability-related impacts. 

London lags in leadership diversity

In London, 27% of respondents reported tech company leadership teams with at least 25% female representation, compared to 54% of respondents in tech businesses based in the rest of the UK.  

The same trend is observed with ethnic minority representation: 32% of London-based leadership teams have at least 25% members from ethnic minority backgrounds, which more than doubles (64%) for companies outside of London. 

London-based companies appear to know that they have a diversity issue; they ranked “Diversity, equality and inclusion”, as the third most important sustainability topic for their business, compared to non-London-based companies who ranked it last.

Regulations driving large tech companies to act on sustainability

Smaller businesses with turnovers of £99m or less are driven to implement sustainability-related policies by the positive impact on brand value, as well as the impact they have on people, planet and business growth. This suggests that, as these companies grow and build their brand image, they see sustainability as a key business purpose.

Conversely (and unsurprisingly), larger businesses with turnovers of more than £100m are more likely to be driven by the need to respond to regulations. Meeting these regulations can require significant investment and resources, leaving larger companies with less flexibility to self-direct their sustainability efforts.

We are seeing stricter sustainability reporting requirements being extended to all companies, not just those within the Public Interest Entity (PIE) and listed space, with disclosure requirements such as the imminently expected UK Sustainability Reporting Standards (UK SRS) and the EU’s Corporate Sustainability Reporting Directive (CSRD). This may lead to regulation becoming a key driver for companies regardless of size, and companies will have to work to meet these requirements without losing sight of, or the ability to invest in, sustainability initiatives that contribute to business growth and brand value.

A growing skills gap: tech talent and green talent

It is clear that UK tech companies are struggling to recruit top talent, with 74% of respondents saying it is somewhat or extremely challenging to recruit new staff, and almost half of companies (44%) saying they wanted to see “Initiatives to address the skills gap in the workforce” in the Autumn Budget to support the growth of their company. 

As the tech industry increasingly contributes to the UK’s transition to net zero, this tech skills gap will be compounded by the gap in ‘green talent’, (i.e. workers who have technical knowledge, expertise and abilities that enable the use and development of green technologies and processes). A 2024 LinkedIn report revealed that grew twice as quickly as supply between 2023 and 2024, with demand increasing by 11.6% and supply by 5.6%. 

Smarter, greener, better 

Sustainability is a complex issue requiring companies to think differently—a task the technology industry excels in. By designing technologies with sustainability and societal wellbeing in mind, the industry is well-placed to take advantage of the massive opportunity sustainability offers. However, getting the right talent and balancing reporting with sustainable action will be key hurdles to overcome.

If you would like to discuss your carbon footprint, sustainability strategy development or reporting, please get in touch with Ben Bisland or your usual 91探花contact.