Chapter 8.2 Business and Industry

Link business rates to carbon footprint

Link the level of business rates to a business’ carbon footprint.

UK Govt
Scottish Govt
Local Authorities
Emissions reduction
Behaviour change

Starting with the need for mandatory emissions reporting, this measure could drive improvements in businesses from chip shops to sporting estates. Likely to be designed to be fiscally neutral overall, there would be winners and losers but not a big income stream to the public purse.

Some businesses will be part of the UK Emissions Trading Scheme or paying the Climate Change Levy on their electricity and fuel bills. These are both UK schemes, so this additional element of payment or reduction on business rates would be an additional Scottish carbon-valuing measure to further incentivise climate emissions reductions.

There would need to be a graded approach based on business size. The CBI supports the use of business rates to drive energy efficiency and green technology (although their support was only about lower business rates).211

Some assessment tools and services exist but there would need to be a centralised coordination of standards and systems to assess business footprints. Including Scope 3 emissions – those created indirectly within a company’s value chain212 – in a later phase of implementing the measure would help businesses understand the carbon footprint of their supply chain, although the uncertainties involved in calculating these would mean this would not necessarily be used to influence their level of business rates in the first instance.

At the UK level this approach could be applied through corporation tax. A system just in Scotland would need to deal with any confusion between business landlords and the business itself.

For further information:


A reformed business rates system could play key role in powering a green industrial revolution, CBI, 2020, articles/a-reformed-business-rates-system-could-play-key-role-in-powering-a-green-industrial-revolution-cbiavison-young/


Briefing: What are Scope 3 emissions?, Carbon Trust, 2022, emissions

Version 1.0: September 2023

The contents of this document will be updated on a regular basis.