There has been a rise in the demand for transition to a zero carbon economy. While government action and global protests are a step in the right direction, they cannot achieve net zero on their own. Companies also need to step into this court. This is because aside from the risk that our planet faces, businesses are also at material risk. In addition to committing to net zero to protect the planet, companies need to commit in order to save themselves.
Businesses that integrate net zero strategy into their business plan, will not only reduce material risks but will also see benefits such as increased innovation, competitiveness, risk management and growth.
In simple terms, net zero means consuming only as much energy as produced. It refers to a state where greenhouse gases going into the atmosphere are balanced by removal. Net zero is often confused with the following terms because of its close relation: absolute zero/ zero emissions, climate neutral, GHG neutral, climate positive/net negative, science based/ paris aligned, off setting, in setting, neutralization, compensation, like for like, GHG reductions and GHG removal. These words are not the same as sometimes the goal is just focused on carbon dioxide and does not account for all emissions hence more specific terms when relating to carbon dioxide such as net zero carbon or zero carbon.
The current pace of change is far behind the pace that we need. Just the other day, China, Germany, The United States as well as other countries across the globe have been ravaged by deadly floods that have caused despicable damage including sweeping entire communities. Earlier this week, the United Nations Climate Change wrote on Twitter “From the unprecedented fires in Western North America, to devastating floods in Europe: The most recent and accelerating climate change impacts constitute a clarion call to action. Companies need to be concerned with the greenhouse emission frustration to reduce the risk of extreme weather conditions as action is unfolding far too slowly.
How can companies become part of the solution and set themselves up for success in a net zero future?
- Begin by aligning themselves with the Paris Agreement
The Intergovernmental Panel on Climate Change, 2018 report highlighted the importance of aligning emission reduction with the Paris agreement goals of striving for net zero emissions by mid century, 2050
- Reviewing industry groups
Companies should make sure that whatever other organizations they associate with join the climate action road. They should focus on being members of groups that have strategies aligned to climate action.
- Speaking up in support of climate policy.
Many businesses are well positioned to inform ongoing policy and should use their strength to focus on the climate emergency. Companies should look to influence climate change through climate action campaigns.
- Companies can up their climate governance game
A company’s climate change plans have a better chance of succeeding with the right governance in place. They should seek expert support from agencies and consultants for best results. They should also equip the board and management with knowledge and skills that will help in the alignment with net zero strategies.
Companies should not hold back in investing in training as this will help them recognize risks and opportunities posed by the climate crisis as well as the best action plan for their businesses.
Companies should openly talk about their efforts towards net zero so as to inspire others to become innovative and ensure net zero success.
- Sustainability reporting
As stakeholders expectations rise, organizations increasingly need to report on their environmental and social impacts and demonstrate progress. As a result, there is greater need for consistent , comparable ESG standards so investors and other stakeholders can clearly see how businesses are creating long term value for the organization and society.
There are different types of frameworks that businesses can use to report on their sustainability efforts including those by the World Economic Forum, International Business Council, The Financial Stability Board’s Task Force on Climate-related Financial Disclosures(TCFD), the Global Reporting Initiative(GRI), the Sustainability Accounting Standards Board(SASB), and the International Integrated Reporting Council(IICRC) among others.
Companies are beginning to use their influence to speed an economy-wide transition. The majority of the companies that have jumped on board report improvement to brand reputation and investor confidence. Consumers and investors are increasingly aware of the effects their choices have on the environment. Companies who commit to these targets are gaining a competitive advantage in multiple parts of their businesses.