In the lead up to COP 26 and with potentially as little as 6 years until we cross the global warming threshold, the concept of getting to ‘net zero’ has really taken off. Barely a day passes without at least one business announcing its ‘net zero’ targets. Even Boris Johnson appears to understand the urgency, announcing on 20th April the UK’s most ambitious climate target to date, cutting emissions by 78% by 2035 against a 1990 baseline.
If you search for ‘getting to net zero’ on the internet, there is a whole network of resources available to help businesses to take their first steps. The UNFCCC’s ‘Race To Zero Campaign’ is a global call to arms for all businesses, cities, regions and investors to join together in setting and acting on targets to ensure the world achieves net zero carbon emissions by 2050 at the latest. Campaigns such as the United Nations Global Compact’s ‘Business Ambition for 1.5°c’ feed into this, calling on business leaders to take action and set science-based targets to reduce emissions to “avoid runaway climate change”. SMEs are encouraged to join the SME Climate Hub to “do their bit to cut carbon emissions.”
Those businesses which are still skeptical about the need to join the ‘net-zero’ initiative should consider the business case for taking action (or conversely, the potential effect of not acting):
- Climate change is already impacting global supply chains, with the increase in natural disasters (such as the pandemic) and more extreme weather conditions adding another level of risk for businesses.
- Climate-related legislation, such as mandatory reporting on climate risk by larger companies and financial institutions and the introduction of a plastic packaging tax, is increasing the imperative for change. As Richard Walker notes in his recent book, ‘The Green Grocer’, “It is estimated that, in the absence of action to cut usage, Iceland’s bill of around £700,000 for PRNs in 2019 could reach nearly £10 million by 2023.”
- Investors are actively investing in sustainable businesses, which have also shown themselves to be more resilient during the volatility of the COVID-19 pandemic.
- Consumers, particularly Millennials and Gen Z who are “increasingly dubbed ‘Generation Green’”, are starting to vote with their wallets, making conscious choices to seek out products made by responsible businesses.
Setting meaningful, science-based targets is part of the process, with the latest research from McKinsey & Company highlighting those factors which are key to successful implementation. These include the value of setting short-term targets (which can also impact on longer-term success), of including Scope 3 emissions within those targets and how, by setting more ambitious targets, businesses can improve performance.
However, the question is, is getting to net zero going to be enough? Sir James Bevan, Chief Executive of the Environment Agency, thinks not. He’s of the view that “as well as achieving net zero we need ‘net zero plus’” which means aiming higher so that we thrive, rather than just survive. Bevan proposes combining net zero with adaptation, which means building more resilient infrastructure, cities and economies and improving through innovation. This also means “sharing the best ideas, learning from others, and working in partnership to crack the issues we haven’t yet cracked.”
Jonquil Hackenberg, Head of Sustainability at PA Consulting, takes a similar view. Meaningful change can only be achieved through systemic change which embraces sustainability as a whole, rather than having “a laser-focus on decarbonisation and net zero”. Hackenberg points out that it’s only by addressing the wider issues, such as those related to packaging, product, water and waste, that businesses will “can effect real change by creating real solutions to real problems – and keep investors happy at the same time.”
This is where, for instance, circular business models can come into play. By employing circular economy principles, such as designing out waste, re-using materials, designing products for durability/repair, increasing the use of products through sharing or offering products as a service, businesses can add value whilst at the same time reducing their emissions on their path to net zero.
By looking at the bigger picture – reducing emissions while also embracing systemic change -businesses can look forward to a more sustainable future. So while net zero is not the whole solution, it should be viewed as an important step on a business’s sustainable journey. As noted by the UN Global Compact, as the Chinese proverb says, “A journey of a thousand miles begins with a single step.”