Net-zero: reasons for optimism but much to do
Simply Sustainable Amsterdam office convened a group of experienced sustainability leaders for our quarterly roundtable meeting on 19 September. The lively discussion focused on how companies can plan and execute the transition to their net-zero target. We saw an extensive exchange of views and experiences between peers, recognising common challenges and sharing views of what is needed to progress the carbon agenda in line with the latest science.
Net-zero: glass half-empty and glass half-full
Almost half of the largest companies worldwide have committed to net-zero emissions by mid-century. This is a huge step forward, compared to a few years ago. Yet participants also emphasised that this falls short of what is needed, and many more companies need to commit to and plan for eliminating GHG emissions.
The discussion reflected on the change that is building in the market and will help accelerate the transition. Some highlighted how regulation is driving companies to reduce emissions, using both carrots – like the incentives for investment in low-carbon solutions in the US Inflation Reduction Act – and sticks, like regulation mandating disclosure of emissions in Europe and the US. Others pointed to the role of the EU Taxonomy, which will shift the allocation of finance to sustainable activities and could radically rewrite the business case for emissions reduction.
We can’t open the gates tomorrow
In her introduction, the sustainability manager of Artis Amsterdam Zoo, where we hosted the event, explained the tensions between the opportunities of educating the next generation about nature and grow their love for animals, with keeping animals in captivity for that matter. Even with a strategy to reduce the number of species, many of these animals nowadays depend on their care and breeding programs for their very existence. ‘You cannot just open all gates tomorrow.’
In the subsequent discussion, we heard that many companies are in a similar position. Even if they would want to be net zero tomorrow, they cannot erase their current business activities from one day to the next. This means that it is important to take your stakeholders along on your journey.
For companies whose core business activities have a significant carbon footprint, this means explaining the opportunities and challenges in decarbonising these, and communicating openly about the choices you make as a business and why you make these.
For a company that help reduce emission by providing a low-carbon product or service, this means explaining that even though growth means more impact, it comes with negative side effects that need to be addressed.
Aligning net-zero with business growth
The final part of the roundtable discussion focused on the tension between emissions reduction and business growth. Even when companies have set net-zero targets at the top, the implementation of emissions reduction measures can be hampered by tension with growth targets.
The participants explored in what ways tensions can be helpful to progress thinking, and what mechanisms companies can use to deal with conflicts between KPIs. Internal carbon pricing was discussed as a helpful way to integrate emissions considerations in investment decisions, while integration of emissions criteria was suggested as helpful in procurement and M&A. And, as one participant noted, there’s nothing like an activist CEO or activist shareholders for driving change.
Read Simply Sustainable’s Insights Series on Net-zero for a further analysis of net zero target setting.
Author: Sytze Dijkstra, Netherlands Country Manager
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