Is a company's carbon neutrality an end in itself?

Carbon neutrality is a commitment that must be societal and shared by all. Crucially, it must be viewed as a long-term ambition that requires action in different stages, year after year.

The race to zero Carbon
“Supply chains are a particular area of concern for businesses. On average, their emissions are approximately 5.5 times higher than a corporate's direct emissions."

Carbon neutrality is a challenge shared by a growing number of players – from government and state bodies, to large organizations and small business. However, carbon neutrality can only be achieved if everyone’s approach to it is part of a common, global, societal process in which all players are involved and totally committed.

To mitigate the impact of climate change, a major reduction in carbon emissions needs to occur. Although reaching net zero carbon neutrality may seem like an impossible feat, it is more achievable than you might expect. There are a variety of carbon saving initiatives at hand for organziations and governments from energy efficiency in manufacturing processes and the decarbonization of electricity sources to waste management and forestry. And to successfully meet the target of the 2015 Paris Agreement of limiting global temperature rise to 2°C, global carbon emissions must reach net zero by 2050. Across the world, countries are becoming more committed in the fight against global warming. Recently, China declared its intent to become carbon neutral before 2060 and promised to start cutting its emissions within the next ten years.

Carbon neutrality: a commitment to change

A commitment to carbon neutrality requires transformation at all levels of an organization and its value chain. But before this can be achieved, businesses first need to raise awareness of their ambition to hit net zero. They cannot do this alone. By collaborating with peers, governments, local towns and cities, they can devise a shared vision on how to reach their goals and understand the role corporate climate leadership needs to play.

We Mean Business, a non-profit organization, works to get businesses to set their ambitions and decide how they are going to deliver on them. According to Dean Cambridge, Deputy Director at the organization,” business leaders have to grasp their organization’s bold targets and take action to implement the right strategy. Importantly, they can't do this alone. They've got to collaborate with peers, supply chains, governments, and vested cities.”

Race to Zero is one example of how a coalition of various entities can come together with one common goal. At present, the coalition represents 452 cities, 22 regions, 1,101 businesses, 45 of the biggest investors, and 549 universities. Together with 120 countries, this comprises the largest ever alliance committed to realizing net zero carbon emissions by 2050 at the latest.

Making the transition

By using guides and tools such as Climate Leadership NOW, businesses can acquire a better understanding of how they tackle more challenging climate action areas across their entire organization and supply chains. These plans must not only define how a company can accelerate its transition to carbon neutrality but do so at pace and scale.. “Supply chains are a particular area of concern for businesses. On average, their emissions are approximately 5.5 times higher than a corporate's direct emissions. We are currently seeing large organizations like Apple making their entire business – manufacturing, supply chains, and product life cycles, carbon neutral by 2030,” says Cambridge.

Once an organization has established its ambition, the next step is action. It is widely recognized that if we don’t half global carbon emissions by 2030, then it will be extremely difficult to reach neutrality by 2050. With this in mind, organizations must use this decade to effectively repurpose their operations. Carbon pricing can help organizations to transition to carbon neutral operations. By developing an estimated cost of their carbon emissions, it can help business leaders make the shift to low carbon an integral part of their business strategies. For example, Saint-Gobain incorporates two levels of pricing. The first, €30 per ton, is applied to large investments such as energy-related projects. The other, €100 per ton, is used to guide long-term R&D budgets.

Large organizations are not the only ones that can pursue meaningful action. Small and medium businesses account for 90% of businesses worldwide. The International Chamber of Commerce, along with organizations like We Mean Business, are helping SME members to plan and take action now. “It's importat to remember that it’s not a case of inaction. It's about not having the right guidance or direction that they need. However, with the recent launch of the SME Climate Hub, a one-stop shop with all of the tools and materials SMEs need to cut their emissions, we hope SMEs will implement the necessary changes to their operating models” says Cambridge. Moreover, corporate leaders who rely on these SMEs and their supply chains can help to encourage them to adopt new ways and assit them with the tools and knowledge they need to implement necessary changes along the way.

Meeting a global challenge at scale

The latest report “Making Mission Possible” issued by the Energy Transition Commission states that enabling a zero-carbon emissions economy by 2050 is feasible but involves achieving implementing significant change to our global systems. For example, the global annual electricity supply will have to increase four to five times its current level to ~90,000-115,000 terawatt hours, all being produced in a zero-carbon fashion. This requires a huge increase in renewable power investment, a growing ubiquity in direct electricity use and a major expansion in the role of hydrogen.

For this and other challenges to achieving a zero carbon economy to be overcome, multiple players, from global institutions to local public bodies, multinational corporations to local enterprises, must work more closely together. By combining their efforts, they can create a more effective operating environment in which they can advocate for climate action, aligning their lobbying efforts across trade groups, industries and geographies. In Brazil several companies that have adopted Zero Deforestation Commitments are also collaborating with the government and NGOs on initiatives such as Mato Grosso state’s Produce, Conserve, Include (PCI) program. This aims to boost reforestation and advocate for more sustainable agricultural and livestock production. “Co-benefit is a huge part of the work everyone needs to do. You must ensure that you’re actions are not having a negative impact but rather enhance peoples’ environments and boost biodiversity”, adds Cambridge.

And once policymakers start seeing businesses sharing a net zero ambition and taking action, they can draft regulations and legislation that they know can have a meaningful impact. Over 170 business and investors, for example, wrote an open letter to the EU to support an EU 2030 greenhouse gas emissions reduction target of at least 55%, to help the bloc become a climate-neutral region by 2050.

Investing today for tomorrow

By setting ambitious targets for carbon reduction and renewable energy deployment, organizations can start to build a clearer picture of the capital investment needed to achieve them. Fundamental to this is a sense of ownership for carbon neutral objectives within an organization. Enticing employees and relevant stakeholders to share ownership of the business’s sustainability agenda can boost employee loyalty and increase sales and ROI.

It is a strategy that must take place over the next decade in order to be ready to move forward into the 2030s with significant de-carbonization plans already in place. This means that businesses today must look at the long-term value of their potential investments, whether it is new technologies, nature-based solutions, or carbon capture and storage. It also means preparing the organization for change, whether it is redeploying or retraining staff or identifying potential issues that might arise across the value chain.

By setting our businesses on the right path to carbon neutrality today, we can hope to make the net-zero a real possibility.

Credits: Olivier Le Moal / Shutterstock

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