While global carbon dioxide emissions fell by seven per cent in 2020 to 34 billion tonnes, the pandemic-induced blip is just that – a blip – and they’re now set to resume their upward trend. At current pace, the world is set to exhaust the Global Carbon budget, or the annual emissions rate that can be sustained, by 2030.
The imperative for action is growing – and the political climate reflects this. The recent Leaders Summit on Climate underlined the willingness of the US and the UK to set firm commitments, and the importance of collaboration between nations, such as the US and China, to meet targets and drive change. It’s a change that does more than meet the anticipated regulatory requirements. It satisfies demand from investors, customers and employees – ensuring continuity and long-term profitability.
But political targets are yet to translate into business action. Progress demands more than vague promises. It calls for emissions targets to be woven into current strategy and business planning, with targets for 2025 all the way through to the 2050 global deadline for limiting global warming. Yet right now, just 45 per cent of FTSE companies are committed to Net Zero by 2050, and 84 per cent do not have a robust strategy to meet the global goal.
To get started, or to progress further, faster, here are six considerations to start driving results:
1. Treat decarbonisation as a business opportunity
Investing in decarbonisation needn’t be a cost centre. You can rethink products to use fewer raw materials or use carbon as an input to enable product development. For example, Coty has introduced sustainable ethanol made from captured-carbon emissions into its fragrance products, Air Vodka uses CO2 and water to create its spirits, and Unilever has introduced laundry capsules made from CO2. Or you could look for ways to reduce waste or extract value from waste. Treasure8 helps eliminate emissions from food waste by turning food surplus into affordable high-quality nutrition.
Businesses have also embraced the carbon credits business opportunity. Tesla reaped USD $1.4 billion in 2020 selling carbon credits. Rabobank is making carbon a currency with their new revenue model, carbon banking. And Quorn, which makes meatless products, is providing carbon footprint information for all of its products, to win business from conscious consumers. Decarbonisation can drive value for your organisation, and the opportunities are truly endless.
2. Understand your organisation’s true carbon footprint
According to the Ellen MacArthur Foundation, by switching to renewable energy we will cut greenhouse gas emissions only by 55%, the remaining 45 per cent of emissions come from making and using products and how we produce food.
By understanding your carbon footprint across your entire business, you’ll be able to identify your largest sources of energy usage, production intensity, transportation needs, and the waste you generate across processes. You can use this information to identify key opportunities to save on cost and reduce carbon output. For many organisations going beyond their own operations to Scope 3 emissions in supply chains will results in even bigger opportunities for carbon and cost reduction.
From there, you can amplify your efforts by benchmarking your performance with open data sets against your peers. We worked with a global manufacturing company across its European production sites to reduce energy generation by 20 per cent and energy consumption by 30 per cent. After implementation, the manufacturer decreased carbon emissions by 200,000 tonnes a year.
3. Drive decarbonisation across your whole value chain
Look at how you can incorporate carbon removal into product strategies, supply chains and operations across your whole value chain and create accountability, especially around emissions and science-based targets.
A large proportion of carbon outputs can be reduced by switching to renewable energy, electrifying systems and making efficiency improvements. When it comes to energy sources, for example, hydrogen could be used to decarbonise steel, shipping, bussing and coal among other industries.
However, there is also carbon in materials and systems. Embodied carbon, mainly found in built assets means organisations need to reconsider extraction, manufacture, transportation and assembly of every product and element to produce the asset, as well as through life maintenance and decommissioning of buildings, systems and infrastructures. For example, the airline industry uses carbon fibre and has a scrap rate of 30 per cent. Finding a way to reuse the carbon fibre would cut down not just on waste, but new demand.
Even virtuous sectors need help. The wind energy industry uses blades reinforced with carbon fibre-reinforced polymer that will need to recycled. Electric buses and trucks reduce carbon emissions but have batteries that will need to be recycled, to avoid contributing toxic waste to landfills.
4. Decide what technologies you need to deliver your carbon reduction
Once you understand your carbon footprint and have plans in place, the question is how to achieve your goals. With myriad digital, new material and decarbonisation technologies available, you’ll need to develop a strategy that enables impact at scale and achieves maximum value.
When looking at accountability and transparency across your value chain, digital technologies such as blockchain, digital fingerprints, artificial intelligence and machine learning can help you get the data you need, create transparency and drive improvements over time. We worked with a nuclear operator to use digital twins to create an operational excellence machine, radically reducing costs across its site and contributing to its mission of reducing CO2 emissions.
Innovative carbon tech solutions can convert carbon-based feedstocks (waste) such as methane, agricultural residues and municipal solid waste to products. For example, Lanzatech has invented technology that takes waste carbon emissions and converts them to new products. UBQ uses landfill waste to create products. For every tonne used and produced, approximately 1.3 tonnes of landfilled waste are diverted and up to 15 tonnes of carbon dioxide equivalent are saved in its current pilot commercial operations.
Materials play an equally important role. The Henry Royce Institute is developing a suite of energy materials to replace fossil fuel-based energy technologies. While ExxonMobil has discovered a new material to enhance carbon capture technology.
5. Partner and collaborate to impact at scale
Organisations are setting ambitious goals of becoming carbon net-zero or even carbon-negative. In addition to the steps outlined here, organisations should look to work with regulators, to drive change faster and tap into incentives to invest in renewable energy sources. Cross-industry partnerships will help drive and accelerate innovation and borrow best practices from other verticals, while start-ups and innovators bring novel technologies and solutions.
For example, Water UK, which represents all of the country’s major water firms, is aiming to use the power of partners to achieve net-zero 20 years faster than the UK’s legally binding target of 2050. The consortium has already halved operational emissions in the past 10 years, no small accomplishment. Brewdog, a Scottish multi-national brewery and pub chain, has already become carbon negative. It accomplished this goal by purchasing a forest where it will plant trees and restore peatland and working with carbon offset partners in the interim. Certain industries, such as agriculture and livestock production, will need to reach carbon-negative before they can fully offset the emissions they produce, so partnering and collaboration for them is critical.
6. Measure your progress and incentivise the right things
If you’ve implemented some or all of these strategies, congratulations, you are on your way. Now, it’s time to go deeper and measure your progress, using the right metrics.
Consider implementing new pricing and measurement schemes to influence decision making. Barclays has implemented a carbon pricing methodology to track its financed emissions, using this information to influence investment decisions and work with power and energy companies to reduce their emissions over time. Tesco has taken a different tack, creating a sustainability-linked bond. If the company doesn’t hit its targets, it will pay its shareholders a premium. And BP has developed an Advancing Low Carbon accreditation programme to motivate and reward staff for innovative ideas, accredit activities that significantly reduce carbon and put new practices into place.
Investors and insurers will increasingly consider your organisation’s decarbonisation strategy and climate risks in their decision making. For example, it’s not out of the realm of possibility that organisations will be refused loans, favourable credit terms and the proper insurance if they use “dirty” processes; create excessive emissions; or experience a claim related to outmoded processes, such as an oil spill or chemical leak due to poorly maintained infrastructure. Similarly, those that move forward and achieve early results may receive better financial terms, not to mention burnish their brand reputation in the marketplace with the media, shareholders and consumers.
If the race to carbon-net zero or carbon-negative seems daunting, it’s important to remember that you can start small and drive quick wins. One way to do so is with a sprint process. When you conduct a sprint, you rapidly identify possible solutions to achieve a client goal, then prioritise and tackle the ones that offer the greatest value with the least effort, first. It’s likely many organisations will align early sprints around capturing governmental incentives, before expanding into other opportunities for capturing value.
We’ve teamed up with organisations around the world to achieve their sustainability goals, from decarbonising to embedding circular economy thinking into the heart of their businesses. With our collective future at stake, it’s vital for leaders to realise that action is required, that today is the day to act, and that even small steps can scale to achieve desired impact.
The business case for sustainability has never been stronger – it is a massive commercial, purpose-led opportunity