What does business need to do to deliver net zero?

We look back at a blog originally published a year ago to offer some insight and practical next steps for any business on a net zero journey that is looking to make it a successful one.

December 15, 2020

Two years ago, the Intergovernmental Panel on Climate Change (IPCC) released its SR15 report, and called for urgent action to limit global temperature increase to 1.5 degrees centigrade. Propelled by the severity of the warning and the growing number of environmental disasters, climate change entered mainstream discussions. The World Economic Forum (WEF) reported that for the first time in its history the top five most likely global risks all relate to climate change and the environment. And a new generation of climate activists made sure their message was heard.

This is a climate emergency. We have less than a decade to stop temperatures increasing beyond 1.5ºC.

And it became clearer than ever that business had a crucial role to play in radically reducing global emissions.

A pathway to net zero

In response to the growing climate emergency, and despite the intense economic challenges of a global pandemic, this year we have seen a sea of organisations move beyond headline sustainability commitments, and go to the next level — defining a pathway / a roadmap / a trajectory, for achieving zero carbon and transitioning to net positive carbon in their business. The number of companies committing to zero carbon no later than 2050 has risen from 20% in 2019 to 45% in 2020 (Ecoact report: The Sustainability Reporting Performance of the FTSE 100).  Over a thousand companies worldwide have set emissions reduction targets, and hundreds of them have raised their ambition by committing to Business Ambition for 1.5°C.

And why now? The first reason is we’ve moved well beyond the ‘why’ on climate change. We have absolute clarity from the science community and the IPCC that we need to halve global emissions by 2030, and the necessity to keep global warming levels below 1.5ºC if we are to avoid irreversible damage to the planet and our way of life. The second reason is that the business community is also moving beyond the ‘what’ in the net zero conversation. For too long corporates and industry bodies alike got stifled with important, but also highly complicated conversations on definitions— What do we mean by net zero? Is that different to carbon neutral?

Does it mean something different in Australia to what it does in the UK? And whilst these were incredibly important discussions where clarity needed to be achieved, leading businesses have moved beyond deliberating and debating, realising they needed to have a plan in place to make a serious contribution to reducing global emissions. Gone are the days of vague statements about carbon reductions. 2020 became a year in which responsible businesses backed up their courageous commitments with clear trajectories on how to achieve it. Here are just a few examples:

• Canary Wharf Group: Net Zero Carbon Pathway (timeframe: net zero carbon by 2030)
• Danone: Toward Carbon Neutrality (timeframe: carbon neutral by 2050)
• Grosvenor Britain & Ireland: Think Zero (timeframe: net zero carbon by 2030)
• Microsoft (timeframe: carbon negative by 2030)
• MITIE: Plan Zero (timeframe: net zero carbon by 2025)
• NHS England: Delivering a ‘Net Zero’ National Health Service (timeframe: net zero cabon for directly controlled estate by 2040; full supply-chain net zero carbon by 2045)
• Nike: Move to Zero (timeframe: net zero carbon by 2030)
• Unilever: Net Zero 2039 (timeframe: net zero emissions for products by 2039)
• Water UK: Net Zero 2030 Routemap (timeframe: net zero carbon by 2030)
• WHSmith: Our Journey to a Better Business (timeframe: net zero emissions by 2025)
• Willmott Dixon: Now or Never; our decisive decade (timeframe: net zero operational carbon by 2030; net zero embodied carbon by 2040)

Features of a net zero pathway

Fundamental to a net zero strategy must be significant decarbonisation (aligned to science-based targets), and innovative measures to meet these targets — e.g. renewable energy, low carbon products and services.

Across these examples, we see the net zero pathways consider these elements:

1. Reducing operational carbon: Increasing the efficiency of assets, processes and maximising existing resources to reduce their carbon intensity, reducing energy demand, and using frameworks such as science-based targets to assess progress
2. Generating energy onsite: Generating energy on-site through renewable/low-carbon means (for organisations with built assets such as factories, warehouses, shops or offices)
3. Procuring renewable energy: Sourcing energy from sustainable and renewable sources where on-site generation isn’t feasible
4. Reducing embodied carbon: Prioritising materials with low carbon intensity; assessing and reducing Scope 3 emissions including through supply chains; mitigating waste to landfill/incineration and prioritising reuse and recycling, and adopting frameworks such as science-based targets
5. Offsetting excess carbon: Where carbon intensity can’t be reduced elsewhere, use of high-quality, ethical and transparent offsetting and sequestration initiatives to “keep it in the ground” are accepted
6. Verification: Using third-party verification services and publicly disclosing the results.

What else is needed to put net zero ambitions into action?

Many of the net zero plans cited above have been put together in a rigorous, highly technical, and science-based manner. Which is absolutely right. Climate science is driving this, and it is crucial that pathways to become net zero, carbon neutral, climate positive, (whatever the target) are set out in a data-driven and highly forensic way.

But then what? You’ve got your vision, your targets and milestones set for zero carbon. But what about delivering against the bold ambitions by 2030? When we ask businesses this question “what could get in the way of us achieving this?” we hear about things like:

• “the business-as usual culture”
• “not making decisions quick enough”,
• “lack of courage from senior management”,
• “getting stuck in the jargon”,
• “no framework for innovation”.

And the reason for this is because many businesses –  and their sustainability/ESG departments – have a tendency to focus on only one type of problem solving — the technical. And if you are one of these organisations that stays squarely in this mindset, you are likely to find achievement of ambitious goals like zero carbon very challenging if not impossible.

Whilst technical problem-solving is absolutely crucial for establishing a zero-carbon ambition, achievement of bold sustainability targets will require a mix of technical and transformational problem-solving.  Because let’s face it net zero is brand new business challenge – not something even the best MBA has the answer for.

Businesses are often large and highly complex animals making it difficult to shift track.   With net zero we are venturing into the unknown, existing business models and culture present many challenges AND we can’t take too much time working it out, we’re on an extremely tight deadline. 2030 is right around the corner, so we need to call on everything we have…

Technical vs transformational problem solving

This table demonstrates the absolute necessity for a business to embrace – and provide space for both technical and transformation problem-solving when embarking upon the achievement of zero carbon and climate positive targets. This is because bold, ‘never been done before’ sustainability ambitions will simply not be achieved by continuous improvements between now and 2030 . Business model innovation will be required to achieve the breakthroughs in our thinking, and the products and services we deliver we need to see in operational energy reduction, renewable energy production, and embodied carbon reduction. And when you are asked to rapidly adapt the business model, this calls on transformational problem solving.

Employees, suppliers and customers alike must be ok without knowing the answers, be ready to adopt a curious and creative mindset, to leave outdated assumptions behind, to experiment, to discover new roles, and engage in new partnerships to co-create solutions. This requires an agile an entrepreneurial culture that constantly remembers the net zero carbon plan will need to flex and evolve in response to external factors such as technology developments, consumer trends, market conditions and political landscape, all of which will be constantly changing over the next 10 years.

Practical ideas for activating your net zero pathway

With the ambitions set, the plans drawn up, businesses are turning their attention to how they bring their net zero pathway to life in the organisation and the enablers and activities that will need to be in place for business transformation. This can feel overwhelming, impossible even, and we know that connecting the intentions to action is a challenge for many businesses.  But there can be a next step, and here are a few ideas that will help push you out of the purely technical problem-solving mindset, into more of a transformational one.

Here are just some of our ideas for what those next steps could look like:

1. Link business purpose to sustainability and zero carbon ambitions – take time to This will have some candid, and inevitably difficult conversations at board level around the role of your organisation in a 1.5 degree world. Difficult conversations about growth, consumption models, and ways of generating shareholder value.
2. Develop a zero carbon transition plan – The Unilever plan is a great example to look at for inspiration, as they consider zero carbon through the lens of their own operations, their value chain, their brands & products and their wider influence on society.
3. Integrate zero carbon strategies with wider business transformation initiatives – Coming out of Covid-19 many businesses have embarked upon change management, business transformation, and organisational change programmes. If a business is to become genuinely zero carbon, this needs proper attention, and shouldn’t be dealt with in the wings by a lone head of sustainability/ESG.  So again bringing zero carbon into ongoing business transformation strategies, planning and engagement is critical.
4. Create the forums for challenge and diversity of perspective- Given both the urgency and the complexity involved in shifting to zero carbon, it is crucial to surround yourselves with critical friends, who can offer challenge, inspiration, in and out of sector examples of innovation. And critical here is cognitive diversity. This exchange of new thinking could be done through working groups, challenge sessions, away days, and could include thought leaders, customers and suppliers, start-ups, members of the public.  Often the best ideas come from the most unusual of places.
5. Undertake a net zero organisational capability and needs analysis review – how well set up is your organisation to deliver to the goals you’ve set out? In getting to zero carbon might you need to think of a different structure?  Do roles and responsibilities need to shift?  Do you need to recruit for new roles?  What capacity building needs to happen to support the shift?   Undertaking a needs analysis will help you consider your existing organisational capacity and suggest ways to bridge the gap.
6. Develop and deliver carbon awareness and empowerment programmes for everyone in the business – this could include anything from a net zero activation summit for all employees to attend, development of net zero jargon busting guides for your employees, customers, suppliers and clients, team-specific training and empowerment sessions
7. Deliver net zero focused coaching and leadership development for Board and sustainability leaders – Net zero is unknown territory so keeping your resilience and focus up as a leader is key especially when you’re being asked a lot of a difficult questions and being pulled in many different directions. Team or individual coaching specifically around net zero can be a great way to stay strategic, prioritise the right activities, and keep your own energy up so you can inspire action in others.
8. Run net zero innovation sprints – Where you have a specific net zero challenge you want to solve, time limited team sprints (from half a day to a full week) can be a great way to do it. The sprint format enables you to clearly articulate and to rapidly developing net zero concepts that could be delivered in the business
9. Connect with sustainable innovation start-ups – know that for the problems you’re trying to solve in your business there could already be an innovator with the solution you need. By running innovation competitions and building your network of sustainable innovators you can come closer to both the embryonic and market ready innovations that are ripe for trialling and scaling in your business.
10. Actively explore customer engagement and partnership on zero carbon solutions – Use the net zero challenge as a way to reconnect with your customers, finding out the issues that matter most to them, and cocreating solutions together
11. Run a net zero focused transformational innovation programme – Rethink your entire business models for carbon positive solutions by using a rigorous innovation framework
12. Develop creative and engaging storytelling on zero carbon breakthroughs – inspire your customers, employees and suppliers with stories of zero carbon breakthrough – either delivered by your organisation or using inspiration from others. These stories could be integrated in ongoing communications and inhouse events and should be used to signal the possibility of net zero.