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3 ways your organization can embrace a net-zero mindset

Making the transition will require new approaches for hiring, governance and R&D. Here’s how companies such as Walmart, Shopify, Just Salad and Allbirds are approaching the challenge.

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The story of how Sandra Noonan landed her job as chief sustainability officer for the fast-casual restaurant company Just Salad offers a vivid illustration of the appeal of net zero for a growing number of consumers — and the mindshare companies can claim by being transparent about the details of their journey.  

Noonan, a former marketing professional who began her own personal net-zero journey in 2019, was drawn into the restaurant by its reusable bowl program — for $1, patrons can buy a polypropylene container that lasts for more than 100 uses. Those using the bowls receive a free topping as a thank-you for helping Just Salad reduce its single-use packaging, and the initiative will be expanded to digital orders in 2022. Noonan relates that she started carrying her bowl pretty much everywhere, That "love affair" inspired her to join the company, which runs 47 locations in the U.S and Dubai, in September 2019.

That program doesn’t cost the company anything extra, but it’s helping the restaurant move closer to a net-zero operating stance — even though the company hasn’t actually declared a specific net-zero commitment.

"For Just Salad, the reusable bowl is basically cost-neutral," Noonan said last week during a panel discussion at the GreenBiz Group VERGE Net Zero online event. "It’s cost-neutral to us because we don’t make money selling you these bowls. We don’t lose money, generally speaking, even though we’re giving you free food as a reward, because we are offsetting the cost by not providing you with disposable containers, or container, which is a major expense for a restaurant."

If 2020 was the year in which net zero became a household name in boardrooms across the world, then 2021 has become the year of comeuppance — when activist and investor concerns over greenwashing forced companies to reflect more deeply about how to embed their net-zero intentions into core operational and strategic practices. Several VERGE Net Zero sessions tackled the challenge of how companies can restructure their business models to move to an aspirational "native net zero" mindset — one that encourages managers to include net-zero considerations as part of day-to-day decision-making processes. 

"I think it’s about much more than just getting your corporate carbon balance sheet to zero," said Taylor Francis, co-founder of carbon accounting software startup Watershed. "It’s an imperative for a company to basically flex its muscle however it can to help the whole world get to net zero."

With that in mind, here are some themes (in no particular order) that emerged during two VERGE Net Zero breakout sessions last week: "Restructure Your Business to Reach Net Zero” and “Native Net Zero: Integrating Emissions Goals Into Products."

1. Make net zero central to corporate governance

In order to take meaningful steps toward net zero, this sensibility needs to be built into a company’s governance practices including its mission statement, executive compensation, accounting practices and choice of external advisers, according to Hana Kajimura, sustainability lead at apparel and footwear maker Allbirds. 

The company, which is structured as a public benefit corporation and has about 500 employees today, markets the idea of "reversing climate change" through its business practices. Among other things, Allbirds uses an internal carbon price for every pair of shoes produced, as a means of better accounting for its impact.

"It’s helped to attract those employees who really want to have an impact and work for a company that really stood for something," Kajimura said. "We don’t just have product developers working for us, we have product developers who care about sustainability and who are always asking, ‘What can I do differently? What can I do better?’"

Balancing quick-win investments, such as an LED lighting retrofit, with a deeper commitment to managing physical or regulatory risks related to climate change is also important, said Emily Williams, vice president of strategy and sustainability for service provider Edison Energy. 

"I think some of the longer-term risk integration is something that a lot of organizations are struggling with, and really just kind of getting started on with the transition to net zero," she said. 

2. Invest in top-down and bottom-up engagement

While Walmart is a much larger company than Allbirds, it shares the philosophy that employee mindsets are central to taking practical and meaningful steps toward net zero. That means not just marketing these ideas, but consulting them as stakeholders for input on taking action. 

Jane Ewing, senior vice president of sustainability for the massive retailer, said that when Walmart was in the process of setting its latest commitment targeting zero emissions in its operations by 2040, it consulted leaders of groups across the organization. It actively engages workers at every level to share details of progress, which it typically announces each year at a milestone event.

"We made sure our associates across the stores and the clubs and the different countries had access to those materials, videos and Q&As, and we just continued to beat that drum," she said.   

That need for engagement also applies to supply chain partners, something that Walmart has embraced through its Project Gigaton initiative, which includes about 2,300 of its suppliers that have set climate goals related to energy, packaging, waste, agriculture, forests and product use. "[It’s] this portfolio view of changing the mindset at the top of the organization or with the procurement organization that it shouldn’t be about just chasing the lowest cost but how are you incorporating sustainability decisions into your procurement decisions," noted Edison’s Williams. "This is really the way to have that multiplier effect that we need."

Just Salad’s decision to publish a carbon footprint label for its menu items, is helping consumers make informed decisions about their ordering (a move mimicked by Panera Bread), and has become a central component of its decisions about what new ingredients to include in its offerings, according to Noonan. In a sense, that makes it simpler to choose. 

"Because we’ve already calculated the average emissions of our menu, we really don’t want to go outside that range; we want to hold ourselves to a lower carbon footprint threshold than our highest items," she said. "And that means we’re developing salads that are balanced, and their combination of daily or protein is kept within a range. It also helps us with suppliers." 

3. Bake net zero into R&D priorities, and share

The focus on net zero is also translating into a shift in product development and research priorities for several companies represented in the sessions. "I think it’s kind of the first strategy of native net zero to embed carbon into the decisions you make about your products, and I think the second strategy is enabling your customers to take action," said Watershed’s Francis.

One exemplar is Shopify, a Canadian software company that helps small merchants add e-commerce capabilities to their websites. Not only is Shopify taking steps to nurture emerging technologies and approaches for carbon removal with a $5 million investment fund, it’s also prioritizing new services for its customers that take the need to accelerate carbon removal in mind. One example is its Offset app, which helps small businesses balance their impact from transportation emissions related to their orders, by investing in projects that Shopify has identified.

"It’s easy and affordable to them because we’re able to aggregate all these small businesses together," said Stacy Kauk, director of the sustainability fund for Shopify. "That’s one way we can actually dig into our supply chain, right? If we think about that opportunity to influence our major suppliers and carriers, we have that access point. And then our merchants are able to benefit from that aggregation that takes place on our platform."

Another example is the sugarcane-derived shoe sole that Allbirds developed to replace materials derived from petroleum. As Kajimura related, the company partnered with a new supplier to develop the approach — it chose to address sole foam because it could have a broad impact. Then, it decided to "open source" the information so that other shoe companies could consider the material.

"Not only did this result in the single biggest reduction in our carbon footprint so far, because it was one material that scaled across all our products, but it also has led to companies from Ugg to Reebok to Timberland using that material now in their shoes on a larger scale," Kajimura said. "So that’s a business model we’re trying to repeat again and again."

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