Forget world leaders — we need to kickstart the net-zero economy ourselves

If the Paris Agreement was about getting the world’s political ducks in a row, the IPCC’s special report on climate change this month was about giving those ducks their marching orders for urgent action.

Breaking free from their customary reticence, the world’s top climate scientists set out the severity and immediacy of the challenge ahead, calling for "rapid, far-reaching and unprecedented changes" necessary to start taking control of a changing climate now.

For many businesses, however, inaction does not stem from willful choice, but from fears for corporate survival and/or inertia by the apparent scale of the problem. Company bosses often just do not know how to act.

Climate action can help your business

Now a major new piece of research based on a series of discussions involving some of the world’s biggest companies and many that are already seeing the benefits of climate action, is building on the business case for urgent action, and sending out a sector-wide call to arms.

"Raising Ambition: The Role of Business in Getting to Net Zero" was produced by climate solutions specialists Natural Capital Partners as a contribution to the U.N. Framework Convention on Climate Change’s (UNFCCC) Talanoa Dialogue initiative. (The aim of these "inclusive, participatory and transparent" discussions is to bring fresh perspectives from a wide range of people and organizations on how to increase climate ambition ahead of COP24 in Katowice in December, when details on implementing the Paris Agreement are finalized.)

Over the course of five months, the company convened seven discussions in five countries across Europe and North America, attended by senior sustainability and business leaders from 61 companies with a collective revenue of over $1.3 trillion. During the three-hour sessions, businesses were invited to share their own climate action stories and discuss how to raise the global ambition for more action by everyone.

As well as providing a clear set of recommendations to policy makers, the report acts as a rallying cry to the private sector to face up to its environmental responsibilities by taking action, now.

As well as providing a clear set of recommendations to policy makers, the report acts as a rallying cry to the private sector to face up to its environmental responsibilities by taking action, now. It draws on contributions to make the case that being climate active is actually good for business, and that achieving net zero — arguably business’s single most effective response to the climate challenge — is not just possible, but also beneficial.

These four key benefits of going net zero can be distilled from the report:

1. Gives clarity to a complicated picture

Responding to the reality of climate change — and more broadly the social and environmental impacts of business activities — is very complex and hard for companies to navigate. Participants noted that having a net zero or carbon neutral target helped them to address this problem by providing a clear and concrete commitment that was both easily measurable and readily communicated to the workforce and customers. The unequivocal nature of the net zero ambition was in itself a resolute statement that let people know where they stood.

"There’s no point to try for a 50 percent or 80 percent reduction, since everyone in the business thinks they are in the 20 percent," Ashley Myers, IKA sustainability specialist, told the Amsterdam discussion earlier this month.

2. Provides opportunity for immediate action

Although some companies, including IKEA, have set targets to become net zero through in-house measures alone, most businesses said they used accredited emission reduction projects through carbon offsetting to supplement their on-site efforts, rather than throwing all their weight behind internal initiatives with increasingly diminishing returns.

Participants agreed that a great advantage of investing in measures through high-quality offsetting projects was that businesses could effect change immediately. This was not just good for delivering emission reductions quickly and meeting net zero targets, it was good for the environment, good for the people (and wildlife) served by the projects and good for the company’s credibility in the eyes of its employees, customers and beyond.

By sourcing the most appropriate projects for their clients — from wind farms in Mexico to solar energy in India to conserving otherwise unprotected Amazon rainforest — companies such as Natural Capital Partners are helping business take direct action against the energy system and land use issues at the very heart of the IPCC report.

As Max Scher, sustainability manager at Salesforce, puts it, "We’re going to do everything we can to help the world transition to a low-carbon economy, use our voice, engage policy makers, engage our supply chain, etc., but the world need action now and so we’re going to offset our carbon now."

3. Shows the world you mean business

It was widely felt that setting a net zero ambition sent out a clear signal of a business’s commitment to being part of the climate solution, and not the problem.

Jan-Willem van den Beukel, senior manager and global circular economy lead of sustainability at PwC, said carbon neutrality was the "proof point" as to whether an organization took its purpose seriously. Harry Verhaar, head of global public and government affairs at Signify, said gaining net zero had proved to be "extremely motivating" for employees, adding that they were proud of their collective achievement.

Sometimes setting a net zero ambition proved necessary for a business to show  itself that it was serious.

Sean Kinghorn, senior sustainability program manager at Intuit, spoke of how he once had asked a group of senior execs during a meeting about company values why they set "audacious goals of promising magical solutions for customers, or the ideal state, even though we don’t have a clear path to achieve them."

He said: "The proposed goal for our carbon reduction was, ‘Do a little bit less bad.' I said, ‘How does this ‘less bad’ goal align to how we solve for our customers?’ That changed the conversation and we started asking, ‘How do we become carbon-neutral now?’"

4. Drives better performance

Several participants in the discussions felt the drive for efficiency borne out of net zero targets could, over time, have a transformative effect on a business.

Businesses respond to the logic of budgetary constraints and financial targets. The participants said that by setting net zero ambitions and — as part of that — using carbon offset projects where appropriate to deliver emission reductions quickly, companies effectively were putting their own internal price on carbon. This then provided the financial incentive for businesses to take action to lower their emissions across their operations and supply chains, reducing the requirement to offset over time.

Peggy Brannigan, environmental sustainability global program manager at LinkedIn, said, "The internal carbon fee has been very effective. It generates conversations, for example about business travel, because the carbon fee rolls out to the travelers’ departments. We’re offsetting now, but want to continue to implement solutions to reduce the emissions in the first place."

Policy recommendations

For now, businesses’ voluntary pursuit of net zero status is critical to meeting the urgency of the challenges the scientists have set out and to giving governments confidence and political headroom to increase the ambition of action to decarbonize the economy. This, of course, does not mean that the corporate world should bear the burden of our climate predicament alone.

Policy makers have a vital role to play in helping to unleash the full potential of the private sector.

Drawing on the wide and varied contributions from the seven Talanoa discussions this year, the Natural Capital Partners’ report includes 10 policy recommendations to the UNFCCC that are as diverse as translating the Paris Agreement into greenhouse gas emissions budgets and asking countries to specify fossil fuel subsidies as part of UNFCCC reporting.

Beyond net zero

The report proposes a "climate imprint model," made up of seven components to help drive net zero to scale across the private sector.

With greater corporate ambition and political support, more businesses hopefully soon will be striving for and achieving net zero status. The first three prints — foot-print, tail-print and hand-print — are familiar focal points for businesses on the start of their net zero journeys, representing the immediate action that can be delivered now.

While that is happening it is critical we rethink the coveted status not as an end-point but as a stepping stone that leads businesses to a sea of opportunity. To support this concept, the next four — brain-print, finger-print, blue-print and news-print — focus on how companies can deepen their ambitions and seize the very most out of net zero. Taking us to net zero and beyond.

Read the full report here.