To avoid the potentially catastrophic impacts of climate change, the global temperature increase must be limited to 1.5 degrees centigrade (°C) above pre-industrial levels. At 1.1°C currently, we are already feeling the effects. The global community has responded with the Paris Agreement, and we have seen a wave of bold business commitments, with almost 300 global companies pledging for net zero before 2050. However, there is still a long way to go, and every business needs to play its part.

While the climate is changing, pressure is mounting: governments are creating new legislation, investors are asking climate-led questions and society is demanding that action be taken. Businesses that don’t adopt a path to net zero could face a number of risks, such as losing investment, non-compliance, losing competitiveness, and being exposed to supply chain instability… never mind being exposed to extreme weather events as a result of climate change.

Currently, only around 5% of the world’s largest companies (as represented by the Global Fortune 500) have pledged to become net zero. But it’s not just up to the world’s largest companies. We are all responsible for our impact on the planet. We need to move towards lower (and net zero) carbon as a global community. This is done by both reducing the emissions we produce as well as removing carbon from the atmosphere.

What is net zero?
Net zero is a “state in which the activities within the value chain of a company result in no net impact on the climate from greenhouse gas emissions”.

The attributes of leading net zero commitments
• Science-based
• Adhere to strict social and environmental safeguards
• Has strong social and environmental co-benefits
• Take responsibility for tackling emissions along the value chain – including products, suppliers, services and investments
• Explicitly recognise that net zero requires a reshaping
• Allocate adequate funding for skills, innovation and R&D
• Reflect the importance of new technologies, capabilities and business models

Some of the challenges associated with the move towards a net zero future include:
• Lack of knowledge of experience with carbon management – it is difficult to know where to start when you don’t have a clear understanding of where your emissions are being created.
• Funding – businesses need to find low-cost, high-impact solutions and look to funding models and grants.
• Geographical location – does the area have the electrical infrastructure to support net zero objectives such as renewable supply?
• Supply chain – how do businesses ensure that net zero commitments are replicated throughout the entire supply chain?
• Individual behaviours – It’s important to also address the challenge of changing individual behaviours such as energy use or transport to work.

So, how can businesses of all sizes around the world balance sustainability and the feasibility of actually getting there?
To deliver on their net zero commitments, organisations will need to undertake end-to-end business transformation. This includes:
• Understanding the implications of net zero for the company’s growth strategy
• Embedding net zero implementations across all business functions
For many businesses, this may seem like an overwhelming change. But, sometimes, significant results spring from making small changes. The path to net zero is paved one stone at a time through step-by-step building blocks.

Here are some simple tips to get started:
Your starting point is to define your emissions baseline. This represents all emissions you are directly or indirectly responsible for across your entire value chain. You will track your progress towards net zero against this baseline and use it to define a strategy and set a science-based target to reduce emissions.
You can then begin reducing emissions across your value chain through appropriate and achievable means, such as efficiency measures, renewable energy, and business transformation. You can also offset any remaining emissions to get you close to the net zero goal.

1 Ambition

Define what you are aiming to do and what success looks like.
• When does your business aim to achieve net zero by (following a science-based approach)?
• What does good practice look like?
• Understand how total emissions impact your value chain
• Prioritise actions to deliver your net zero commitment
• Develop a credible carbon offset approach (this should include measures to avoid, reduce and remove emissions)

2 Governance

• Accountability for net zero should be driven through the entire organisation
• Establish net zero as a standing agenda item at the executive level
• Assign the management responsibilities of net zero transformation

3 Strategy

• Embed and align net zero into company strategy
• Understand how net zero commitments are changing market dynamics
• Assess the capabilities required to succeed in a net zero future
• Identify options to deliver on your net zero strategy
• Develop your business case to deliver net zero strategy
• Align your operating to deliver on your net zero strategy

Where there is risk, there is opportunity
It’s becoming a necessity to manage the risks of climate change to safeguard commercial interests. This means adopting a net zero strategy. At the same time, the climate challenge presents a chance for businesses to build a reputational and competitive advantage. Businesses that evolve and deliver will benefit from improved efficiency, reduced costs and greater innovation. In this way, climate action makes business sense.
“We are at a unique stage in our history. Never before have we had such an awareness of what we’re doing to the planet and never before have we had the power to do something about that.” – David Attenborough