Net zero targets… all net and not enough zero..??
2021 has seen the wave of pledges for Net Zero Carbon grow and grow from cities, countries, investors and corporations. The world seems to be waking up to the sobering truths around climate change.
- Just this month eight of the world’s leading insurance and reinsurance companies launched an alliance (NZIA) to help speed up a transition to a net zero emissions economy. *https://www.reuters.com/business/sustainable-business/big-insurance-companies-launch-net-zero-climate-alliance-2021-07-11/
- Wellcome pledges £29bn investment fund will be carbon zero by 2050 *https://www.ft.com/content/5a0e2a43-961e-4b3a-bac8-477a9dd2f574
These are promising steps in the right direction, but does it mark a sea-change, or clever PR and brand management..?
The hard truth is that corporate plans often rely heavily on “offset” systems in which they purchase emission credits from other firms or organizations that reduce carbon emissions more cheaply than the corporation can. On paper, these firms will be advancing toward net-zero; in reality, their own carbon intensity will remain stubbornly high.
So perhaps too much focus on the “Net” as opposed to the “Zero”.
This month I kicked off a discussion group and round table series, involving the SusteneriGroup (https://www.sustenerigroup.com).
The initial focus was to pool wisdom, discuss market maturity, and to agree on focus areas and opportunities to add value in the context of business transformation.
It is clear that some businesses have been early adopters, and are already on the right-hand side of the scale (Leadership and Innovation) of the maturity curve…
…But the general sentiment is one of concern that most organisations are actually pre-compliance, and particular concern with the extent that green washing is occurring.
Will it take regulation and compliance measurement to get action from executive teams?
We concluded that that will definitely help but there should, and will be other factors such as:
· Pressure from customers e.g. product boycott
· Pressure from stakeholders (not just shareholders)
· Attention from CFO due to impact on results, risks, fund raising
· Attracting and retaining talent; people increasingly want to work for organisations that have a broader social purpose. Gen Z is emerging as the “Sustainability Generation”
Where does the ownership sit for ESG?
Arguably the most common reason(s) for transformation programmes failing is a lack of sponsorship from the CEO, and a lack of alignment across their Board.
We see the same risks applying as organisations set about becoming more sustainable. To be successful, ESG / Sustainability must be weaved into an organisation’s DNA and sponsored from the very top.
While digital transformation has been the buzz phrase for the last 5–10 years, we are now seeing the emergence of “Sustainability transformation”, the advent of “Chief Purpose/Impact Officer” and a surge in demand for ESG skills.
Will lessons from the past serve to arm leaders with the attitude needed to make their organisations more sustainable?