By Jamie Hailstone
February 21, 2021
Source: Forbes
Photo Source: Unsplash,
It’s this year’s must-have accessory in the boardroom and no self-respecting business leader can afford to be without one, but are all corporate net zero pledges really the same?
Of course, the sheer number of businesses – both big and small – that now have commitments or net zero officers can only ever be a good thing. It shows just how quickly sustainability has moved into the mainstream, but many campaigners remain deeply suspicious. A recent study by the New Climate Institute raised questions about greenwashing, by claiming the net zero plans of the 25 world’s largest companies should not be taken at face value.
According to the study, the strategies of those companies only commit to reduce their emissions by 40% on average, not 100% as suggested by their net zero claims.
It follows a report published last year by Natural Capital Partners, a leading provider of carbon finance solutions, which claimed that while 38% of the world’s largest companies have pledged to tackle climate change and have a significant milestone in place for 2030, the same cannot be said for the 60% who have not yet made such a commitment. “It's tall poppy syndrome,” said Natural Capital Partners CEO, Vaughan Lindsay. “Those corporations and people who are taking a leadership position often get questioned. While actually, I think the question should be what's happening to other 60%, who are quietly doing nothing?”
Lindsay said there are three key drivers, which are making corporations sit up and take the issue of climate change seriously. The first is consumer pressure, with more and more people demanding environmentally friendly products and services. “The consumer research is pretty strong and if you are not showing your climate credentials, consumers will shun you,” he added.
He said the second key driver is pressure from investors, who are “terrified” of putting money into carbon heavy business models that become stranded assets in just a few years time.
And the third pressure, according to Lindsay is a fear among CEOs and boardrooms that governments will introduce compliance regimes, which will force them to change their business models.
“A lot of corporates are taking ‘pre-compliance action’ and thinking if they act voluntarily, they won't be hit by a clunky and potentially very expensive and inappropriate compliance regime,” explained Lindsay. According to the Natural Capital Partners study, a fifth of corporate net zero targets are not aligned with the emerging consensus or any established targets.
It also found more than half (56%) of net zero targets are “responsible” and aligned with either government targets or the Paris Agreement, while 24% have committed to go further than those respective targets.
“As long as it's credible, rigorous and has integrity, any action is better than no action,” said Lindsay. He added that business ambitions over climate change tend to grow with time, and as corporations get comfortable with the concept they then move on to the next phase.
Lindsay said the first stage for any organization wanting to get to net zero is get a third party to measure its carbon footprint. He added once that footprint is established and verified, companies then have to set a meaningful target to reduce it, and that will vary, depending on your business.
Lindsay said organizations should always prioritize internal ways of reducing a carbon footprint, like changing energy supplier or electrifying vehicles. Other operational aspects, like the supply chain may be hardier to adapt, but he added the key was to take “full responsibility for the emissions you are reducing”.
“You can't hide behind having a pledge,” added Lindsay. “Consumers reward businesses that are taking leadership action, they don't penalize them. In the end, that's why businesses are getting more and more assertive about climate change, because they realize it's the right thing to do.”
Does your company have a climate change plan? How is your company image? Why?
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