To net zero and beyond: how companies are leading on climate action

In a new piece of research, based on a series of discussions involving some of the world’s largest companies, Natural Capital Partners sets out seven ways that companies can contribute to building a net zero economy.

In October 2018 the leading climate scientists in the United Nations’ Intergovernmental Panel on Climate Change (IPCC) called for “rapid, far-reaching and unprecedented” changes and for net zero emissions by 2050 as part of its report detailing the implications of 1.5^oC of warming.

For many businesses, climate inaction does not stem from wilful choice, but from inertia by the apparent scale of the problem. Corporate boards often don’t know where to begin. Over the course of five months we held seven roundtables to bring together 61 senior sustainability and business leaders from companies with combined revenues of $1.3 trillion – including HSBC, Mars, Unilever and Volkswagen – to explore routes to net zero. Out of these conversations came the ‘Imprinting Net Zero’ model, which is made up of seven imprints; ways that businesses can drive net zero to scale, both within the confines of their own operations and across the broader economic system.

TO NET ZERO…

The first three imprints are familiar focal points for businesses on the start of their net zero journeys, representing opportunities for immediate action.

The first is the foot-print. It refers to what businesses can do to reduce emissions consumed directly through company activities or through the purchase of electricity. Participants encouraged businesses to reduce this to zero. As Ashley Myers, Sustainability Specialist at IKEA put it at the Amsterdam Talanoa Dialogue “In many ways it is easier to go for a 100% reduction. If your goal is 80%, then everyone has a reason why they are in the 20%.” A net zero footprint can be achieved immediately through a combination of internal reductions, renewable energy procurement and reducing emissions through supporting low-carbon sustainable development projects.

Companies can also reduce their tail-print, which is comprised of the emissions created by their suppliers in the production of their goods and services. Known by many as ‘upstream’ emissions, we think that ‘tail-print’ better captures the responsibility that companies have over the impact of their suppliers since ‘upstream’ implies that a company has no influence over them. Tea and coffee company Taylors of Harrogate, for example, delivers emission reduction projects across its supply base in Kenya, Uganda and Malawi. Through community reforestation and cookstove programmes, the company is able to reduce the climate impact of its products from tea bush to retail shelf to net zero. And through improving livelihoods of suppliers, Taylors contributes to the long-term resilience of its supply chain.

Next up is hand-print: emissions consumed by customers of a company’s goods and services, know as ‘downstream’. Elopak – a leading global paper-based packaging company – offers its customers the choice of CarbonNeutral^® packaging to take full account of the cradle-to-retail-shelf impacts of its products. Some of Europe’s largest beverage brands have taken this up, from milk to orange juice. It delivers this through purchasing 100% renewable electricity and offsetting unavoidable emissions through reforestation and forest conservation projects that in turn support the company’s core raw material: trees.

…AND BEYOND

Through these three some businesses are, in and of themselves, net zero today. But net zero is not an end-point. Instead it is a necessary stepping stone that opens up a sea of opportunities for businesses. The next four imprints — brain-print, finger-print, blue-print and news-print — focus on how companies can deepen their climate impact by contributing to the build of a net zero economy and deepen business benefits by entering new markets and gaining staff and customer loyalty.

The brain-print is about putting transformation to a net zero economy at the heart of business strategy, advocacy, brand positioning, product and service innovation. As Stephen Hibbert, Global Lead Energy Transition at ING says “What commercial banks should really be doing to build a net zero economy is unlocking capital for the transition, thinking about what we actually do, which is lend.”

To this end ING recently announced Terra. Using detailed scenarios for each sector developed by independent organisations, the methodology assesses the technology shift each sector needs to deliver a stable climate and evaluates how the technology clients are currently using or are planning to use compare. By using this forward-looking, open source methodology, ING is not only steering its full lending portfolio towards the goals of the Paris Agreement but also enabling its peers in the banking sector to further scale this approach.

Then there is the finger-print, which refers to how companies make their sustainability strategy relevant to all staff and management in order to inspire them to act outside the workplace. LinkedIn, for example, does this through a shadow carbon price. As Peggy Brannigan, Global Program Manager – Environmental Sustainability at LinkedIn explained at the San Francisco Talanoa Dialogue, “It raises the visibility of our sources of carbon emissions… highlighting that business travel was a large part of our total footprint. Now a carbon fee rolls out to every traveller when they book a ticket, so it generates conversations about when it’s important to travel, and when it’s not.””

The blue-print is how companies move from big goals to concrete plans to help build a net zero economy through investments, partnerships, governance and technology. Scania, the vehicles manufacturer, conducted a climate scenario analysis and outlined what it can do as a business and what it expects from other adjacent sectors and partners in the value chain.  “We put our cards on the table,” said Andreas Follér, Scania’s Group Sustainability Manager at the Stockholm Talanoa Dialogue.

Our final imprint is news-print, by which we mean how companies communicate about climate change. Some are engaging influencers, partners and advocating for policy, using alternative platforms to the traditional sustainability report. For instance, Interface’s ‘Climate Take Back’ reframes climate change from a question of limiting damage to one about how to create a climate fit for life and embeds the message throughout its corporate communications.

Many companies are jostling for a leadership position in the future net zero economy. Companies that don’t want to be left behind think about the opportunities ahead in terms of the imprints outlined above. This will ensure they are not overwhelmed, are able to take action now and show immediate results, and then evolve their work to raise ambition and impact.

Read the full report or register for a webinar in February to hear more at naturalcapitalpartners.com/talanoa

Alex Watson is Marketing Manager at Natural Capital Partners, a leading provider of renewable energy, carbon emissions measurement and reductions, water stewardship, supply chain resilience and biodiversity protection. Its 300 clients include ING, Interface, Microsoft and M&S. It produced this research as a contribution to the United Nations Framework Convention on Climate Change’s (UNFCCC) Talanoa Dialogue initiative, which brought fresh perspectives to the climate negotiations in December in Katowice, Poland, where details on implementing the Paris Agreement are set to be finalised.