Aiming strategies to counteract global warming
In the wake of the COP26 conference held in Glasgow last October, companies worldwide are under increasing pressure to meet the net-zero emissions goals and contribute to halving global emissions by 2030. Here are some proactive measures companies can take to address their direct and indirect emissions:
1. Adopting Circular Business Models: Companies can shift towards circular business models such as product-as-a-service or subscription systems to increase product utilization and reduce resource waste, targeting significant cuts in Scope 3 downstream emissions.
2. Financing Green Assets: Investing in green assets and promoting green financial products can help companies support portfolio decarbonization and align lending and investments with net-zero frameworks, thereby incentivizing emissions reduction and reducing exposure to high-emission sectors.
3. Optimizing Transportation and Distribution: By cooperating with contractors and supply chain partners, companies can reduce logistics emissions, which represent a major fraction of downstream emissions.
4. Implementing AI and Digital Technologies: Utilizing AI and digital technologies can help design more sustainable infrastructure and urban environments, use predictive analytics to lower lifecycle emissions, and reduce embodied carbon substantially.
5. Setting Transition-Specific and Science-Based Targets: Companies should set transition-specific and science-based targets to guide and transparently measure progress for both direct emissions and electricity consumption, enhancing corporate climate strategies and closing loopholes.
6. Engaging with Net-Zero Standards and Frameworks: Companies can engage with sector-specific net-zero standards and frameworks like the Science Based Targets initiative (SBTi), the Net Zero Banking Alliance guidelines, and relevant sectoral protocols to ensure robust, verifiable pathways to net-zero by 2050, with interim milestones by 2030.
By combining these approaches, companies can accelerate decarbonization across their value chain, catalyze the greening of financial flows, and help halve global emissions within the critical decade ahead. These measures leverage innovation, financial incentives, and collaboration alongside strong regulatory and governance frameworks to meet and exceed net-zero ambitions.
Sustainable business has become the norm in 2021, with increasing pressure from shareholders and a spurt in clean technology. Climate change is a top priority across companies, and cutting emissions from the value chain is essential, as a large proportion of emissions comes from it and needs to be controlled or reduced.
The COP26 summit has recommended the consolidation of financial and sustainability reports to make it simple for businesses to report on the climate impact and be transparent. Companies should eliminate commodity-driven deforestation from their supply chain and collaborate with others to restore critical ecosystems.
The message from COP26 is clear: fossil fuels are to be phased out, and most governments are implementing policies to phase out fossil fuels and coal and incentivize greener alternative fuels. Companies aiming for net-zero emissions must align their sustainability objectives with their public goals and take up the cause for reducing emissions. Collaboration between large companies and SMEs is also necessary to help SMEs meet their sustainability goals.
While some 'net-zero' pledges can amount to greenwashing, and some carbon offset programs are based on questionable assumptions, the carbon credit market is growing and can help in increased investment in nature-based solutions. Companies must be vigilant to ensure their carbon offsetting efforts are genuine and contribute to meaningful emissions reductions.
[1] World Economic Forum (2021). Net-Zero by 2050: A Roadmap for the Global Energy Sector. [2] United Nations Framework Convention on Climate Change (2021). Science Based Targets initiative. [3] International Energy Agency (2021). Net Zero by 2050: A Roadmap for the Global Energy Sector. [4] Intergovernmental Panel on Climate Change (2018). Global Warming of 1.5°C.
In the context of increasing pressure from shareholders and advancements in clean technology, science-based targets are essential for companies to incorporate in their climate strategies, as recommended by the Science Based Targets initiative (SBTi). Environmental science plays a crucial role in guiding these targets and measuring progress, aligning with the global goals to halve global emissions by 2030 and achieve net-zero emissions by 2050.
Financial institutions can also contribute to these objectives by financing green assets and promoting green financial products, incentivizing emissions reduction and lowering exposure to high-emission sectors. This shift supports the greening of financial flows and is in line with the net-zero frameworks outlined by the Net Zero Banking Alliance guidelines and other sectoral protocols.
