Why measuring success will be key to proving commitment against the carbon challenge

With last month’s COP27 now behind us, the world is processing the key takeaways from 2022’s climate summit. Discussions focused on a new loss and damage fund designed to help low and middle-income countries cover the cost of climate change impacts, safeguarding food security, as well as the pressing issue of the world’s continuing reliance on fossil fuels. The reaction so far has been mixed. While many have praised the availability of a resource pool to help developing nations deal with climate-induced impacts, such as the recent floods in Pakistan, others have framed this as little more than squabbling over a particularly complex restaurant bill in the face of the larger carbon challenge. The issue of the tens of thousands of delegates (and often their private jets) attending an event in Egypt has also not gone unnoticed considering the wider purpose of the summit.

Two days into the conference, on November 8th, the UN released a report looking at the practice of greenwashing (where green PR and marketing are deceptively used to persuade the public that an organisation’s products, aims and policies are environmentally friendly) and its impacts on the carbon emission. Fundamentally, the report looked to provide a set of recommendations to protect the carbon neutrality mission as well as ensure the definition of “net zero” is agreed upon and cemented. A key recommendation from the report is to prioritise short and medium-term reduction targets alongside longer-term goals. In the absence of these earlier targets, wider success in the future will become much harder to achieve. Securing incremental milestones will likely help both businesses and governmental institutions make continual progress and ensure their plans aren’t sidelined.

So, how many are successfully demonstrating the success of their actions? The SME sector (which make up 90% of the worldwide business landscape) has been stepping up to the fight with positive data seen in a 2022 survey from the UN-backed SME Climate Hub. It revealed that half of SMEs are calculating their carbon emissions with 60% having plans to reduce their carbon impact. Barriers to further success include a lack of incentives for reducing emissions as well as the need for further investment to assist them in their journey. This point was underlined by Beverley Gower-Jones the Founder of the Clean Growth Fund whose presentation at the recent Climate Technology Show highlighted the swing in Seed – Series A investment from Web Analytics to Carbon Analytic start-ups. Further conversations we have had with clients across the Series A-C space indicate that the uptake in carbon analytics and reporting is still taking time to penetrate larger enterprises, as larger companies grapple with the overall transformational impact to their businesses of carbon regulation.

By contrast to the SME space, the world’s biggest companies don’t appear to be faring so well. An analysis by non-profit organisations NewClimate Institute and Carbon Market Watch has warned against taking the climate pledges of major multinationals at face value. They assessed the transparency of each of their studied firm’s headline climate pledges and gave them an “integrity rating” with Amazon, Google and Volkswagen rating low on their net zero targets while Unilever, Nestle and BMW Group were found to be very low.

As mentioned in the UN’s “Integrity Matters” report: “Net zero is now at an inflexion point. Some of those non‐state actors did not follow their net zero pledges with action, in spite of the urgency set out in the science. Some may have underestimated the task or interpreted net zero differently. Some may never have intended to achieve their stated goals, aiming only to benefit from the positive press abounding at the time.” It seems that the period where the introduction of carbon pledges and mission statements would be welcomed as proactive action is over, and the time for disclosing demonstrable results has begun. As Henry Ford once said: “You can’t build a reputation on what you’re going to do.” Perhaps many companies are starting to find this out for themselves.

With the US, UK and European governments placing increasing pressure on businesses to provide data on the performance of their emissions efforts, it’s key for companies to ensure their short, medium and long-term carbon goals are implemented appropriately and measured accordingly. This is no small task. Dr. Christian Blanco, writing in Volume 135 of the Journal of Cleaner Production, found from his research that an average company can take anywhere from 3-9 years to get their carbon reporting right. It’s a challenging issue, especially considering the complexity of both measurement and reporting exemplified by Scope 3 in particular (emissions organisations can influence, but not control) and the difficulty large firms are having in its estimation, tracking and data collection.

To tackle the complexity, the responsibility needs to sit with people in the best position to own it and drive its success. Often, we see members of the C Suite such as the CFO or COO taking up the mantle with some corporates taking further steps with the appointment of Chief Sustainability Officers (CSOs). Regardless of the title, those mapping the route to carbon reduction need to remain diligent in their focus on the short, medium and long-term goals as well as adaptable in the face of a reporting challenge which, even in the face of what will likely be shifting measurement standards, will need to remain both positive and consistent. To succeed, it’s imperative that these change makers, whether new or existing, have the values, vision and mandate behind them to make a difference.

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