Why carbon neutrality needs to be at the top of everyone’s agenda
By Will Parkhouse. Will is a Director at Zeren and is based in our London office, as a member of our Commercial hiring team.
The need for businesses to assess their practices against any resulting environmental impacts has been gaining increasing focus over the past 50 years. The National Environmental Policy Act was signed into US law in 1970 with the UK following suit with similar legislation requiring corporate assessment of environmental factors such as emissions in 1974. Technically, the UK’s Smoke Nuisance Abatement Act of 1853 could be an earlier example but it’s fair to say the focus on environmental sustainability as a priority, as well as the corporate benefits for achieving it, has been gaining considerable momentum over the past half century.
The Paris Agreement, adopted at COP21 in December of 2015, has helped to solidify this journey and being the first universal, legally binding climate change agreement, has cemented the goal for the world to reach carbon neutrality by 2050. Business reaction was, overall, overwhelmingly supportive of such an agreement with more than 800 of the world’s largest listed companies providing positive reactions to such a framework via a 2015 questionnaire posed to their boards in the run-up to COP21.
In the years that followed, we have started to see the benefits of the resulting corporate action take shape. One key benefit for businesses, and the world, is the effect carbon reduction is starting to have on the climate. According to estimates by the Climate Action Tracker, an independent scientific analysis produced by three research organisations tracking climate progress, recent work has helped to flatten the prior, pre-Paris Agreement trajectory of temperatures down to 2.9°C, from a previous estimation of a 3.5°C rise by 2100.
Other benefits of addressing the carbon challenge are increasingly tying into common sense necessities for current operations. Energy costs are rising which means using sustainable options, whether for servers, offices, web hosting etc., can help deliver more efficient consumption and lower bills as a result. Switching to greener suppliers and adopting practices such as carbon offsetting also serves to boost the green credentials of a business leading to stronger marketing and reputation for attracting new clients as well as new hires.
A number of large multinationals are investing big in high-recognition green strategies and baking them into their long-term growth plans. Italian manufacturer of electricity and gas, Enel, is looking to invest €10bn over the next decade in green energy and electric solutions to drive greater success against sustainability goals and become an environmentally conscious “super major” among their peers. Head of Economics and Scenario Planning for Enel, Francesca Gostinelli, positioned this adaptation to a changing market as “adhering to a path of long-term sustainable growth, in-line with the Paris Agreement, to not only seize the opportunities connected to the energy transition but to also act as an enabler.”
The idea of enablement is an interesting aspect of the journey, and links into the wider sense of purpose businesses fundamentally need to adopt and champion not only to drive improvements internally but across the wider landscape. It’s a practice seen all the way up to some of the world’s largest companies and investment bodies. In an annual 2020 letter to CEOs from BlackRock CEO, Larry Fink, the message is pushed in no uncertain terms that “every government, company, and shareholder must confront climate change.” Those who champion responsiveness and transparency in their sustainability work, in both national and corporate contexts, are highlighted as entities that “will attract investment more effectively, including higher quality, more patient capital.”
With the strong stances taken from such high offices, it’s likely that we will see sustainability programmes increasingly trickle down and prioritised across the wider spectrum of the commercial world in the years to come. Another interesting takeaway from Larry Fink’s 2020 letter is how he describes purpose as “the engine of long-term profitability.” But succeeding with purpose fundamentally comes down to people. Leaders must maintain a focus on their core sustainability purpose and continually work to connect the activities of their team and wider mission to this crucial need.
Climate goals are about a recognised need for change and while businesses will have a vital role to play, it’s people who will ultimately be key to owning the purpose and ensuring our positive progress on the journey to carbon neutrality continues.
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