Time to accelerate: momentum building for Net Zero action
Jan 05, 2021
The wave of businesses, investors and governments committing to ambitious net zero targets in 2020 is a promising sign that a shared sense of urgency is emerging, and those who aren’t factoring this into their organisation’s strategy will get left behind. This is truly the pivotal decade: we have just over two business cycles to transform every sector of the global economy to halve global emissions. Much is being written about this once in a lifetime opportunity to build a Net Zero economy, but what does this actually mean in practice? Our recent Net Zero economy index shows it means we need decarbonisation rates almost five times greater than we’ve achieved before. Every year we underachieve on cutting carbon, the task gets tougher and the transition required becomes more radical. As we enter 2021, we know we now need decarbonisation and ultimately transformation of organisations, industries and geographies at an unprecedented scale and speed.
‘Business as usual’ is no longer sustainable: the accelerating climate crisis makes that clear. But in the aftermath of another crisis – the COVID-19 pandemic – we have a unique opportunity to build back a better, fairer ‘Net Zero’ economy. Every organisation has to be ready to meet that challenge… and soon.
Driving action for net zero is not just for its environmental and societal benefits, however. It’s also good business. Around the world, countries, states and cities accounting for more than half of global GDP have already set net zero targets. Organisations that transform first will have a competitive advantage in the emerging new economy, they will be more resilient and agile, thus becoming leaders for others to follow.
The path to net zero offers both challenges and opportunities. Net zero transformation will require new incentives for investment, innovation that unlocks new technologies, as well as collaboration with many different partners across the business ecosystem.
Consider some of the many reasons why net zero action is gaining rapid momentum:
- Global leaders increasingly recognise the systemic threats that climate change poses to the global economy and are taking steps to promote a green recovery at scale.
- Meanwhile, a growing number of investors now expect organisations to minimise their exposure to climate change impacts and to invest their funds in environmentally responsible ways. And, many more companies are now choosing or are required to publicly disclose their sustainability-related risks and performance, which is causing them to revise their commercial strategies accordingly.
- Broader social trends are driving change too. Consumers increasingly prefer to spend their money with socially conscious businesses, and they’re reducing their support for companies with unsustainable practices. Employees want to know that their employers are making positive contributions to society.
For organisations that might not have yet fully embraced the need to transform, 2020 was an especially eye-opening one. The coronavirus pandemic demonstrated the need for businesses to be agile and resilient in the face of a rapidly changing global environment, showing many parallels with the need to act on climate. And new political developments around the globe are setting the stage for more potential changes ahead - not least the expected re-entry by the US into the Paris Agreement.
The climate change negotiations taking place in Glasgow in November 2021 give us in the UK a particular focus. COP26 needs to be the pivot point for stronger commitment: being the COP that raises the ambition of governments, industry and businesses to put the world on a path to reach net zero by 2050 and meet the Paris Agreement goals.
Recent events – from the pandemic to natural disasters to mass demonstrations for social justice – have shown us how quickly our long accepted ways of working can change profoundly. And they underscore how organisations can find opportunities to transform when they have strong enough incentives to do so. The challenge now is for businesses across every sector to find ways to set a net zero pathway, and to embed resilience in supply chains and operations as they ‘build back better’.
So what’s the best way forward for you? Start by understanding the latest strategies for net zero and emerging technologies that can accelerate the transformation. Two excellent resources for this are The Building Blocks for Net Zero Transformation and this guide to The State of Climate Tech 2020. Then look for lessons from other organisations that are taking the lead in sustainability efforts.
Good governance will also be vital to achieve net zero goals. This means thinking about climate accountability, long-term resilience and new incentives for sustainable investments and operations. Consider how you measure and report on ‘ESG’ (Environmental, Social and Governance) matters - the World Economic Forum IBC’s report on Measuring Stakeholder Capitalism is a useful reference.
If you haven’t already set out plans for how your organisation will transform for the net zero business era, now’s the time to start doing so. And if you have made plans, it’s time to step up the pace and begin acting on them.
To discuss how PwC can help your organisation, get in touch with Emma via the contact details below.
For details on PwC’s own Net Zero by 2030 commitment, see pwc.com/netzero.