We are presently experiencing a seismic shift in the world towards a vital, more sustainable way of living and doing business. More and more companies are placing sustainability at the center of their strategies & processes and accepting the challenge to contribute to the international goal to limit global warming to 1.5 degrees. Corporate Carbon Management, reducing, offsetting emissions, and decreasing the environmental impact have become key goals for organizations and brands worldwide to create value and maintain competitiveness.
Sustainability Is The New Reality
Stakeholder demands have been changing a lot over the past years. Digitalization and worldwide connectivity have been drivers for more transparency and pushing ad-hoc information on grievances and misconduct worldwide into the local societies. In my opinion the current global pandemic and health crisis has changed the corporate thinking and the global awareness in confront to the fact of what the climate crisis and a fundamental climate change could mean for the human kind and this planet. In fact, sustainability has become an essential factor for each company and in their various departments: customers are more likely willing to pay a premium for sustainable products, the sustainability commitment of the company has become a decision making factor for or against an employer, new alternative markets and as sustainable marketed products are speeding up in growth, and investors are placing sustainability at the top of their agenda.
Stakeholders are clearly promoting,demanding, and driving businesses towards a sustainable carbon performance transformation.
“Similar to the digital revolution before it, the sustainability revolution changes everything. […] The trouble is that too few companies factor the potential costs of strict regulations or other big unknowns into their long-range visions. They instinctively tend to model a future that looks more or less like today.” Study from Bain&Company, Sustainability Is The Next Digital
Businesses need to transform and perform on carbon emission reduction and other sustainability related topics to remain competitive. Recently “JPMorgan Chase announced a significant expansion of its efforts to reduce carbon emissions worldwide with new commitments to invest in, encourage investment in and provide financing to companies devoted to saving the planet.” Last week, Allianz, the insurance major from Germany, has been named the “most sustainable German company” in an assessment and survey conducted by stern and Statista. Allianz manages more than two trillion euros. "The claim that you can't make money with green investments is increasingly proving to be nonsense," said Oliver Bäte, CEO. The opposite is true: "Those who do good things are more successful."
From Commitment To Carbon Action – From Costs to ROCI
Many companies now communicate their commitments to become carbon neutral by 20XX. Yet today, we’re seeing great initiatives, which don’t represent an entire carbon journey but important investments done by companies to reduce the corporate carbon footprint. Recently Airedale Chemical in the UK has invested £200,000 in solar panels as part of a commitment to reducing its #carbonfootprint. The finance director stated that "this initiative should save the firm about £25,000 a year on its energy bills – with an overall saving of £800,000 forecast for the next 25 years.”
We’re already seeing industries where carbon performance is having a huge financial impact. With the new CO2 reduction scheme in the heating and transport sectors from January 1st 2021, companies that bring fossil resources and fuels into circulation “will have to buy emission allowances. Starting at 25 euros per ton the price will increase to 55 euros per ton by 2025 and as of 2026 the price will be determined by auctions within a frame of 55-65 euros”.
Further, financial institutions and investors are already taking the carbon maturity and performance of companies into account for their decision-making processes and are binding e.g. the loans interests rates to corporates sustainability and carbon performance. The better the performance is, the lower the rate becomes. There are many more examples on the ROCI like talent retention and employer attractiveness, since especially young professionals are more and more focussing on how sustainable their future or actual employer is.
Engaging the Supply Chain
In fact, this is not the easiest thing to do, defining the strategy, building the internal engagement and support, starting to monitor and act on results is time and resources consuming. Yet, we are experiencing that a lot of companies start to skid when it comes to analyzing and monitoring their emissions. Data is very widely scattered and not easily available and businesses in some industries need to tackle the issue, that up to 90% of companies’ impacts on the environment come from supply chains. These scope 3 emissions have a crucial impact on commitments and their credibility. For example stated the Adelphi Report from 2017, which examined German industries, that “In all industries, the upstream value-added chain, from the extraction of raw materials to the individual processing stages and direct suppliers, accounts for a considerable share of the environmental impact. Environmental protection measures should therefore not only be introduced at the company's own sites, but activities should also be geared to the supply chain.”
It is crucial for companies to choose the right approach and tool to monitor their emissions and to support the journey towards net-zero.
The Process of (R)evolution
Bain&Company’s study is called “Sustainability Is The Next Digital”, and this comparison makes absolutely sense. The #ClimateTech market has grown in 2020 extremely and is offering companies many possibilities to act on their carbon emissions. Compared to Digitalization, for Sustainability we have got the right tools and best practices available that can help companies to monitor, improve, reduce, offset, and leverage their carbon performance while developing an optimized ROCI, the Return on Carbon Investment.
Our purpose at Cozero is not only to support companies with our Carbon Action Platform in measuring and monitoring their emissions but going from offsetting to reduction and involving all relevant stakeholders into the process, sharing results and progress. It is at the core to move this topic from a compliance perspective to a strategic & management-driven approach, for which Cozero stands for.
Cozero tracks, optimizes, and engages on your carbon performance. Carbon management, the simple way.
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