Towards net-zero: Are we really the smartest of monkeys?

There’s a real buzz about the transition towards ‘net-zero’, which is generating a major outbreak of optimism in an otherwise bleak year. More than ever, it feels like we might actually have all the resources, tools and technologies we need to meet the climate crisis. While the latest call-to-action presents a real opportunity, we have to ask; is our focus on net-zero enough – or is this singular pursuit potentially a distraction from the more complete journey of transformation we need to undertake?

The past few months have been breath-taking.

Back in September, Climate Week – hosted online for the first time – generated an explosion of interest in climate action, with over 500 events from more than 20 countries around the world, sharing a unifying message: we have to “use this moment to pivot to an economy that is not driven by fossil fuels”.

Each day, an avalanche of announcements, new pledges, commitments and industry reports, all directed towards a low-carbon world. From major cities to big businesses, and NGOs to governments, everyone seems to be joining the call to action, as if compelled by some irresistible force. Even China is pledging to become carbon neutral before 2060. While the world’s second-largest economy is just a little late to the party, it’s still better to have them turn up. Over to you, POTUS.

This year’s event stood out for a host of other reasons, too; set, as it was, against a backdrop of “hurricanes, droughts, floods, tornadoes, wildfires — you know the drill — combined with the looming exit by the United States from the 2015 Paris Agreement”.  The notion of the perfect storm could hardly be more relevant.

The momentum continues with a host of net-zero events, springing up, around the world. In November, edie’s Net-Zero Live event seeks to empower businesses, policymakers, investors, NGO’s, product and solutions providers to lead the net-zero revolution and accelerate climate action. The net-zero convocation seems to be re-capturing the imagination for concerted climate action. Global net-zero commitments have more than doubled in less than a year – with progressive regions, cities and businesses leading the charge.

At this long-awaited vantage point, one could almost be forgiven for thinking – give or take an election or two – that we’re actually reaching an authentic tipping point; sustainability is finally going mainstream in business, politics and economy, and this story of a green revolution could yet develop a happy ending. Can we really dare to dream that all will be well in tackling the crisis of the century? Perhaps, we are the smartest of monkeys, after all; at least, smart enough to adapt, and avoid the threat of climate breakdown and associated economic collapse and extinction?

All in, or action gap?

So, it looks like we’re ‘all in’ – petty much – with the growing ambition to achieve net-zero emissions. Yet, as we all know, making a commitment is one thing, delivering a real impact is quite another. We need to move beyond warm words and pivot, very quickly, towards robust action plans, configured to deliver tangible and radical impacts.

There are already concerns about our readiness to act: the majority of major companies still lack robust delivery plans. Recent analysis shows that while 45% of FTSE 100 companies are targeting net-zero emissions, only 16% have realistic decarbonisation plans in place. We appear to have a climate action gap.

There’s also a divergence of ambitions on time scale: the more ambitious of businesses are pursuing aggressive targets of net-zero by 2030, while a much later date of 2050 is being adopted by more cautious governments and politicians. Environmentalists like Greta Thunberg are, rightly, raising questions on the overall framing of net-zero: should we rather be aiming for real zero if we are to have any chance of staying within the 1.5C Paris stretch target?

As Greta articulates so well, “Because distant net-zero emission targets will mean absolutely nothing if we just continue to ignore the carbon dioxide budget — that applies for today, not distant future dates. If high emissions continue like now even for a few years, that remaining budget will soon be completely used up”.

And the clock is ticking. As we approach the end of 2020, we now have less than a decade in which to make significant headway towards a net/zero-emissions future. Which means we need to take bold decisions and make big strategic changes, right now – not later in the decade. As Fatih Birol, the executive director of the International Energy Agency, puts it: “The next three years will determine the course of the next 30 years and beyond.” The bottom line is this: we can no longer put-off serious climate action.

Yet, there is also much good cause for optimism. Achieving net-zero is not pie-in-the-sky, it is technically possible, today: the solutions are all there, patiently developed and lined-up by a host of innovators and climate leaders over the last decade and more.  

A recent study by Mark Jacobson and his team at Stanford University demonstrates that the shift towards 100% renewables is easily achievable by 2050, notwithstanding any pushback from incumbents and vested interests.

Renewable energy is also commercially viable – costs have plummeted, and many new renewable energy projects are now cheaper than even the cheapest coal-fired power plants. The International Renewable Energy Agency says half of new solar and wind installations undercut fossil fuels in 2019. Since 2010, the cost of new solar photovoltaic projects has fallen by 82%.

So far, so good: we have the demand (genuine need and real commitment), and we have a good supply (increasingly effective and affordable solutions), but how do we actually navigate towards net-zero?

Finding our way

Delivering on the promise of net-zero is complex; we need frameworks at government and market level to create the right policy architecture – and these will need to be coupled with more tactical programmes at a business level, configured to deliver a real impact.

New frameworks are emerging. At market level, a major industry coalition in the UK – including Anglian Water, Mott MacDonald and Skanska – has developed Building a Net-zero Economy, focused on how the net-zero transformation can be supported within the infrastructure sector. They have identified five key challenges for urgent attention in building the infrastructure we need for net-zero by 2050, including: flexibility and adaptability, establishing infrastructure and regulatory frameworks, mobilising and transforming supply chains, maximising benefits, while minimising costs and mobilising finance. When you dig into the detail, net-zero in this sector is a massive undertaking in itself.

At the business level, Transform to Net-Zero – a coalition of major corporations, including Unilever, Microsoft, Maersk, Mercedes-Benz, Danone, Nike, and Starbucks – is aiming to bring to life the net-zero transformation journey for companies. They wish to develop best practice guides, tools and templates to inspire companies to fully embed net-zero into their own businesses. This movement looks like it could provide a seriously helpful resource, but we’ll need to see some substantial guides and tools, pretty quickly.

Already available, we might adopt the 1.5C Business Playbook – built on four effective pillars: reducing business emissions aligned with a 1.5C pathway, reducing value chain emissions, integrating climate within our business strategy, and influencing climate action in society. A very interesting guide, and a good place to start, perhaps.

In practice, any tangible steps towards net-zero carbon will, most likely, involve a combination of reducing emissions (through efficiency and demand reduction, reducing waste, and switching to renewables & localised production), electrifying public and private transport, and offsetting carbon by funding projects like reforestation (to counteract any residual footprint), along with a range of local and community-based initiatives.

In reality, there will be many different pathways; every business will need to fully engage and develop an appropriate form for their own specific context. But, whatever the business and sector, we do need a robust plan. And, central to such a plan will be the circular economy.

Going circular and beyond

According to the Ellen MacArthur Foundation, switching to renewable energy and increasing efficiency can only cut global greenhouse gas emissions by 55%. The standard steps for carbon reduction will not be enough, on their own, to deliver radical shifts in performance, without radical efficiencies in key inputs associated with resource extraction and production.

To fully close the climate action gap, we’ll also need to fully adopt and integrate the circular economy – by designing out waste, keeping materials in use, and regenerating farmland to influence the remaining 45% of emissions.

As the Dutch Minister for the Environment, Stientje van Veldhoven, shares: “We really need to link climate change and the circular economy because if we don’t, we’re not just neglecting half of the problem, we’re also neglecting half of the solution.” There is no choice: if we want net-zero, we also have to go circular.

We also need to remember that climate and carbon are not the only issues. We need to think much more broadly – not just for the sake of our planet – but for the benefit of our businesses, too. By considering all aspects of sustainability, including resources and supply, waste and recycling, people and community, biodiversity and energy, it is possible to make a greater and more efficient impact: it makes good sense to capture all opportunities and benefits at the same time; and, ultimately, we do need to be sustainable on all planetary and societal boundaries.

Joining the dots

We also need joined-up thinking and action across all our initiatives and commitments. Many organisations will have multiple pledges, targets and initiatives, including: UN SDGs, ESG metrics, business purpose, natural capital assessments, sustainable supply chains, and many more. How do all these commitments align with each other, and help the business perform and create value?

In practice, we will need a suite of interconnected initiatives: Microsoft appears to be developing this level of joined-up thinking, with a series of cohesive strategy announcements made throughout this year.

In January, the technology company announced its new strategy to become carbon negative by 2030 – a bold commitment (more ambitious than net-zero), not only covering its entire business, but also including the complete supply chain (Scope 3 emissions), along with emissions back to the company’s formation, back in 1975 (carbon debt). This represents a transformational commitment – exactly what is needed in the corporate sector.

Microsoft has also recognised that carbon is not the only issue. All sustainability challenges and opportunities are interrelated and tend to have common, underpinning solutions. Carbon is simply the initial area of focus announced by Microsoft, and the company has subsequently announced three further, vital elements in support of its overall strategy: biodiversity & ecosystems, waste, and water.

Perhaps Ikea’s People and Planet Positive strategy offers a more complete and meaningful framing of the challenge? Yet, good as it is, this might still not be enough.

Not only do we need to ensure joined-up thinking between initiatives, we also need to integrate everything within a framework for better business – one that helps us to resolve the tensions at the heart of the sustainable business challenge; how to successfully integrate sustainability and be successful, commercially.

As Rio Tinto and many others have discovered, through some trial and much error, it is hard to balance competing interests. Can we really hope to maximise short-term profits while apparently balancing a variety of stakeholder interests? Resolving this fundamental challenge requires much more work.

Does it work commercially?

This leads us to the final challenge: Our pathway towards net-zero, encompassing all of the above principles, still needs to work commercially – delivering a ‘fair’ profit – as well as enabling environmental and social sustainability. There are many businesses, fairly advanced in their sustainability thinking that might be generating good progress on the latter two points, yet performing poorly in commercial terms.

Some progressive retailers, for example, have been embracing sustainability over the last decade, but are so used to commercial success through selling lots of new, linear-economy products, they are now struggling to create relevant and sustainable business models. How will they make money in a circular retail world?

In fact, business models in many sectors are being stretched, tested towards breaking point: no longer able to deliver the illusion of continuous growth in sales and profits; no longer able to defy gravitational forces of debt, market saturation, and growing economic risks – they are rapidly heading towards becoming stranded assets.

Becoming a truly sustainable business means we still need a viable commercial model. This requires some really smart innovation, especially concerning our business models. When fully integrating sustainability into the business model, everything changes, as it needs to do. We will explore this point, more fully, within a future article.

The full journey?

Our current enthusiasm for net-zero is highly commendable – we do need a positive fulcrum from which we can leverage real change, and after an (almost) lost decade, we do need to generate positive momentum in dealing with the climate crisis. But, on its own, a focus on net-zero offers an incomplete solution. It might still be necessary, but it’s not sufficient.

It’s a bit like starting off with the grand idea of taking a low carbon tour of all the countries across Europe, then settling for a day-trip to London, instead. Sure, we need to include London on our itinerary, it’s an interesting city with much to offer, but it’s not the only important destination we need to visit; think of all the other essential experiences we miss, by not taking the full journey.

Net-zero is only a part of what is needed. We also need to be fully sustainable in all dimensions, operating within all planetary and societal boundaries, and to achieve this we need to fully engage with the circular economy. We also need all our sustainability and business initiatives to be fully aligned, working coherently and integrated within the context of a commercially viable business framework. This will also mean business model innovation – to deliver sustainable value for our customers, the business and all our stakeholders – and, remain commercially viable in the 21st Century.

There’s lots to think about, and it can become complex, but we cannot ignore what is needed. We badly need a more complete and holistic perspective, coupled with a healthy dose of honesty, concerning what it really takes to deliver the necessary transformation in all our businesses and economies. Are we really the smartest of monkeys? To escape the slide towards extinction, we’ll have to get a whole lot smarter.