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From devastating droughts to blazing wildfires, the effects of climate change are seen and felt daily. As these events intensify and become more frequent, climate change has become an increasingly urgent issue for lawmakers, individuals, and businesses to address. To avoid the most harmful impacts of climate change, global greenhouse gas emissions must be cut in half by 2030. By 2050, they must reach net-zero.
With mere decades to spare, achieving net-zero has become imperative. Fortunately, organizations are catching on. In 2019, only 16% of the global economy had made a net-zero pledge. Just two years later, that number jumped to nearly 70%.
What it means to be net-zero
The term “net-zero” describes a state where the amount of greenhouse gas emissions going into the atmosphere are reduced to such an extent (or offset by removals) that a “net zero” balance is created, preventing further global warming. For many organizations, net-zero means making deep cuts to the emissions they’re responsible for across their entire value chain, including emissions produced by their own processes, those purchased through electricity and heat, and those generated by their suppliers and end-users — which are estimated to account for 65% to 95% of a company’s carbon footprint.
Some organizations choose to go further by finding ways to mitigate emissions beyond their own value chain. For example, they may educate their customer base and suppliers on how to reduce their own emissions or allow customers to purchase carbon offsets at checkout.
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While most organizations are ambitious about achieving net-zero, few lack an effective action plan to do so, according to a recent survey of senior executives from 900 global organizations that have set net-zero targets. In fact, roughly half of organizations use their emissions data solely for mandatory reporting, with no impact on their business decision-making. This is despite the fact that 85% of organizations recognize the business value that emissions measurement provides, such as the ability to explore sustainable business models, avoid financial risk, and reduce operational inefficiencies.
How can organizations leverage data to successfully achieve net-zero?
To successfully reach their net-zero goals — and reach them faster — it is essential that organizations leverage emissions data in their business planning and decision-making, and not just for reporting. Of those using emissions data in their decision-making, over half (53%) have experienced an acceleration in their net zero journeys, and on average, these organizations have also achieved a 4.6% reduction in emissions per year.
The following five-step framework can help businesses reach net-zero faster:
Establish an organization-wide framework for net-zero governance
When it comes to initiatives as large as climate change, it often requires a major shift in mindset. Everyone at the company must start thinking differently about their individual carbon footprint, as well as the footprint of the projects they work on, and the team and vendors they work with.
Management support is critical for success. If the C-suite views net-zero initiatives as a critical priority, it drives urgency and funding. With management at the helm, organizations must develop a data strategy and roadmap to support their net-zero goals and set up a governing body to oversee progress.
Establish a robust data management foundation
Data quickly becomes unwieldy and unactionable without the appropriate tools to measure, collect and synthesize it. Organizations will need to ensure that they have a robust data management foundation that automates emissions data collection at scale from multiple external and internal data sources. Collaboration with the wider ecosystem is also critical to source reliable, verifiable emissions data across the value chain.
Next, organizations must build out storage, processing, and analytics capabilities for their emissions data. This enables them to consolidate this data into a single source of truth, automatically calculate their emissions footprint and generate predictive insights. Finally, they must invest in visualization and data reporting tools so that their stakeholders can act on those insights.
Drive usage of emissions data across business functions
To enable employees to act on emissions data insight, organizations must establish an internal carbon pricing system and invest in upskilling initiatives across the business. Internal carbon pricing systems help teams evaluate the carbon cost of their business decisions, and weigh them in their decision-making. According to a recent survey, nearly 4 in ten organizations plan to set up such systems, but only 12% have already done so.
While most organizations are eager to achieve net-zero, a majority of employees do not yet know what that means. To address this knowledge gap, organizations should develop net-zero awareness programs to bring current leadership and employees up-to-date and train them in key skills, such as carbon accounting. Moving forward, these training programs should be incorporated into onboarding for new employees.
Establish mechanisms to ensure accountability for decarbonization across the organization
For an organization to reach its net-zero targets, each team must be engaged in reducing their share of emissions. To prioritize emission reduction, organizations must define clear targets and carbon KPIs for each team, and they should be included when evaluating the performance of internal functions.
Companies may go so far as to link compensation with carbon KPIs, for example, and award bonuses or adjust compensation for business leaders depending on their team’s ability to achieve emissions reduction targets.
Collaborate with the wider ecosystem to expand access to reliable emissions data
Just as achieving net-zero requires the effort of an entire organization, reaching it on a global scale will require the whole world. Organizations can contribute to the global cause by working to mitigate greenhouse gas emissions beyond their own operations.
For example, they can participate in global campaigns and alliances to raise the level of net-zero ambition. They can collaborate with their wider ecosystem — including their competitors — to establish industry-wide methodologies for emissions measurement. They can help their suppliers measure emissions by providing them with carbon accounting tools, training, and support. Finally, organizations can participate in data sharing partnerships, where they partner with external entities such as their competitors, suppliers, and customers to share and act on emissions data.
Building a net-zero future
Net-zero goals are ambitious but achievable. With leadership buy-in, a clearly defined strategy, and a strong foundation for collecting and acting on data, businesses can reach their net-zero goals at an accelerated pace and make a positive impact on the global ecosystem.
Prasad Shyam leads Capgemini’s insights and data practice for manufacturing, automotive, life sciences, oil and gas, and energy and utilities industries in North America.
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