4 Strategies for Reaching Net Zero

Joe Rozza

With climate change becoming a more material risk, many companies are accelerating steps to reduce their environmental impact and improve the resilience of value chains to endure extreme weather, chronic water stress and other risks. While recognizing the importance of taking climate action for the sake of our environment, companies are also realizing that investors, clients, employees, consumers and other key stakeholders are less likely to engage in business without a visible commitment to sustainability. If companies are not adhering to climate commitments, the risks to growth, profitability, reputation and brand value could be substantial.

Under these mounting pressures, businesses are increasingly making adjustments to their operations and increasing their environmental commitments. For many organizations, their first climate commitment will be to achieve net zero carbon emissions—going from zero commitments to a net zero commitment— from “zero to zero.” Based on Net Zero Tracker’s database, net zero commitments within the Forbes 2000 increased 75 percent between 2020 and 2022. Amazon and Global Optimism’s Climate Pledge, which requires signatories to commit to net-zero carbon emissions by 2040, has already been signed by over 450 companies spanning 55 industries. 

Moving from zero to zero requires a thoughtful and actionable step-by-step strategy to ensure the shift towards sustainability is achieved in a way that will maintain profitability and encourage future business growth.

Here are four steps your organization can take to develop a climate action plan and achieve net zero, in a way that’s best for business:

#1 Establish a sustainability business strategy

Begin with the development of a company-specific business case that identifies the major trends that can create risks to, and opportunities for, the growth and profitability of your enterprise. An essential consideration is the net zero commitment trend and growing preference for more sustainable goods and services among your customers, clients, and business partners. It’s important to remember that the process of developing the strategy is as important as the final product, elevating the importance of including stakeholders from across the company.

The strategy should not only define what should be done, but also how it will be integrated into overall operations. By creating a multi-year roadmap that aligns with annual business planning, you can ensure implementation remains on track. The journey to net zero emissions is long and ambitious, but it can be achieved with consistent, modest gains year over year.

#2 Develop a multi-year pathway commitment plan 

The first step involves quantifying the carbon footprint for your business using the Greenhouse Gas Protocol. The control method you select—whether “financial control” or “operational control”—is a critical decision. The “financial control” approach may be preferred since it allocates accountability for the carbon footprint according to who makes the financial decisions regarding the goods, services, capital investments and operating expenses that affect sustainability performance. Include all three scopes, even if scope 3 emissions are a rough estimate.

A good practice is to employ an experienced, credible external business partner to quantify your carbon footprint and to clearly discern between situations when your organization is accountable for the carbon footprint and when it is in more of an influence role (i.e., where your organization is involved and can help reduce the carbon footprint but is not in financial control). 

 It may be helpful to organize your carbon footprint into three buckets:

• Corporate operations (e.g., offices, travel, fleet)
• The services, goods and investments where your organization has financial control and accountability for the carbon footprint (e.g., manufactured products, existing and new real estate assets)
• The aspects of your business that have a carbon footprint, but another organization is in financial control and is accountable for the carbon footprint (e.g., construction of a building according to the design, specifications, and budget of a business partner).

Development of a decarbonization pathway for each bucket involves identifying the actions you will take over time to reduce emissions; including the degree to which each action will reduce emissions.

The final step in the goal setting process involves setting interim targets and having the overall commitment and decarbonization pathway externally validated by an organization like the Science Based Target Initiative. 

#3 Integrate decarbonization into business processes 

This can be the hardest to accomplish because it largely depends on the organization’s culture and the degree to which it is process-driven. For well-organized, process-driven organizations, mapping out the integration can be straightforward. For less organized organizations with more people-driven decision-making, integrating sustainability will be more difficult and will most likely require a deeper level of organizational change.

#4 Select and implement best management practices

There are many readily available resources that provide ideas on the best management practices to lower the carbon footprint of corporate operations, real estate assets, manufacturing, goods and services. Identifying options is typically not difficult—it’s identifying feasible options that work in each specific location and situation that can be a challenge. Incentives, tax credits and grants help improve financial feasibility, yet many are specific to a location or topic. With this in mind, partnerships with suppliers and third parties with specialized capabilities are critical to success.

It is important to recognize that the goal of achieving net-zero carbon emissions is ambitious and can be a daunting prospect. However, proceeding with the above listed actions is the fastest and most effective way for your organization to catch up with the accelerating trend toward net zero carbon emission commitments.

Net zero carbon emission commitments across the business world is a very real and compelling trend that is on a trajectory to make a company’s commitment to decarbonization a key determinant of its viability and success in the future. Companies can either choose to commit to net zero and strengthen its position or can choose inaction and risk losing market share, being marginalized by business partners and getting outflanked by their competitors. The time to take action is now.

Joe Rozza, P.E., BCEE is the chief sustainability officer for Ryan Cos. U.S. Inc. and has nearly 30 years of experience helping organizations develop and implement sustainability strategies that mitigate business risks, drive productivity, create competitive advantage, and give companies and brands greater purpose.