‘From ego to eco’: Business giants outline net-zero blueprint for others to follow

It has taken 12 months to produce the new framework

Published today (3 October) by the University of Cambridge’s Institute for Sustainability Leadership (CISL), the ‘Net-Zero Business Transformation’ report outlines how business leaders will need to alter their mindset in order to ensure that the low-carbon transition is not a siloed add-on but is the crux of core business strategy. In this way, they can properly sieze the opportunities of the transition and play a key role in driving it, within and beyond their value chains and respective sectors.

CISL has revealed that the report took 12 months to pull together, including the contribution of 30 organisations including large businesses in a range of major sectors. Participating businesses included Ikea, Croda, Dentsu International, the Majid Al Futtaim Group, Royal DSM, Rolls-Royce, Hewlett Packard, Iberfrola, Signify, Spotify, Salesforce, Holcim, Carrefour and Vattenfall.

The report proposes a five-step framework, with the first step being “setting a transformative agenda”. Targets and visions, the report states, should be ambitious enough that the business will need to “disrupt the status quo” to meet them. They should be set publicly so that the business will not go back on them, and so that key stakeholder groups can ask questions about them.

Then, businesses should create the enabling conditions for the transformation needed to deliver its stated visons and targets. They may need to improve governance and create an enabling culture. They may need to reconsider whether their partnerships and advocacy work – either alone or through membership organisations – serve their vision. They will also need to assess their financial and innovation plans and approach to skills.

On innovation specifically, the report recommends that businesses take a “portfolio” approach, supporting varied technologies and pathways that will likely become viable along different timeframes. The search for a single ‘silver bullet’ is discouraged. The report argues that large businesses have a responsibility to mainstream innovations, going beyond limited-time interventions at one point in the development process.

The report argues that, as business transformation progresses, leaders should take a stakeholder-centric approach, considering how their actions can bring about risks and opportunities for different groups and taking responsibility for managing this.

Tied in with this is the need to measure, disclose and reduce physical and transition risks in an equitable way.

Beyond the five-step framework, the report provides a checklist for companies looking to identify their priority areas for action based on materiality and on their ability to change systems through their sphere of influence. It also comes with seven case studies of businesses already working to implement the framework.

The report’s foreword is written by Royal DSM’s co-chief executive Geraldine Matchett, who writes: “Our reckless consumption of resources has for too long exceeded the capacity of our planet, even as we continue to under-deliver on meeting people’s needs, in many ways and many places. […] Unless we take drastic steps to urgently reshape how we live and work, those changes will become irreversible, causing catastrophic harm to the planet and its ability to provide for a rapidly growing population.

“A growing number of companies understand their role in a sustainable society and recognise their responsibilities to a broad spectrum of stakeholders; nevertheless, while the net-zero destination is clear, the route to reaching it is murkier.”

Credibility and leadership

Net-Zero Tracker’s most recent stocktake found that, while net-zero targets now cover most of the global economy, efforts to improve their credibility have been slow and minimal to date.

As of June, more than one-third (702) of the world’s largest publicly traded companies had set public net-zero targets. This was more than double the number of companies to have done this in or before June 2020.

However, only half of these companies have embedded reporting against these targets into annual reports and documents. Just over one-third (35%) had targets which meet the Race to Zero’s minimum criteria. It bears noting that these criteria are now being raised, meaning that an even smaller proportion of these firms will now be compliant.