The importance of making a practical transition to net zero

This warning, published in the Global Stocktake, in October 2023, should act as a wake-up call for organizations, but now is not the time for unsubstantiated gestures.   

Ambitious net-zero targets may sound impressive and like a positive step forward, but what is far more important is that organizations can actually meet the carbon emissions reduction targets they set themselves.

We know from Normative’s Carbon Accountability Report, that despite 96% of companies saying they are committed to a formal carbon accounting process, 72% of respondents do not calculate scope 3 emissions. There is a disparity between what organizations commit to and what they can deliver based on the data available to them – a business execution gap. This needs to change.

With progress against global net-zero targets lagging, it has never been more important to map out a pragmatic path to net zero. This is particularly true when it comes to organizations considering reliable and affordable power generation requirements, the like of which Twenty20 Energy works with on a daily basis. So, what do we mean by a pragmatic path to net zero and how can organizations get there?

High-quality data is pivotal to net-zero plans

Organizations are facing pressure from regulators, consumers, and investors to calculate and reduce their carbon emissions. It is therefore understandable why so many are assessing their source of energy supply and considering changes. But just because a different source of energy sounds more climate-friendly, that doesn’t necessarily mean making that particular transition will actually improve an organization’s carbon footprint. 

This is a hugely important decision that cannot be taken lightly. It can also be complex, as is proved by the challenges facing organizations in developing markets. Such organizations need energy solutions to support rapid growth, at the same time as balancing financial and environmental considerations, in line with United Nations sustainability goal 7 – ensuring access to affordable, reliable, sustainable, and modern energy for all. 

Actionable data insights are essential in allowing organizations to tackle these challenges through a practical step-by-step transition to net-zero, rather than a meteoric leap. Without relevant, timely, and accurate data, organizations will not be able to make informed decisions. A key consideration for organizations now is what power source they should work with and, in many cases, transition to. Without data of a sufficient quality, it’s very difficult to understand which option to choose, such as how beneficial an immediate switch to solar power would be, or what are the best short, medium and long-term options to get an organization on course to achieve its net-zero targets. Making the transition from fossil fuels doesn’t happen overnight, but if we leave data out of making such decisions, there’s a risk that it won’t happen at all. 

The regulatory imperative

Given the scale of the shift that is needed throughout the global economy to get on track for net zero, clear plans are crucial. Now, this is also being reflected in regulation. 

The EU’s Corporate Sustainability Reporting Directive (CSRD) already requires organizations to either disclose a Paris-agreement aligned emissions reduction plan, or state clearly if they do not have one. While this is an EU regulation, the CSRD also applies to companies based abroad that have a presence in the EU.

In addition, the Corporate Sustainability Due Diligence Directive (CSDDD) is a European Union directive that will require large companies to align their business strategies with the Paris Agreement goal of limiting global warming to 1.5°C. Essentially, this means that large companies have to have a plan for reaching net zero. This will apply to EU and non-EU companies that are active in the area and meet the turnover threshold.

So, even if organizations have not yet felt the need to draw up a plan to reduce carbon emissions, now regulatory pressure will bring this to the forefront of the minds of executives and board members across multiple industries.

Going beyond compliance

The growing expectations on organizations to develop such carbon reduction plans goes beyond mere compliance. This is an important incentive for many to think carefully about a longer-term plan to get to net zero. There are also real business opportunities on the horizon.  

For those looking for a competitive edge, building a clear roadmapped plan for a practical transition could bring numerous benefits. According to a McKinsey study, a committed sustainability strategy can drive down costs by 10%. With regards to employer branding, 2 in 3 employees are more likely to work for a company with strong environmental policies. There are compelling arguments from every angle when it comes to developing a net-zero plan – the key to success now is making sure organizations can make smart decisions by looking at the bigger picture, rather than the flashy headlines.

Conclusion: taking action on your practical transition to net zero

The path to net zero is complex, but achievable with a pragmatic, data-driven approach. With regulatory pressures like CSRD today, and the CSDDD on the horizon, organizations need to act now to develop realistic, achievable plans for emissions reduction.

Here are some practical steps you can take today to start your journey towards a practical transition:

1. Assess your current emissions across all scopes, including the often-overlooked scope 3 emissions.
2. Leverage data analytics to identify emissions hotspots and prioritize reduction efforts.
3. Evaluate transitional technologies and stepwise approaches that balance immediate impact with long-term goals.
4. Develop a clear, data-backed roadmap for emissions reduction that aligns with your business objectives and regulatory requirements.
5. Implement robust measurement and reporting processes to track progress and demonstrate compliance.

Remember, the key is to start taking action now, even if the path isn’t perfect. Every step towards emissions reduction counts, and a practical transition is far more valuable than lofty, unachievable goals.

Ready to accelerate your practical transition to net zero? Stay tuned for real-world examples.