For decades, sustainability considerations sat in corporate social responsibility (CSR) programs that were as far removed from the C-suite as one could possibly imagine. Today, however, the reputational and opportunity risks of failing to deal with sustainability issues – particularly climate change – have driven the topic to the top of CEO agendas. When their banks, investors, customers and competitors are all exerting pressure for action, CEOs know that ignoring the topic is a risk they dare not take. The fact that this issue only recently appeared on the C-suite’s radar, however, helps to explain much of the gap between CEO promises to act and the lack of substance in many of their plans for cutting carbon emissions. Measuring and eliminating CO2 is a complicated issue. Getting up to speed takes time; learning enough to create a realistic and actionable agenda takes even more. Understanding the fine detail is both essential and complex.
Measuring carbon impacts
While there’s no time to waste, CEOs (and their stakeholders) must understand that the path to net-zero carbon is a journey. It won’t be accomplished overnight, but getting started is vital. The best place to begin? With data. Without it, you can’t determine where you are, how far you need to travel or whether you’re making enough progress – and doing it fast enough – to reach a typical goal of a 50% reduction by 2030 and net-zero by 2050. One challenge to collecting data is that you need to measure not only the carbon impacts of your company’s own activities, but also those of all the partner activities that contribute to your business. Among these: the type of electric power (coal-fired, natural gas or renewable) and materials your suppliers use to make the parts you buy from them. The vehicles used and distances covered in delivering them to your factories and moving finished goods from your factories to distributors and retailers. The parts and travel required to service and repair them, and the processes required to recycle products and packaging at end of life. Each of these factors, and hundreds more, contributes to a company’s carbon footprint. Getting the data to measure them, not to mention creating a clear picture from all that data, is a daunting challenge.
The supply chain dilemma
Many CEOs are just now discovering that their suppliers don’t have the data, or any idea how to create it. Meanwhile, all data are not created equal. Establishing rigorous standards for data collection is vital to ensuring consistency and easing the process of aggregating data from hundreds of sources into a clear, meaningful picture. OEMs have an important role to play here. While most major manufacturers and Tier One suppliers have the resources and access to hire expert consulting help from firms like Carbon Intelligence (Ci), many second- and third-tier suppliers do not. It’s encouraging, therefore, that so many of Ci’s clients are asking us to provide engagement programs for their suppliers, extending the detailed knowledge and advice they gain from us to a far broader audience than we could ever reach one-on-one.
"The path to net-zero carbon is a journey. It won’t be accomplished overnight, but getting started is vital. The best place to begin? With data.”
A safe space for action
One important point: Although over five years have passed since adoption of the Paris Agreement, these years have not been wasted. Instead, society has used them to forge an environment conducive to meaningful business action. It’s difficult – and economically dangerous – for a business to act unilaterally. The combination of increasingly stringent government regulations – and more on the horizon – plus support from major banks and investment firms and the shared experience of early corporate movers has forged an intelligent network of support and a competitive environment where action does not carry undue risk. In fact, the opposite istrue. Today, failure to act is the far bigger danger.
This is vital, because business is the most important linchpin in solving our carbon crisis. On the most elemental level, businesses exist because they’re skilled at recognizing, analyzing, tackling and solving problems. Eliminating carbon from our atmosphere may be the biggest challenge any CEO will ever tackle, but they and their businesses are also uniquely qualified to invent the solutions to acleaner, healthier future.
