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Responding to the spread of coronavirus - Message from our Managing Director

Decarbonisation strategies need to go further, be quicker and act bolder to reach net zero

Alan Barlow, Director at Centrica Business Solutions, explores why organisations need to build a sustainable business and pursue net zero now

Science tells us that we must limit global temperature rises to 1.5°C compared to pre-industrial levels. To achieve this, we need to reach net zero carbon emissions by 2050. Failure would leave hundreds of millions of people facing droughts, floods, extreme heat, and more.

In response, we’ve seen governments around the world announce targets for reducing carbon emissions by 2050. But many are now realising that these targets aren’t good enough. They need to be bolder and take action sooner, or we won’t reach net zero by mid-century.

In the last few weeks alone, I’ve read news articles about:

The European Union reach an agreement on the European Climate Law, which enshrines its commitment to reaching net zero by 2050 in law.

The UK government strengthening its position on climate change, by committing to a 78% cut in carbon emissions by 2035.

The energy white paper setting out how the UK will clean up its energy system and reach net zero emissions by 2050.

But most experts agree that current climate pledges still don’t go far enough or won’t be delivered quickly enough. Independent scientific analysis from the Climate Action Tracker forecasts that current policies would still see global temperatures rise by 2.9°c by 2100. Even if the most optimistic targets were reached, global temperatures would still be too high. With the UK set to host the pivotal UN COP26 climate negotiations in November 2021, there is great impetus to show global leadership by bridging this policy gap.

This isn’t someone else’s problem

Decarbonisation is clearly critical to the survival of the planet. But it’s critical to the immediate survival of our businesses, too. 2050 targets might seem a long away today. But as business leaders, we need to act now to retain the commercial viability of our organisations.

There’s a huge range of reasons why we need to take action now, but two stand out to me. Firstly, no matter what industry your organisation operates in, your environmental credentials are increasingly one of the key things that customers use to determine who to buy from – whether they’re a consumer purchasing your end product, or a procurement manager deciding on your future in their supply chain. In fact, new research from Centrica Business Solutions found that 69% of sustainable business leaders choose supply chain partners based on their ability to reduce their carbon footprint. That’s potentially a huge proportion of your customer base. So, if your competitors move quicker and harder on decarbonisation than you do, you shouldn’t be surprised if your customers start to move in their direction. The damage that would do to your bottom line is obvious.

In addition, we all know that political priorities will continue to change. New regulations and policies will continue to be introduced to drive decarbonisation at a national level. If you don’t act before regulations force you to, you’re leaving your organisation exposed to unnecessary and unsustainable risk – from future regulations that might cost your business financially, such as carbon taxations; to the missed opportunities of new incentives that your business is not ready to take advantage of. Sustainable business leaders are already doing this. 80% say their decarbonisation strategy goes beyond current policy requirements. They know regulatory shifts could have serious impact on their performance if they’re caught unawares, so they’re being proactive to stay ahead of the curve. We should all be doing the same.

Why wait to pursue net zero? Build a sustainable business model now

We’re all part of the net zero solution

We all know that there’s no ‘right way’ to get to net zero. It’s a different journey for everyone, and if there was a straightforward answer, we’d all be doing it. What’s important is that we all do something – and we do it now. Even a small change is a step in the right direction.

Earlier, I said that climate change is everyone’s problem. I meant it. It’s particularly important for business leaders though. Our sphere of influence is broad, so the decisions and actions we take on decarbonisation today will play a significant part in determining the future of our planet.

I never underestimate my own role in all of this, either. I’m in a unique position of being able to steer my own organisation towards net zero, while also supporting leading organisations around the country to do the same. Around 90% of our total carbon emissions come from Scope 3, so I know the biggest thing my teams can do to support the world’s journey to net zero is to help them use energy more sustainably, by helping organisations cut their emissions across power, heat and transport.

If you’re not so clear on the steps your organisation should be taking, our new report – Why wait to pursue net zero? Build a sustainable business model now – provides recommendations to get you moving. It’s based on personal experiences of 1,000 executives from 7 countries, and their insights can provide some inspiration on the ways your organisation can become a sustainable business leader and the steps you can take as a leader to accelerate your organisation’s path to net zero.

Let me end with a final thought. In reading our new report, one quotation really stood out to me. When talking about the need to act on decarbonisation now, David Croft, Sustainability, Environment and Human Rights Director at Reckitt, said: “The risk of inactivity is one thing, but the other thing to consider is the risk of missing opportunity. There is opportunity in developing products and working in a certain way that is part of the solution to the global challenge of climate change. I would much rather be part of the solution than part of the problem”.

I couldn’t agree more. Failure to reduce your organisation’s fossil fuel use now will mean more expense later on, from tighter regulations and carbon taxes. It will also mean lost opportunities too, as your customers move to competitors who share their environmental values. It might be tempting to keep waiting for the ‘perfect’ time to act. But if you keep waiting, before you know it, it will be too late.