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Crafting a decarbonisation strategy that fits your business needs

5th November 2020

In a recent blog, we mentioned that environmental sustainability is a process and way of working— not something that is “simply achieved.”

Sustainability managers, facilities managers, procurement and finance professionals tell us that no matter how sophisticated an organisation’s environmental sustainability strategy is, there will always be more work to be done. Yet as we help customers to set out on a path towards decarbonisation, eco-efficiency and lowered utilities costs, our approach is centred on measurement and goal-setting. This is, of course, necessary to track progress and quantify success.

When working with organisations to develop an ambitious, yet realistic roadmap towards reduced environmental impact, we ask them to envision the future. Whether it’s 2030, the focus year of the Paris Agreement, 2050– the UK government’s target year for net zero greenhouse gas emissions, or another date relevant to the business, we know it’s important that they consider timelines beyond their most immediate business decision-making.

From recovered funds, to lowered costs, optimised processes, and transformed company culture, we’ve seen the benefits of improved environmental sustainability performance across sectors. But environmental sustainability is ultimately about business risk. To truly mitigate that risk, proactive measures around people, processes and technology need to fit into a consistent and ongoing strategy.

The value of scenario-based thinking 

Whatever the sector, every organisation is navigating a changing, and less predictable economic landscape, particularly with the current impact of a pandemic and the further uncertainty around Brexit. The importance and business benefits of decarbonisation have never been more important. Equally, organisations are hesitant to make public commitments without a clear understanding of the long-term implications. It’s here that a scenario-based approach is impactful.

Scenario-based thinking looks to a relevant end-date (for example, 2050) and works backwards, considering the various levels of commitment needed to achieve a certain reduction of environmental impact. By approaching planning with an end date already in mind, organisations are forced to consider and confront the larger changes affecting their industries from shifting resource costs and the changing demographics of their consumers, to an evolving regulatory landscape and potential future changes to their products or business models.

Redefining Return on Investment (ROI)

As our consultants know from practice, some investments require longer timeframes to demonstrate their true value. Furthermore, some choices may take longer to prove a financial ROI, but are more immediately beneficial to an organisation’s overall strategy, improving brand reputation, employee morale and stakeholder relations. When it comes to technology, from energy efficiency measures to heat pumps and other green innovation, the benefit lies in finding that ‘sweet spot’ of timing and spend which delivers sustainable results, while avoiding forced, unanticipated expenditure.

To make sure this message resonates, we evaluate multiple potential approaches to sustainability (scenarios) and compare their effect on the organisation. Inaction, or “business as usual” is one of the options compared. We help estimate the financial, operational and reputational effects of those potential missed opportunities to help build the case for commitment to tackling environmental sustainability performance. But establishing the cost of inaction is just one step on the journey— how do organisations decide what action to commit to taking?

The value of Science-Based Targets

Science-Based Targets provide a framework within which to make credible commitments, setting emission reduction targets in line with climate science and international agreements. According to the Science Based Targets Initiative, “Targets adopted by companies to reduce greenhouse gas (GHG) emissions are considered ‘science-based’ if they are in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement – to limit global warming to well-below 2°C above pre-industrial levels and pursue efforts to limit warming to 1.5°C.” By evaluating potential commitment scenarios within the context of SBTs, organisations can decide on a strategy with goals that fit their capabilities, but remain ambitious enough to be classified as ‘Science Based.’

Though Science Based Targets set trajectories between 1.5 °C and 2 °C, a recently launched open-source tool makes it possible to translate any organisational objective into a “temperature score.” This makes it possible to validate targets in the context of SBT, or compare ambition across organisations, even when Science Based Targets haven’t been set. Designed with financial institutions in mind, the SBTi Finance Tool allows for comparison of decarbonisation ambitions across a portfolio, generating “heat maps” for countries or sectors. Based on this information, the tool can be useful in defining an engagement strategy—identifying where efforts to decarbonize are best focused, incorporating information like percent of ownership, and level of contribution to emissions. Commitment to decarbonisation is famously difficult to compare across organisations, this technology translates diverse targets into one common and intuitive metric on temperature, helping place diverse commitments to environmental sustainability performance in the context of global emissions objectives.

The UK Government has already set a target of achieving net zero carbon emissions by 2050 and for the NHS the target is even more ambitious with a net zero carbon target of 2040. Recently the Government has committed to producing a decarbonisation plan for the UK ahead of the rescheduled COP26 climate conference in November 2021.

We know that the UK can’t achieve net zero without participation from everyone, but it remains to be seen how the Government will balance the carrot with the stick! – Either way, doing nothing is unlikely to be an option for businesses.

For more information on how we can help you with your sustainability plans, please contact us