Published on November 9, 2023, 5:04 am
Despite the increased number of businesses committing to science-based targets, a recent report by Bain reveals that 33% of companies that reported Green House Gas (GHG) emissions through CDP and had an expiring absolute scope 1 & 2 target in 2021 failed to meet it.
Torsten Lichtenau, senior partner and global lead of Bain & Company’s Carbon Transition Practice, provides insight into these figures and offers advice on how companies can adopt a more successful approach to sustainability.
Lichtenau acknowledges that while setting ambitions is easy, achieving those goals has proven challenging. He emphasizes the importance of not only ambition but also commitment and determination in delivering targets consistently and cost-effectively. He points out that true differentiation will come from these qualities.
In addition to meeting targets, Lichtenau highlights the need for companies to commercialize their low-carbon offerings fully. This next step in the sustainability journey will be essential for companies as they embark on a path toward decarbonization.
Bain’s report identifies five key areas where companies can accelerate their decarbonization efforts. These areas include strategic adaptation, investor and lender resonance, customer-back decarbonization, partnerships for results, and creating an empowered ‘green organization’ from top to bottom.
Strategic adaptation involves gaining clarity on relevant climate scenarios and identifying signposts that indicate future developments. Investor and lender resonance is crucial as shareholders are increasingly focused on decarbonization without compromising near-term returns.
Customer-back decarbonization requires starting with the customer in mind and working backward across offerings, operations, and the supply chain. Understanding customer sustainability priorities is vital during economic downturns when cost savings become pivotal.
Partnerships play a significant role as carbon transition is too large for any one organization to handle alone. Engaging with customers, suppliers, and peers throughout the value chain is essential for success.
Lastly, creating an empowered ‘green organization’ involves empowering middle management to drive decarbonization efforts. It is crucial to align key performance indicators (KPIs) and incentives, integrate decarbonization into company performance management, and provide clarity on trade-offs.
In conclusion, while commitments to decarbonization have increased, operational targets have not always been met. Companies need to prioritize commitment and determination in achieving sustainability goals. By strategically adapting, resonating with investors and lenders, focusing on customers, forming partnerships, and empowering their organizations from top to bottom, businesses can accelerate their decarbonization efforts and gain a competitive advantage.
Note: This article was originally published on FutureCIO.