Over one-fifth of the world’s largest corporations have pledged to reach net-zero carbon emissions by 2050. More companies are expected to commit ahead of the November COP26 climate summit in Glasgow. Those that don’t will miss billions in new investments and won’t be ready for increased regulation, competition from rivals already working on solutions, and disgruntled investors, consumers, and employees eager for results. But is that enough?
Deadly climate events — floods, relentless wildfires, and record-breaking heatwaves — have become routine. Global greenhouse gas emissions are set to increase by 16% in the next decade, yet to get on track toward the net-zero goal, they need to decline by 56% by 2030. Innovations continue – recently one mobility company hit the first 500-plus mile range with an electric vehicle. However, while most businesses have good aspirations, many lack tangible plans, without which revenues and jobs will be put at risk.
How to Halve Emissions by 2030
Six industries are key to reducing emissions to where they need to be
Scope 1 reflects direct emissions from a company’s own or controlled operations. It does not include emissions generated by suppliers, buyers of the company’s products or employees.
To support change, the Oliver Wyman Forum is launching the Climate Action Navigator — a freely available, interactive, web-based tool — to accelerate the shift from intent to action. The navigator identifies 17 impactful actions — like scaling low-carbon power generation or reducing transport emissions — that regions and sectors can take. It gives business and government leaders specific mitigation guidance on which areas need immediate focus to reach the 2030 climate goals.
To ensure the guidance is practical and successful, Oliver Wyman and the Climate Group are releasing a report based on interviews with almost 30 companies across industries that are pursuing a climate agenda while building a profitable bottom line. Their approaches share many similarities despite differences in company size, location, and sector, from setting ambitious goals, providing training, and offering financial incentives to encouraging experimentation and a cultural shift. And most importantly, they focus beyond their own operations to ensure that suppliers and customers also are decreasing carbon emissions.
We hope that sharing the Climate Action Navigator and these successful strategies will raise the tempo of the race to net zero. So where do we start?
On Your Mark
Reaching net zero is perhaps the greatest challenge society has ever faced. Deadlines are tight, and many of the technologies we’ll need to succeed don’t yet exist or need significant refinement. But businesses need to act now. “Going early is a long-term competitive advantage,” said one company executive we interviewed. “Carbon will be more costly and won’t be socially or legally acceptable.”
Until recently, few CEOs prioritized climate or made it part of their business plans. That won’t do at a time when competitors, customers, investors, and regulators are increasingly taking or demanding action. Company leaders need to set ambitious carbon reduction goals that force them to acknowledge the challenge and measure the progress of their customized solutions. “If you don’t put the goal out there, you won’t find a way,” said one executive.
Training is an important component of success, especially for boards and leadership teams that will be making decisions about funding and direction. One firm we interviewed trains its top three management layers in climate target setting to get their feedback and to ensure they have a stake in the goals. Another — a major global retail business — provides extensive training for its board and country management teams.
Aligning senior managers’ pay directly to sustainability goals is a proven component. An upcoming report by the Oliver Wyman Forum and 30% Club will show how a similar strategy helped drive results for diversity goals.
Climate change demands urgent action, not a business-as-usual approach. Companies need to rethink their design and invest for major decarbonization, not incremental change. Business leaders need “to embrace the reality of climate change,” according to a sustainability officer for an investment company.
Companies also need to tackle the root causes of their emissions and solve for the whole value chain. One consumer goods corporation acknowledged the “inconvenient truth” of its Scope 3 agricultural footprint, which accounted for 95% of its emissions. In the end, it decided to commit to net zero, which will require not only avoiding deforestation but also including afforestation in its supply chain.
It’s a Marathon, Not a Sprint
Investment in high-carbon activities is equally critical to change. “You need to test your climate roadmap on the most difficult businesses,” one executive told us. His company is investing proportionately more to decarbonize its dairy, meat, and pet care operations because they create the most emissions. Similarly, activists are shifting from divestment to demanding a managed wind down of high-carbon producers. Private equity firms now routinely use environmental, social, and corporate governance (ESG) scorecards when evaluating potential investments. That means even small and medium-sized enterprises must address their carbon emissions.
The race to net zero is grueling in many industries. It requires commitment, endurance, and enormous mobilization, but first-movers already are seeing results – lower emissions, economic opportunities, and supportive employees, customers, and investors. It’s now time to quicken the pace.
We asked consumers, “What factors prevent you from purchasing sustainable products?”
Source: Oliver Wyman Forum Global Consumer Sentiment survey, August 2021
– The expected increase in greenhouse gas emissions between now and 2030. That trajectory puts the planet at risk of devastating effects of climate change like rising heat and sea levels and more destructive hurricanes.
Source: Oliver Wyman Forum Climate Action Navigator
– The reduction in greenhouse gas emissions necessary by 2030 to prevent the worst from climate change.
Source: Oliver Wyman Forum Climate Action Navigator
– The Oliver Wyman Forum’s Climate Action Navigator assigns several actions out of 17 — like scaling low-carbon power generation or reducing transport emissions — to the world's most carbon-heavy regions and sectors to reduce emissions to where they need to be.