How companies can bridge gap to net zero and move from talk to transformation

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While organisations are taking steps in the right direction – setting targets, implementing roadmaps and issuing periodical sustainability reports – the majority are still not meeting their targets. The Partners in Performance survey hopes to shine a light on what can be done to accelerate these programs and bridge the gap to net zero.

The survey asked executives across industries and regions how their decarbonisation programs were going and revealed the major challenges they face, the weak links hampering emissions reduction and what can be done to address them.

Major challenges facing companies racing towards net zero

Three major challenges emerged from the survey. Energy transition leaders outlined a need for: More transparency; greater commitment to net zero; and turning aspiration into action.

Many reported that internal communication was insufficient, leaving employees unaware of their company’s progress towards targets. In some cases, statements on emissions reduction targets were not backed by data as reviews were not fully in place. This means you have leaders communicating aggregate progress across an entire global portfolio rather than by individual division or region, leaving people on the ground scratching their heads and wondering if they were helping reach those targets or not.

Survey respondents believe that focus and commitment is needed to reduce targets. They emphatically stated that there is ‘a real need to embed sustainability into organisational processes and into people’s behaviours.’ People need to see an end-to-end result of how their actions today reduce their company’s emissions tomorrow. This could take the form of many things, but the lowest hanging fruit is something respondents highlighted: hiring skilled workers and implementing dedicated resources to advance emissions reduction programmes.

The survey results are true in Australia where some companies are losing steam with their initiatives after setting a target. It’s hard to think of a company out there that doesn’t want to decarbonise, but without a concrete roadmap, targets to work towards and initiatives to drive action, it’s really hard to actually do anything.

Many companies are making big declarations, but it’s not cascading down to the rest of the organisation, so frontline people are not being given tangible actions to help the company meet targets. The survey does show a bright ray of hope as 20% of respondents strongly believe they are on track to meet their emissions reduction targets.

Dubbed ‘leading organisations’, these companies are further along on their decarbonisation journeys, being far more likely to have objectives in place, transparency over impact, involved employees, effective systems of review, and the right training and talent to drive emissions reductions. For these companies, decarbonisation was a true priority for the leadership, not just in messaging but in financing and integrating sustainability into every aspect of the business.

In Australia, we are seeing a real transformation, even in the slow moving hard-to-abate sectors like mining and heavy industry. With new fuels like hydrogen becoming more viable and technical limitations being overcome, we may see firmer commitment from these firms. They may not be leading companies just yet, but it could be a different story in a few years if they get back on track to meet interim targets.

However, there are several weak links across the board that are hampering emissions reduction programs. Very few of these respondents, whether they were here in Australia or in Europe, felt as if their core processes had been recently reviewed or were aligned towards meeting emissions targets. There were also not many who stated they had improvement processes in place to manage reductions – as in, they were trying to continuously improve to reach goals but kind of focusing on a ‘set and forget’ mentality.

Only 8% agreed they had the right data and tools (emissions management software) on hand to meet their objectives or that their incentives were aligned towards reducing emissions. Very few agreed that there were clear and material consequences for good or bad performance on emissions targets across their organisation. The fix here could be something as simple as tying executive compensation or bonus calculations into short- and long-term reduction goals.

Organisational problems, not technical problems

The technical aspects of decarbonisation are in essence, available, but the larger problem is inefficiency. There needs to be a real review across an organisation examining core processes to better understand where emissions come into play. Is it capital management, the supply chain, operations? If companies focused more on identifying these things, they could embed and tackle the issues at their root.

The technology to make decarbonisation possible and profitable is available, but the issue lies in how targets are set and how companies create a plan to reach them. You need to hire people who have the know-how to get you there, get the right tools to track, manage and forecast emissions, and you need leaders who want to achieve this and drive towards it.

Every company can bridge the gap between aspiration and action to reduce emissions. Solutions exist and so does the pathway to do it profitably, so companies need to stop waiting for that perfect solution and just move forward. Start with a roadmap, drive some initiatives, review what is working and keep on iterating until you bring emissions down. The longer leaders wait, the bigger and more expensive the problem becomes.

Authors: Dr. Michael Träm, Director, Partners in Performance, Peter Mann, Director, Partners in Performance

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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