Business action to achieve net zero
A dedicated focus on both sustainability and addressing inequality, alongside transparency and honesty, need to be paramount for business leaders.
Many organisations are still in the foothills of the journey towards net zero, with initial disclosures and commitments made, and are looking for support and best practice from others for a successful transition.
At the Forum for Global Challenges Business Summit convened by University of Birmingham from 3-5 May 2022, senior leaders from some of the world’s most well-known brands sat alongside innovative SMEs to discuss how interconnected our lives now are, and how they are leading their businesses and collaborating with others to drive forward the net zero agenda.
What came across most clearly was how to manage the intersectionality between many areas: between sustainability and diversity and inclusion, between personal agency and corporate accountability, between training, knowledge sharing and innovation, and between ensuring appropriate focus on both short and long term priorities.
Collaboration is key
Collaboration is the new Moore’s law of sustainability.
As part of the move to net zero, direct carbon emissions (scope 1) and indirect carbon emissions (scope 2) are easier for a business to define and act upon. Emissions from across its value chain, from suppliers through to how consumers engage with them (scope 3), is where it generally becomes much more complex – however the discussion centred on the need to bring scope 3 into the agenda for all businesses, and that these difficult issues need to be worked through. In particular, the sharing of best practice, with larger companies supporting their supplier base was discussed, opening up knowledge sharing with wider audiences and ensuring that collaboration takes place across the entire innovation ecosystem.
For example, Bosch are helping and supporting SMEs who are on the journey, having achieved carbon neutrality for scopes 1 and 2 in 2020. The Bosch Climate Solutions division has been set up specifically to support partners, suppliers and customers on their decarbonisation journey.
We have one planet with finite resources. Unless we all get to net zero, we aren’t at net zero. We need to work together.
Innovation and scale up support for a just transition
Green finance will be instrumental to a business’ ability to plan for a just transition. Goldman Sachs is deploying $750 billion across investing, financing and advisory activities by 2030 and bringing commercial expertise to help clients accelerate climate transition and advance inclusive growth, while HSBC has allocated up to one trillion to support businesses to achieve environmental and sustainability goals.
The transition needs to be managed well, and there are strong links between environmental and social factors.
"We need to create solutions that are simple, affordable and accessible, and provide the education and training to make this work" said Vaitea Cowan, Co-Founder of Enapter, an SME that produces electrolysers with a goal to make green hydrogen cheaper than fossil fuels. It was noted how more sectors are now interested in their products as they scale up and interest grows. At the start of their business venture, 60% of interest came from the power sector, but that has now changed to only 30% power, with 30% transportation and 30% from the industrial sector – for example to make green ammonia.
We don’t need to choose between scaling up and the environment. The circular economy is a centre piece: we take back our systems at the end of their lifetime, and our mass production goes live in 2023, 100% powered by renewables.
The circular economy is a central theme for all businesses as well, with product design focusing on more standardised, more repairable and recyclable products, and with service industries supporting their clients in how they can reduce, recycle and reuse products. For example, PwC have supported the Birmingham Organising Committee for the 2022 Commonwealth Games in how to plan to meet their ambition of making this large scale, global event, the most sustainable Commonwealth Games yet.
The need for partnership has never been greater, between consumers, governments, businesses and universities – we need genuine collaboration as we all share a common goal.
Financing and support for scaling up new climate solutions are fundamental to net zero goals being achieved. HSBC is running global programmes working with the WWF and WRI on nature-based solutions to protect and restore the environment as well as for climate innovation by supporting start- ups. As one example, HSBC is supporting start-ups at the University of Birmingham’s Tyseley Energy Park; this includes a venture looking at how to better recycle electric car batteries.
From individual to corporate action
Pressure for change is coming from consumers, as well as the employees themselves within organisations. The Chair of the panel, Lord Bilimoria, provided useful background to the conversation, with the recent Edelman Trust Barometer 2022, which covered 28 countries and more than 36,000 respondents, showing a broad public consensus that the public want businesses to act, and that they are seen as they most trusted organisations - above the government and the media. Seventy-seven percent of respondents, trust "My Employer," making the relationship between employer and employee incredibly important.
How businesses conduct their business can create huge change, by influencing the hearts and minds of colleagues – for example, in the choice of office space, food offer and plastic use, as well as targeted internal campaigns to educate and provide tools to support small but significant changes. Bringing in external experts to speak to staff – to shed light on their impact and to awaken the senses of individuals to make change can be very impactful. For example in 2021, Goldman Sachs participated in the global “Count us in” campaign which supported employees from across the firm to make everyday changes to their lives, in order to reduce their personal carbon footprint, showing the number of Kg of CO2 saved by each individual. At HSBC, a well-developed internal ambassador network, the Climate Action Network empowers employees from the ground up, enabling them to take action in their own world and developing their knowledge in this area.
Sustainability is good for business
Dermot McDonogh, Chair of Goldman Sachs Bank Europe SE and Chief Executive Officer of Goldman Sachs International Bank, advised that attracting top talent necessitated having sustainability at the top of a business agenda, as well as it being the right thing to do. It is sometimes perceived as a cost to business, but Matt Hammond noted that fundamental change can provide benefits back to the business, as well as huge public policy benefits and addressing the obligations to the planet.
Consumers are running ahead of regulation in this regard. Governments need to act to support this journey, providing regulation and a common standardised approach, where sustainability and inequality commitments are reported similar to a company’s P&L, and understood as universally. "A common, standardised approach is fundamental to respond to what could otherwise be greenwashing and a corresponding break in trust from consumers" said Simon Eaves of Accenture.
Some businesses are leading the way, such as Quorn Foods, providing certified carbon labelling on their products to demonstrate what impact the company is having on the planet - an imperative in the food industry which as a whole, is responsible for 30% of carbon emissions. Knowledge builds trust and gives consumers the ability to take action.
Business needs to do more than be there for shareholder value or profit – we need to have a positive impact on the world.
The right kind of leadership
Business leadership in the modern era needs to answer this question, what is a business’ purpose? In spite of shareholder pressures and short to medium term issues, many of which are significant, such as the war in the Ukraine, the energy crisis and inflationary pressures, how can leaders maintain and ensure their business can focus on creating a positive impact on the world. This particular panel session certainly provided some tangible actions for organisations to consider and the University of Birmingham is working closely with businesses across all sectors and geographies to support this transition.
The University of Birmingham is proud to be taking an active role in working with corporate partners to tackle regional, national and global challenges. If you’d like to collaborate with us or hear about future opportunities and events, contact us at businessteam@contacts.bham.ac.uk
Find out more on our 'Working with Business' webpage.