Net zero needs more than ambition it requires a coherent strategy
Eileen Sharpe, executive vice president, IDA Ireland outlines the five steps organisations must take to reduce their carbon footprint.
Seventy countries, including EU members, the United States and China have set net-zero targets addressing approximately 76 per cent of all global emissions. 1,200+ companies, more than 1,000 cities, and over 1,000 educational institutions have committed to science-based targets to guide and measure progress towards net zero, and while many are making progress, research shows a significant challenge matching targets with achievable plans.
Climate Action 100+, the world’s largest investor engagement initiative, on climate change, found that while 53 per cent of companies have a decarbonisation ambition to reduce their GHG emissions, less than one fifth have the critical elements of a decarbonisation strategy in place. The UN Environment Programme’s, most recent, ‘Emissions Gap Report’ brings this into stark focus, highlighting significant gaps between pledges and actions, with “limited progress” being made. The report details the world faces a “rapidly closing window” to implement change, with great risk of falling short of Paris Agreement goals, and no credible pathway to limit temperature increases to 1.5oC.
IDA Ireland partners with 1,700 international companies; industry leaders and brand names from all around the world. Over time, each company will need to make their way to net zero. With advantages for early movers, late starters will find it increasingly challenging to attract finance, to compete against peers, to retain and attract talent – net zero will be a strategic and important competitive advantage.
Many of the challenges to progressing net zero goals are around communication and clarity – what to prioritise and when to invest. Delivering change is always difficult, but now it is urgent. Leaders and policy makers need a clear and achievable pathway to support and drive progress.
Ireland’s National Climate Action Plan clearly identifies national priorities and ambition; however, implementation must be done on the ground. IDA Ireland’s ‘DEEDS’ framework is a model to support corporate ‘decarbonisation investment’. It aligns with the national priorities, and it guides IDA Ireland’s support for clients and the urgency to make net zero progress.
The framework outlines five, high-level, steps for companies to reduce their carbon footprint. It is a clear, straightforward structure, for any net zero discussion or investment. DEEDS simplifies and declutters what has become a complex and challenging environment. There are five steps.
Develop a climate action plan – All first steps start at the beginning. Companies need to understand their carbon emissions, their baseline, and all need to measure their emissions against agreed target metrics, to track their progress. Developing a corporate climate action plan (CAP) puts in place a multi-year investment plan for companies, and leaders, to identify the source of emissions and what options are available, to make steps to eliminate or mitigate those emissions, in a progressive timeframe.
Efficiency – DEEDS’ second step prioritises energy efficient solutions, to cut inefficient energy use e.g. swapping lighting systems for LEDs and sensors, upgrading HVAC and smart energy systems, installing temperature controls etc. Typically, firms will achieve greater than 20 per cent energy savings across their business through these straightforward methods. The principles are the same whether operating in an office or manufacturing environment.
Electrification – A great number of firms use fossil fuel for activities which are readily feasible with electricity e.g heating systems, back-up generators and other equipment. Converting low heat needs (150C) manufacturing environments or generation of on-site electricity. These companies will need to explore new technologies, source green gas supplies e.g. biomethane or hydrogen, and introduce solar and or wind options to their operating environment. These solutions can be technically challenging however they have an immediate and permanent impact on a firm’s carbon emissions. In addition, the benefits stabilise energy supply and energy cost risks, reducing exposure to high or fluctuating energy prices.
Scope 3 – Scope 1 covers emissions from on-site use of fossil fuels, Scope 2 addresses indirect emissions from the electricity we buy from suppliers. Scope 3 emissions focus on all other aspects of the business – employee activity e.g travel, distribution etc, sourcing of raw materials and distribution of product. Changes to a firm’s scope 3 emissions have a broad and important impact on carbon footprints, and drive behaviour in supply chains.
Increasingly companies are driving change by adding sustainability and ‘carbon reduction commitments’ to procurement and tendering processes – An increasing trend, set to influence and distinguish competitors, whether related to upcycling, supply chain optimization or water and waste management – Companies will need support, for R&D investments, developing innovative solutions and instigating cross sector collaboration, to overcome operational challenges.
Commitments to high level ambitions are rising to match need, however delivery is challenging. Speed to meet important milestones is critical to national and corporate success. Countries and companies have targets, converting those targets, to actionable plans, is up to each organisation and company.
Leaders will be ambitious and implement changes quickly. For many others, collaboration, transparency and actioning a workable framework will be slower but no less important. IDA Ireland’s ‘DEEDS’ framework is one example of an approach – What is clear is the importance for all leaders to have a straightforward structure and plan, and to communicate with stakeholders, employees and investors. All companies need to implement and improve climate action performance and ensure progress to a low carbon economy.
