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Six years after the landmark Paris Agreement, nations are taking stock of the progress they have made on previous commitments, including their promises to reduce emissions and adapt to climate change. While the policy work continues, the question that many senior executives of corporations will ask is, “What do we do after COP26?”
The first thing they will have to do is recognise that with all the attention on climate change this year, things are speeding up in some key areas.
Most important, the focus is going to shift from setting targets to delivering results. Until now, executives may have been rewarded just for stating goals. From here on, they will need to show real reductions. Here are four concrete things they can do to start reducing.
Make carbon transition a pillar of your strategy. Too often, sustainability and carbon transition come as afterthoughts, but they should be baked into the strategy practice. The risks and opportunities of climate change should shape decisions about new products and how to improve operations. UK supermarket leader Sainsbury’s is making carbon reduction a cornerstone of its strategy, with pledges to reduce Scope 1 and 2 emissions to net-zero by 2040 and to cut Scope 3 emissions by 30 per cent by 2030. Among many changes, it has switched to energy-saving lithium-ion pallet trucks.
Get more bang for your net-zero buck. Companies are pushing their carbon transitions as rigorously as any other business initiatives, which means improving efficiency while reducing cost. German engineering and technology firm Bosch says it has been carbon neutral in Scope 1 and 2 emissions since 2020, thanks to greater energy efficiency. And it is also about finding opportunities to monetise investments in sustainable technologies. Mexican cement producer Cemex sells a line of concrete that contains 70 per cent less carbon, and it offsets the rest of the related emissions to deliver a carbon-neutral product.
Embed carbon transition into the fabric of the business. Even the best plans will fall flat without the right supporting practices. Pricing, incentives, and tracking are three practices that help carbon transitions stay on track.
Avoid the hourglass effect. In many companies, top management and new employees are enthusiastic about sustainability, while middle management is left to solve the revenue, cost, and safety implications. Many have little or no experience managing carbon reduction, but companies can support them by educating everyone about carbon reduction in their industry and clarifying the rules for trade-offs.
The transition away from carbon and toward net-zero emissions is likely to be a top priority for many executives for the rest of their careers. For most companies, the window for consideration has closed. It is time to act and deliver meaningful carbon reductions.
* Dale Hardcastle is a partner and Gerry Mattios is an expert partner at Bain & Company. Both Dale and Gerry are co-directors of the firm’s Global Sustainability Innovation Center (GSIC) in Singapore. Torsten Lichtenau is based in London and leads Bain & Company’s Carbon Transition Impact Area globally.