Earth Day 2022: The Net Zero Challenge for Businesses
Earth Day is commemorated annually on April 22 with the aim of focusing on the environment and how we can be more sustainable. Each year, more than a billion people get involved in activities ranging from planting trees to reducing their energy consumption or volunteering for green projects.
Founded in 1970, Earth Day was started by Gaylord Nelson, a US Senator from Wisconsin after seeing the impact of the 1969 oil spill in Santa Barbara, California. He believed that if he could raise the issue of environment and sustainability with the general public, it would also move the political agenda forward. It worked, with Earth Day now an annual event in 190 countries.
This year, Earth Day is all about investing in the planet. As the world must reach net zero greenhouse gas emissions by mid-century to keep global temperature rise below 1.5°C and avoid the worst impacts of climate change, the movement calls politicians, citizens and businesses to act. .
Companies focus on reducing emissions
UK businesses are responding to the call to move to net zero emissions. Data released by the UK government ahead of the COP26 climate summit in November last year claimed that more than half of the UK’s largest companies have pledged to eliminate their contribution to carbon emissions by 2050, representing a total market capital of over £1.2 billion and combined annual turnover of £700 billion.
Business and Industry Minister Lee Rowley said: “Businesses, large and small, across all sectors of the global economy, have a crucial role to play in both reducing their environmental impact and in the development of green technologies that will put us on the path to net zero. .
“With over 2,500 UK businesses joining the ‘race to zero’, including the majority of our biggest companies, the UK is leading the way in showing how going green doesn’t just make sense for the planet – it also makes business sense.”
Globally, more than 5,200 companies of all sizes have joined the United Nations Zero Race in sectors including transport, retail, finance and manufacturing. They join over 1,000 cities, 67 regions, 441 investors and over 1,000 higher education institutions that collectively cover almost 25% of global CO2 emissions and 50% of global GPD.
If the world is to reach net zero by 2050, businesses must step up. And many of the biggest companies in the UK are. Companies like BT, Legal and General and Ocado aim to achieve net zero in their own operations (known as Scope 1 emissions) by 2030, while Barratts and Reckitt Benckiser aim for 2040.
Emma Walmsley, CEO of GSK, said: “The science is clear: nature loss and climate change are already harming human health. So we must act now to protect and restore the health of the planet if we are to protect and improve people’s health. That’s why GSK is committed to achieving net zero climate impact and net positive nature impact by 2030.
“For GSK, our sustainability commitments are an integral part of our strategy, making our business more resilient, protecting our operations and helping us to impact global health while delivering returns to our shareholders. .”
The Challenge of Reaching Net Zero
Achieving net-zero emissions across the entire supply chain (including scope 3 emissions) is proving more challenging. BT is targeting 2040 across its supply chain and customer emissions, as is Ocado, while Sainsbury’s believes it will be 2050 before it is zero in its value chain.
Despite the promises, research from the Corporate Climate Responsibility Monitor suggests companies are “behind” their plans. After analyzing the pledges made by 25 major companies, he suggests that the companies are only on track to reduce their emissions by 40%.
“We sought to uncover as many replicable best practices as possible, but were frankly surprised and disappointed with the overall integrity of the companies’ claims,” says Thomas Day of the New Climate Institute and lead author of the study.
As pressure on companies to act on climate change grows, their ambitious headlines too often lack real substance
“As the pressure on companies to act on climate change increases, their ambitious claims too often lack real substance, which can mislead both consumers and the regulators who are key to guiding their direction. strategic. Even companies that are doing relatively well exaggerate their actions.
Reducing emissions in the supply chain in particular remains a major challenge. CDP, a non-profit organization that helps companies disclose their environmental impact, found that more than half (56%) of suppliers had no climate targets in 2021, while only 28% implemented a low-carbon transition plan.
Companies are not tracking scope 3 emissions enough, with only 38% saying they engage with suppliers on climate change and 16% on water security.
Sonya Bhonsle, Global Head of Value Chains and Regional Director of Companies at CDP, said: “Our data shows that corporate environmental ambition is still far from ambitious enough. Along with this, companies have blinkers when it comes to assessing their indirect impacts and engaging with suppliers to reduce them.
“Companies must act urgently to cascade and manage environmental impacts along their supply chains to increase the level of action to secure a 1.5°C future. This is essential for the transition to a sustainable net-zero, deforestation-free and water-free economy.
CDP also found that while 71% of suppliers report scope on emissions, only 55% report scope two and 20% report scope three. This is despite the fact that a company’s supply chain greenhouse gas emissions are, on average, 11.4 times higher than operational emissions.
What companies need to achieve their climate goals
To achieve climate goals, companies say they need more clarity from governments and policymakers. Nearly half (49%) of CEOs globally say they don’t know how they need to operate to meet the 1.5°C warming target, with that number rising to 70% in Oceania. Only 18% say they are clear on this point overall, compared to 34% in Asia.
On this Earth Day, there will be a lot of talk about the little things people can do to make a difference. This could be planting a tree, carrying a reusable water bottle or coffee mug, or walking to work.
But consumers expect more from companies. Where previously it would have been acceptable to pay lip service to sustainability, consumers are now looking for companies willing to follow suit, with 24% of UK adults believing brands should take a stand on climate change.
And it is becoming increasingly clear that human-induced climate change is, in the words of the IPCC, causing “dangerous and widespread disruptions to nature and affecting the lives of billions of people around the world”. .
The world can hope to stave off the worst impacts of climate change, but we face a “now or never” moment, with emissions set to peak within a decade and nearly halving.
Jim Skea, professor at Imperial College London and co-chair of the task force behind the IPCC report, says: “It’s now or never if we want to limit global warming to 1.5°C. Without immediate and significant reductions in emissions across all sectors, this will be impossible. »
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