Are Corporations Ready to Deliver on Net Zero?

ENGIE Impact's Corporate Net Zero Readiness report highlights the gaps between organizations' decarbonization goals and their operational reality. Mark Chadwick, Managing Director of Sustainability Solutions, and Freddie Hospedales, Chief Marketing Officer at ENGIE Impact discuss the impact of these findings.

Video Transcript

Transcript has been edited for clarity

Freddie: I’m here today with Mark Chadwick to discuss our research on corporate net zero readiness. As an author of the report, Mark will discuss the operational reality behind our key findings. Mark, I’d like to start by asking you, are companies ready to deliver on Net Zero promises?

Mark: Great question. One of the things that we notice, time and again, is that a lot of our clients have excellent strategic ambition and bold targets, but generally miss an important feature. They don't really understand what it takes, in terms of real implementable measures, to get them from where they are today to achieving their targets.

For example, they should have a fairly clear view of the types of technology and CAPEX programs that they're going to need to run over time. This is quite important. They need to understand how they are going to incorporate renewable energy over time into their roadmap. They also need to understand how they are going to deal with this concept of scope three emissions.

There's one super important piece that we see missing in almost all decarbonization or low carbon transition plans. It is the thought of, "What needs to be true about my organization in order to be able to deliver on this plan?". That's the critical element that we often see missing. We started this research to try and understand the critical enablers of transition—who has what in place, and who needs to work on what, so that we can really get a feel for how complete a plan is.

Many organizations believe they are on the right path to Net Zero, but key findings suggest otherwise. Read Report→

Freddie: Data is critical to not only setting ambition but defining those implementable measures you highlighted. So, what is the role of digital tools in creating a single source of truth for decarbonization data?

Mark: The digital tooling that we have in place to help us with sustainability was created in what we can call the era of transparency. This is really about asking, how do I report to the external world about the programs and situations inside my business. The purpose of all of these tools was to produce a sustainability report once a year, and maybe to report to somebody like CDP or the Dow Jones Sustainability Index. So there are like spot checks that you have to deliver once a year.

Now, we're talking about moving from an era of transparency to an era of transformation. This means talking about operationalizing the types of programs and interventions we need to deliver on this shift. To achieve this, the quality of data needs to go up. It needs to be much closer to the real-life happenings in the business. The frequency with which we receive this data has to go up so that we can begin to really understand and control what's happening in our business. How do we do that? Without digital tools, it isn't really feasible.

Freddie: You mentioned we’re in an era of transformation. Now, any era of transformation requires an investment of capital, but some organizations are hesitant to invest. Why do you think that is?

Mark: When you've got a bunch of companies around the world with complex operations, who need to deliver a decarbonization program but lack the internal resources to do it—how do they make that happen? I would say capital expenditure (CapEx) is just one of the resources that companies may be lacking. They're lacking the capabilities they need to deliver complex programs. They're lacking the data and the understanding on how to most cost-effectively deliver these programs. They're lacking knowledge about new technologies and how to manage them operationally. So I would think more about these contract structures, not solving just for CapEx, but solving for the whole capability piece.

A company like ENGIE has this full package and that's really attractive to the organizations that we're talking to. We don't just solve the CapEx problem, we look at the full picture.

Freddie: Another thing that came out in the report was the notion that companies need to look at their entire portfolio. How important has it been for the clients that you work with to activate their entire business in their decarbonization journey?

Mark: If we're talking about a transition, rather than transparency, of the energy systems that our organizations rely upon—which part of an organization does not require energy to be able to operate? None. So an energy transition is fundamental to our entire economy. Therefore we need to have people involved.

There are a bunch of factors that need to be managed and I would argue that those kinds of operational factors are best managed by the person who's running a plant, or even a production line in the plant. Not by a sustainability professional in a head office, and certainly not by an executive team. We need to engage all parts of the organization if we're going to be effective.

Freddie: Fantastic. Mark, thank you for your observations.