Five Ways Organizations Can Continue to Enable the Decade to Deliver

Just one year ago at Climate Week NYC 2019, the 2020s were dubbed “The Climate Decade,” which launched a groundswell of conviction to ‘just do it’ – stop talking and start acting. Soon we saw next-level momentum building behind this goal, with some of the world’s largest companies setting some of the loftiest decarbonization goals to date.

While the unexpected and unprecedented events of 2020 have caused the undeniable disruption, this does not change the mission to deliver on the Climate Decade. Yes, companies have had to quickly adapt to the disruptions caused by the pandemic and our new ways of living and working, which has caused a near-term pivot from looking at long-term strategies to the urgent near-term resilience.

Here are the top five considerations for organizations to establish goals and drive sustainability forward right now, for tomorrow.

1. Leverage Present Day Lessons to Continue Momentum

Although this year’s pandemic charted a different course that we couldn’t have imagined, organizations have continued their sustainability momentum while balancing the needs of their employees and communities. For example, we saw companies like Microsoft, IKEA and Nestle make swift and collective moves to respond to COVID-19 – this same agile thinking and quick decision-making is imperative for businesses looking to safeguard themselves from a climate action perspective.

Businesses that have placed sustainability as a top strategic pillar and have gone through sustainability resilience assessments were better prepared and able to jump to action faster than their peers without a sustainability focus.  

To mitigate risks to operations, supply chain and reputation, a critical exercise for corporate sustainability planning is continuity planning and risk mitigation for things like extreme weather and imminent weather changes. Forward thinking companies use risk modeling to plan for this – and make key business decisions based on the real threat of climate change. 

For example, COVID-19 has fundamentally altered the workplace. As organizations across the world consider returning to the office, many are embracing the idea of a radical shift in their approach to remote work, which has become vital to protecting the health and safety of employees while keeping businesses operating. But in the future, organizations are considering additional benefits: the ability to reduce emissions and foster productivity.

2. Intensify Sustainability Goals and Accelerate Timelines

Four clear and important trends in corporate sustainability commitments have emerged over just the last few years, which demonstrate that more corporations are actively working to address the climate challenge, while trying to make an even deeper impact.

• The volume of corporations reporting carbon reduction targets is increasing. More companies than ever are committing to bolder zero-carbon goals. RE100, which tracks organizations committing to 100% renewable energy by 2050, now has over 250 members across every sector, compared to 140 members just two years ago. Earlier this month IKEA committed to producing as much renewable energy as it consumes by the end of the year, and Adobe aims to be 100% powered by renewable energy by 2035.

• The intensity of those commitments is rising. From 2005 to 2017, ENGIE Impact’s analysis shows that there has been a three-fold increase in the size of the average annual carbon reduction targets companies are setting, from just 2% per year to 6% per year. This means companies need to go deeper with projects and invest more every year.
• The time horizon of commitments is shrinking. Over that same period, the average commitment made was 26 years out. Now it is eight years. With the average tenure of an S&P 500 CEO 7-8 itself, this makes corporate leaders dramatically more accountable for their targets.
• The scope of these targets is expanding. More and more companies are going beyond their corporate walls to include targets for carbon reduction in their supply chain, or what’s known as Scope 3 emissions. For a typical company, these types of emissions account for 75% of what their business is responsible for. It’s also important to note that Scope 3 is a requirement for SBT when it accounts for more than 40% of a company’s total emissions.

When advising our clients on their sustainability journeys, ENGIE Impact takes a holistic view of both business-driven initiatives and external forces—backed by deep data analytics — to develop realistic, achievable targets that maximize economic and environmental opportunities.

3. Use Partnerships and Coalitions to Fuel Innovation and Accountability

Climate change, much like COVID-19, is a universal threat that will at some point impact everyone around the world. While we’ve cited examples of many organizations leading on their response to climate change, there’s still a gap in much-needed partnerships and coalitions. Even now, governments are working towards progressive COVID-19 recovery deals centered around sustainable actions. Most organizations—especially businesses—are built to be more competitive rather than collaborative. But when it comes to climate action, we need to rethink this mindset and not work in ‘city’ or ‘business’ silos.

Global partnerships and cross-dimensional groups can better predict and solve climate-related issues before they happen, getting us head of the next ‘big thing,’ and already some incredible partnerships are emerging:

• Procter & Gamble’s 50L Home Initiative strives to bring together companies, policy makers and communities to develop and scale innovations for the home that help solve the urban water crisis. According to TruCost, major cities around the world face the prospect of a water crisis, and 14 of the world’s 20 largest cities are already experiencing water scarcity.

• In July, nine major multinational corporates, including Danone, Microsoft, Unilever and others, announced Transform to Net-Zero, a coalition that will bring together industry leaders with some of the world’s most ambitious carbon goals to create playbooks on how to achieve net zero.

4. Include Entire Value Chain in Your Organization’s Goals

Sustainability leaders understand that we are not alone on the path to corporate sustainability and carbon neutrality. They are not driving change just within their own organizations, they are looking for change across their entire operating ecosystem. That means reducing Scope 3 emissions by demanding that suppliers, vendors, producers and others are just as committed to transformation. Decarbonizing supply chains is becoming more of an expectation of large, forward-thinking businesses – and it intensifies sustainability transformation. According to CDP’s report, Changing the Chain, simply increasing renewable energy use within the supply chains of 125 large corporates by 20% would reduce emissions by over a gigaton.

Some key strategies for tackling this challenge include:

• Invest in technology and data. Technology, and the data it provides, can improve decision-making across the value chain. Growing visibility into corporate environmental footprints can be an indicator for which value chain partners are becoming more climate resilient. 
• Name climate risks and treat them as inevitable. Creating climate risk assessments at each stage of the value chain will reveal where risks, such as ingredient shortages, threats to physical assets, transportation disruptions and power shortages can — and eventually will — disrupt business. The case that decarbonization and resource efficiency will build resilience is stronger than ever. 
• Build the right relationships.  This will look different by business but may include proactively diversifying suppliers, using local sourcing when possible to reduce transport risks, and developing collaborative lines of communication with the supply partners you depend on. Collaborate with and encourage your value chain partners to build resilience through delivering on their corporate sustainability goals.  

• Simplify and be ready to flex. Increase adaptability both through capital investments and process improvements to respond to events like changing consumer trends, shifts in demands, or logistical challenges of extreme-weather events. 

Amazon and We Mean Business recently announced a partnership to establish the world’s most comprehensive effort to drive companies to adopt more ambitious carbon emission reduction goals. A core activity of this coalition is engaging with large companies and their supply chains to provide frameworks, toolkits for action and reporting, and capacity building to encourage suppliers, especially SMEs, to ramp up their climate goals.

5. Realize Stakeholder Expectations

Businesses have been setting sustainability targets at an unprecedented rate, but another emerging shift is that the public is holding them to these promises like never before. Earlier this year, mammoth finance influencer Blackrock announced to its portfolio companies that corporate sustainability would be more integral to the way the company “manages risk, constructs portfolios, designs products, and engages with companies.” Soon after, at the height of COVID lockdowns, Barclays announced its net-zero carbon target for 2050. Rated as one of the top investors in carbon-intensive companies, it cited investor pressure as a catalyst for this massive shift in its overall strategy and business.  

As reflected in the Davos Manifesto late last year, companies are broadening the notion of who they deliver value to, reaching beyond shareholders to include all stakeholders, such as employees, customers, suppliers and communities. This is heavily driven by their ecosystem of stakeholders increasingly placing pressure on employers and brands to invest in corporate sustainability.

COVID-19 demonstrated how much people expect brands to respond quickly, authentically and with their people at their core.  The external actions companies take to minimize their environmental impact will become a make or break issue from a brand perspective.  

Continue the Conversation

ENGIE Impact is proud to participate as a sponsor at #ClimateWeekNYC to explore the lessons we’ve learned from 2020 and leverage them to move forward in the sustainability transformation for corporations, cities and governments. Undoubtedly there’s an authentic desire and business case to prioritize and act on sustainability objectives, so these conversations are critical to successfully close the gap from ambition to goal. Tune into broadcasts, hear sustainability insights from global experts and more on our Climate Week NYC content hub.

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