Leadership Perspectives: Regional Net Zero Readiness

ENGIE Impact's Corporate Net Zero Readiness Report highlights the gaps between organizations' decarbonization goals and their operational reality. Freddie Hospedales, Chief Marketing Officer at ENGIE Impact sits down with our experts to discuss regional implications for achieving Net Zero.

Video Transcript

Transcript has been edited for clarity

Freddie: I’m here today with the regional heads of our sustainability solutions practices, Nicolas Lefevre-Marton, Malavika Bambawale and Diego Ibarra. They contributed to our Corporate Net Zero Readiness Report, and today we will hear their thoughts and regional perspectives. I’d like to start by asking, how prepared are companies for a successful Net Zero transformation today?

Nico: There are positives to where we are. The amount of activity and mobilization is very strong and that is a huge positive. But, the reality that we emphasize in this report is that companies are actually hugely unprepared to drive decarbonization at pace and at scale in line with the broader Net Zero agenda. I think they understand the end goal, but they are discovering what needs to be done between now and then—not just the investments in levers of decarbonization, but also in the critical enablers as an organization. So, unfortunately, there's still a whole lot of work to do.

Freddie: In your experiences, what should strategic decarbonization plans include to be actionable and cost-effective?

Diego: Certainly, so a successful Net Zero transformation is really anchored around three dimensions. First, the decarbonization levers an organization can deploy. And that includes energy efficiency, renewable power, or green mobility. It's critical to understand the regulatory context within your region as well as the technology and financing mechanisms available. Those are fundamental steps to understanding the readiness and the business case behind each one of those technologies. The second dimension is scale. You want to engage your organizational transformation, whether that is at the business unit, country level, state level, or globally. It really varies how you want to go beyond your company as well because there are huge differences and opportunities throughout the value chain. Lastly, the third dimension is the enablers that you use to unlock and accelerate the change. This includes understanding the financing solutions at the local, regional or federal level. Its also important to understand the availability of carbon data and how your company is set up to provide timely, high-quality carbon data for effective decision making.

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

Freddie: Data plays a critical role in decarbonization. What role do you think digital tools play in creating a single source of truth in a decarbonization journey?

Malavika: That's a really interesting question. When we do decarbonization roadmaps, one of the reasons it is so complex is that you have a whole range of stakeholders involved from the company side. You have the executive level, the operational level, finance, and sometimes the supply chain as well. So how do you get everyone on the same page? That's why you need a common platform to enable and create a single source of truth. Otherwise, it is kind of a massive exercise that involves massive stakeholders across various layers of the organization. You tend to lose the truth at some point. Our study found that only 3% of executives felt that there was a single source of truth and that they were suffering from the different versions of the truth floating around. That gap has to be addressed.

Freddie: From your work with clients, have you seen noticeable differences in Net Zero readiness by region that global organizations should be aware of?

Nico: If you look at maturity on carbon topics, Europe has been a step ahead for several decades. Because, from a regulatory context, the European Union and member states have been putting more aggressive regulations on carbon for many years. The first European-wide Emissions Trading Scheme was set several decades ago, and that was a sophisticated region-wide tool. Each member state has got a long list of sophisticated actions to encourage industries and households to start accounting for carbon and taking action. The overall maturity in the region is high compared to the US and other countries around the world. That means that our clients have a higher level of sophistication to some extent. In some countries, you might be thinking about ambition setting like what should our position, posture, or goal be. In Europe, typically that step has already been taken. We're really now more in the details of how to define these plans and how to achieve them. This transition from ambition to implementation is really where we are, particularly in Europe, but in other regions in the EMEA.

Malavika: Within APAC, the boundaries of the country make a difference. There are varying levels of complex regulation. There are certain countries that are predominantly run on coal, that have recently announced plans to change that. We need to figure out how we can remove that complexity and help players understand what future scenarios look like so that they can move ahead with their plans in the sector and region.

Certain sectors are moving further ahead on these topics. For example, the tech sector is really doing a great job of pushing the topic of getting carbon-free energy. But, the mining sector, for example, has a huge issue with brown power and is exploring ways to change that. Within manufacturing, you'll find a whole range of players, some of whom have gone ahead, while others are still far behind.

Freddie: South America has a major market focus in the heavy asset industries. What common challenges do carbon-intensive sectors such as mining face, and what enablers do you focus on to help these clients overcome their challenges?

Diego: One is that in energy-intensive industries, implications for decarbonizing normally involve huge CAPEX decisions and might have significant operational implications. An example is a mining company that realizes after they do analysis that the only way they can hit the 2030 or the 2050 decarbonization targets is to decommission their facility. Or, the implications of switching a whole fleet of hauling trucks from diesel to battery or green hydrogen. The challenge there is the level of analysis, trust, and understanding of the technology that you need to provide for leadership to make the right decision. The second one is, as you move closer to implementation, applying the right governance models and decision-making frameworks to make sure that once the goal is set, the plans are actually effectively implemented. Again, in energy-intensive industries, as soon as you start implementing, deploying or integrating carbon-based decision-making frameworks, you realize that the right answer might vary significantly. Preparing your organization for those realizations is not a trivial thing and is a change management effort that can not be underestimated.

Freddie: Fantastic. Thank you, Nico, Malavika, and Diego for sharing your observations.