Find the Confidence to Act: Avoiding the Greenstalling Trap

Most large companies acknowledge the urgency to mitigate climate change but many still lack the conviction to step up and join the race to Net Zero, even if they have already set an emissions target. In many instances they are either uncertain about which steps to take to achieve it or are afraid of the perceived cost of decarbonizing their operations, the result being that they get stuck in a vicious cycle of delay, known as “greenstalling”.

The issue is that decarbonization is urgent, and inaction is not advisable. Public and stakeholder expectations for sustainability are increasing, and companies that fail to meet those expectations are putting themselves at a disadvantage. Yet despite knowing the advantages of decarbonization – it helps mitigate regulatory and market risks, can reduce costs, enhance reputation, drive revenue growth, and attract investment capital on favorable terms - organizations can become fixated on the challenges and hesitate to act. Sometimes their knowledge of the benefits is not enough to overcome their analysis paralysis and avoid the do-nothing trap. And while it’s always advisable to weigh all the options, sometimes the best option is to simply get on with it.

Understanding Greenstalling

Greenstalling is a relatively new term referring to the situation in which companies delay taking decarbonization measures. Some analysts link it to concerns about public scrutiny and accusations of greenwashing, but it can also result from internal barriers that hinder the decision-making process, or from a range of excuses for making no progress on emissions.

For instance, one common justification companies give for failing to progress on emissions reduction is that they lack sufficient data to act. Another we have heard cites regulatory uncertainty as a reason to delay investment in green solutions. And while a lack of data or regulatory uncertainty might be the factual situation, we don’t believe either should serve as an excuse for inaction. Many emissions reduction measures are beneficial regardless of how much data one has or what the current regulatory policy states.

Regardless of the reasons given for greenstalling, companies should know they have options to improve sustainability. Switching to renewable energy and engaging suppliers to lower one’s Scope 3 emissions are “no regrets” measures that are always beneficial to take. Companies concerned about lacking expertise in carbon reduction can outsource their carbon program to experienced third parties. And the financial side of decarbonization need not be an insurmountable hurdle either; solutions to overcome it are available.

Debunking the Cost Argument

Of all the causes cited for greenstalling, ENGIE Impact’s 2024 Net Zero Report shows that the most common is the assumption that decarbonization initiatives are too costly.

The process can be complex and capital-intensive, but there are options for overcoming budget constraints. It is also worth noting that approximately 75% of the decarbonization pathways we have developed cost less than a business-as-usual scenario.

Here are three solutions that immediately mitigate the cost of decarbonization:

1. Energy efficiency is not called the “low-hanging fruit” of decarbonization for no reason. It is the quickest and most cost-effective carbon mitigation option. Even in Europe, where emissions reduction has been on the agenda for a while, we can identify cost-effective solutions that save money and improve financial performance.
2. Transition to renewable energy sources either through direct investment in solar arrays, power purchase agreements, or green contracts. The cost of renewables has declined significantly and can be competitive with or even cheaper than fossil fuels in many regions. While there are variables that impact cost competitiveness, the long-term stability of renewable energy prices can provide cost savings. Paired with energy efficiency measures, a total cost reduction is likely.
3. As-a-service contracts provide asset finance to cover the CAPEX of most major interventions a company might want to make, such as energy savings measures or utility provisions. These are performance-based contracts without any capital outlay for the company, lowering the risk of carbon mitigation measures.

More generally, building acceptance that decarbonization should not be considered a secondary priority vis-a-vis the core business, and looking at the long-term benefits rather than short-term return on investment, is key to overcoming the hesitation to decarbonize.

At the heart, greenstalling is about not having enough confidence to take the action that's needed.

Case Study: Overcoming Greenstalling

ENGIE Impact worked with an energy-intensive company struggling to progress on its ambitious emissions reduction target of 30% by 2030. Despite recognizing the urgent need for action, the company found itself trapped in a "greenstalling" predicament, overwhelmed by the scale of the task and unable to take the first step.

ENGIE Impact's initial approach involved revisiting the company's stakeholder expectations and emphasizing the consequences of inaction. Next, ENGIE Impact conducted a comprehensive analysis of the company's needs, including a thorough site assessment and a holistic evaluation of various decarbonization technologies and options for both the short and long term. This analysis also factored in the company's capital expenditure limitations. This process allowed ENGIE Impact to demonstrate the feasibility of a cost-effective decarbonization roadmap, giving the company a clear path forward.

By taking these initial steps, the company gained the momentum and confidence needed to embrace decarbonization. They are now actively pursuing ambitious carbon reduction programs and have even committed to a more challenging decarbonization goal.

Greenstalling presents a significant business risk in today's marketplace. While concerns around cost and data complexities are valid, they should not paralyze action. By leveraging readily available solutions such as renewable energy procurement, Scope 3 engagement strategies, and partnerships with experienced sustainability consultants, organizations can overcome these perceived obstacles and capitalize on the multifaceted benefits of decarbonization.