Align purpose, strategy and business models

To be successful in a net zero economy, a business or organisation must make a fair social contribution and have a neutral or positive environmental impact, alongside creating financial value (CISL, 2020). This can be achieved by aligning the organisation’s core purpose with a net zero goal.

In this context, we can define purpose as a meaningful and enduring reason for an organisation to exist that benefits society, while protecting the social and natural foundations that societies and economies depend on. Organisational purpose should also address an organisation’s responsibility to all stakeholders.

Organisations also need to ensure that all decarbonisation initiatives align with their wider business strategy and model (CISL, 2020). This is because implementation is likely to be unsuccessful if an initiative is not approached as a core business activity. If internal stakeholders conclude that an initiative is not a priority and therefore not performance or career-related, it will likely have a limited impact on the direct operations of a business (Kaplan & Norton, 2005).

Decarbonisation initiatives need to encompass and address the full life cycle of an organisation’s products or services (CISL, 2020). This is because successful decarbonisation initiatives account for all three scopes of an organisation’s emissions across the entire value chain of each product, from design to use and disposal (Greenhouse Gas Protocol, n.d.).

Decarbonisation strategies will vary across sectors and between individual companies within a sector. However, all strategies must have GHG emission reductions at their core. Using heavy industry as an example, the following key strategies could prove effective for reducing emissions:

  • improving materials efficiency to reduce the volume of virgin materials required
  • identifying new business models in value chains that do not compromise economic or societal benefits
  • increasing the circular use of materials (or material components) such as steel, plastics, and cement, reducing emissions and saving energy in the process
  • introducing process improvements that eliminate the use of fossil fuels from the outset (often requiring significant changes and investment in novel production processes)
  • investing in the development of carbon capture and storage (CCS) technologies to enable the permanent storage of GHG emissions from production, feedstock production, or end-of-life incineration.

(Material Economics, 2019:23)