Barriers to adoption

The following organisational barriers are often encountered:

  • Knowledge gaps: Businesses just beginning their net zero transition can experience initial challenges if they do not understand potential decarbonisation pathways or are uncertain about the impact of action versus inaction. In many cases, the benefits of a transition are not widely acknowledged and committing to transition is not treated as material or a strategic priority. Identifying these knowledge gaps and holding key stakeholders accountable for setting clear, measurable targets can help businesses overcome this barrier.
  • Inadequate data, tools or frameworks: Without a detailed analysis and assessment of the emissions generated by the business (eg across the three scopes outlined in the GHG Protocol), business leaders remain unaware not only of the environmental impact of their own operations and those in their value chain, but also of the associated risks. This, in turn, can delay or prevent the development of appropriate mitigation strategies.
  • Supply chain complexity: The systemic complexity of multi-tiered, interdependent supply chains can lead to a lack of clarity around responsibility for emissions and climate action. It can also lead to a lack of transparency. Acquiring the necessary data on carbon emissions within the supply chain network can be challenging but is essential for creating effective dialogues with stakeholders across the entire value chain.
  • Misaligned incentives: It can be challenging to reconcile a long-term decarbonisation strategy with pressure from investors to create short-term returns if there are no explicit incentives for senior business leaders to move away from ‘business as usual’. An incentive structure that links net zero targets to performance metrics can create greater stakeholder alignment.

What are the established barriers to achieving a transition from business as usual
to a low carbon economy?

PAUL BEGLEY: In my experience from working with business, there’s a whole host of
things which are really big barriers to action on this agenda. We don’t have a lot of clarity
within the boardroom and within senior decision-makers about the current contribution to
climate change. We don’t have a lot of clarity about the rate of change that’s required to
proactively be part of the solution to a net zero carbon emission economy. And then we
don’t actually have the thinking dexterity within organisations to actually deploy capital or to change behaviours quickly enough in order to deliver that.
What role can individuals play in their organisations to overcome constraints and
make a transition to a NetZero business model?

BEGLEY: I think sometimes we classify individuals and organisations differently, but
actually organisations are collections of individuals. And I think organisations generally are going through a period of redesign. So, I think we’re seeing organisations that are much more networked. And so, I think individuals are in a situation where we have greater agency than ever. And that’s really important because social media and other functions have empowered the voice of any employee to influence corporate reputation and brand, both negatively and positively. And actually, if you think about the transition to a net zero carbon economy, then that should be something that’s really desirable and sought after. It should be spurring innovation, and individuals need to be able to frame that through their communication, through their actions, through the policies that they implement, how they implement things, and how they change things.
What essential steps do organisations need to take to overcome barriers to a
NetZero transition within their business?

BEGLEY: The first thing that any organisation needs to do in order to make this transition
is understand your current contribution. A lot of organisations can be an enabler of other
people, whether that be customers or other parts of the supply chain, on their transition to a net zero carbon economy.
The second thing is to come up with your role in that transition to a net zero carbon
economy. And those organisations that are really good at this are understanding the
purpose. They’re understanding both their net zero transition pathway, but also the
unintended consequences on society more broadly. And I don’t think that, many people
would feel very satisfied if we got to a net zero carbon economy, but there were no jobs,
and that’s a realistic trade off. So being really cognizant about the decisions, and the
unintended consequences of decisions, is really important.
And the third thing I think is to have good data and really use that to drive decisions. So,
it’s not uncommon to sit in sessions with some of our clients and actually hear the plans
for the next 10 years. And they’ll say, well, over this period of time, the next decade, we’ll
emit X number of tonnes of carbon and that the per dollar income will be lower than
previously. But actually, the science is absolute. The global carbon budget is fixed and a
relative improvement on performance over a 10-year period actually isn’t absolute, that’s
just making less bad. And increasingly, as I’ve done this morning, we’re engaging with
investors that are looking for that key indicator. So, they’re taking corporate disclosure on
carbon emissions, and they’re transposing that with the science. And that means that
capital begins to flow to those people who are actually having a positive impact on society, rather than those people who are just slightly better than their peers.
I think it’s something about leadership development more generally, but I think having a
culture which can critically evaluate progress, which can learn from the science, which can adapt and be agile in this period of increased uncertainty is really important. And I think there is something which is about working with other stakeholders constructively. How can you support and nurture, work with those partners in order to come up with a full untraditional partnership that delivers the net zero carbon economy. And that requires a whole different set of what’s traditionally been soft skills. It requires the need to engage with people on different terms to use some of this science of climate change, to actually frame the conversation, to inform a conversation, and then also to work out how best everyone makes the transition.
How do you work with business to overcome some of the barriers to drive
transformational change?

BEGLEY: Most people’s literacy on this agenda is pretty appalling. So, we’re out by a
magnitude of maybe 10, in terms of the levels of warming so far. And actually, the
perceptions of things like the carbon budget are just again, out by magnitudes. And that’s
really tricky because we need to engage with people. And through our education courses,
we are engaging with people to help them calibrate their thinking to the rate of change
that’s required. These issues are absolute. They’re not relative. So, if you’re better than
your peer, that doesn’t mean you’re necessarily contributing to a positive transition.
Increasingly, as individuals, the board members are realising that there’s some sort of legal responsibility that’s actually enshrined within many of the listings of the company.
In stock exchanges, there’s a requirement for people at the company level to have clarity
about their carbon footprint. Have clarity of the narrative about how they will be part of
positive solution to the low carbon economy. And that’s changing some behaviours but
that’s more of a stick than a carrot. Those things that are really interesting to me are those areas where there’s a strong carrot and we’re working with a number of companies to trying to help them create strategic responses to some of the issues. So, for instance, we’ve been working with a large chemical company in order to try to help them move towards recycling mattresses. And I’d never really thought about the economics of a mattress or the environmental footprint of a mattress, but generally, most people will change their mattress every seven years or so. And that’s got a huge energy footprint. And actually, if you can tackle that sort of issue, a day to day object, there are very few glorious headlines for doing so, but it can be a really material issue. And I think what we need is we need people who are willing to experiment, that are willing to look at the science, and then really create new products, new services, new processes, new business models, but also new businesses that can be part of the solution.

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Summary:

Five specific actions that organisations can take to drive organisational transformation towards net zero:

  1. Identify your organisation’s current contributions to climate change, ie emissions.
  2. Outline your organisation’s role in the transition.
  3. Use data to drive decision-making.
  4. Prioritise leadership development.
  5. Collaborate constructively with stakeholders.