Your business mission … target ‘Net Zero’
How do you prepare for a future where ‘Net Zero’ is a mandatory operational requirement?
The road-map to achieving ‘Net Zero’ is relatively straightforward, from a top-down strategy perspective at least. The reality of the transition however is far more challenging for most businesses.
In one sense, targeting ‘Net Zero’ emissions is a classic change-management program model. A business-wide initiative that can be managed using established and proven methodologies.
One common model, follows a recurring milestone method with five top-line steps:
Step 1 – Audit – identify, detail and quantify current emissions (your 2021 baseline)
Step 2 – Analysis – understand, calculate and model the causational drivers (calculation algorithm)
Step 3 – Alternatives – identifying alternative technologies and processes (targets and program options)
Step 4 – Program – schedule and commit to change initiatives (including cost-benefit and resourcing)
Step 5 – Implementation – execution of the program, tracking, adjusting and creating the outcomes.
This is usually in a repeated medium-term milestone program, given a priority mandate by the Board and Executive Management for change, clearly outlined, resourced, measurable and accountable. Each reduction level becomes a new baseline against broader reduction targets, and once no further reduction and abatement can be achieved, usually around the 90-percent reduction mark, the final residual is offset.
Of course in practice, identifying the best lower or zero-emission alternatives can be difficult, and the implementation and change costly, painful and loaded with attendant commercial risk. Like any form of disruption however, the choice to do nothing is ultimately terminal. Through-out commercial history, non-adaptive businesses die at the hands of their changing customer base and more agile competitors.
The critical step is not allowing down-stream complexity and difficulty from preventing initial action. Any Executive or Director that doesn’t have a focus on ‘Net Zero’ progression, is by definition negligent on the medium-to-long term survival of their business.
“The first step to getting somewhere is to decide that you are not going to stay where you are.”
Chauncey Depew (1834 – 1928)
NET ZERO AUDIT
Do you know what the Global Warming Impact of your business is today?
Any area of activity, including business activity, has an emission footprint. Collectively this is part of the total global warming potential ‘GWP’, that in 2020 was quantified at close to 50 Billion tonnes in Carbon Dioxide Equivalent (CO2e) emissions. The first step, for any country, industry or organization, is to determine their emission activity footprint, measured in CO2e units, and build an accurate model of how these emissions originate, and how they will increase or decrease with change. A model that can analyse changes from business growth and operational changes, as well as any positive impact from environment management and emission reduction programs. Establishing a current day starting point or baseline.
Let’s take a quick look at some of the science and definitions. The main ‘greenhouse gas’ driving global warming is Carbon Dioxide (CO2), although it is far from the only emitted gas, it is useful in modeling to convert everything back to a single measure. In this case the ‘Carbon Dioxide Equivalent’ (CO2e).
Before the industrial age, the atmosphere had a CO2 concentration of approximately 300 parts-per-million. Climate-change skeptics sometimes point to much higher levels of CO2 during the period after the Earth’s formation (billions of years ago), and during the age of the Dinosaurs and up until around 20-million years ago, however this is irrelevant to the biological and meteorological realities of the contemporary world. The global CO2 level remained at a relatively constant 250 to 320 parts-per-million for a period of almost the last 20-million years, until the most recent 120-years. From around 1900, rapid population growth, urbanization and industrialization started to change the nature of emissions and our global atmosphere and resulting weather conditions. This rate of change increased again after World War Two, and then yet again with the information age from the 1990’s, with a corresponding change in global economic activity.
Since 1950, the CO2e level has been growing at a roughly linear rate, of around 15 parts-per-million additional emissions every decade. From around 310 parts-per-million in 1950 to around 410 parts-per-million in 2020. In a very-rough approximation of this complex system, every 100 parts-per-million equals a global temperature rise of slightly more than 1-degree Celsius. The 2015 Paris Agreement set a target to limit Global Warming to 1.5 degrees-Celsius above pre-industrial levels, and certainly less than 2-degrees, where catastrophic global consequences from the warming planet and atmosphere are expected.
This rate of change in both Carbon and temperature has been increasing more rapidly since the year 2000, with ever increasing population and proportional industrialization, with corresponding carbon-producing activity in both the developed and developing world. The effect isn’t just at the point of emission, gasses have an average ‘atmospheric lifetime’, and in the case of Carbon Dioxide, the average atmospheric lifetime is around 100-years. The CO2e level and temperature change is already around the 1.2 to 1.5 degree range, and to stay under the 2-degree target, emissions need to be declining already, halved by 2030 and net-zero by 2050. If your business is not having this conversation, and does not have a current emission baseline (audit), then you are already leaving assessment and strategy late.
SOURCE OF EMISSIONS
As damaging as increasing Carbon Dioxide emissions are, most of the other ‘important to identify’ emitted gasses that accompany contemporary global economic activity are worse. They are currently lower in emitted volume than Carbon Dioxide, but some are growing quickly and have greater Global Warming Potential (GWP) impact. Methane (CH4), a product of transport and agriculture, has 25-times the per-unit impact of Carbon Dioxide. Nitrous Oxide (N2O), a product of agriculture, fossil-fuel energy production and transport, has 265-times the per unit impact. CFC’s and HFC’s, thankfully reduced from the 1990’s onward, had more than 10,000-times the per unit GWP impact. However more newly appearing emissions of Sulfur Hexafluoride (SF6) from electrical transmission, and Nitrogen Trifluoride (NF3) from semiconductors and the computing age, have 23,000 and 16,000 times the GWP impact of CO2 respectively. These last two chemicals, although low in atmospheric levels today, are building from a zero natural atmospheric base and relate almost entirely to our contemporary digital, computing, and energy heavy information age.
Some of the most harmful emissions come from business activity, and every business should know what the emission cost of their business is. For most plans, the majority of emission cuts need to occur within the next decade.
“It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you’ll do things differently.”
Warren Buffett (1930 – )
NET ZERO AUDIT
The first part of a ‘Net Zero Audit’ is to determine the Global Warming Contribution of the business or activity. The Carbon Dioxide Equivalent (CO2e) amount by source, calculating the contribution and the algorithmic (mathematical) model, so that changes can be calculated and forecast. Usually this is put into a dynamic model, so that choices can be experimented with in a ‘digital twin’ environment, a computed model that duplicates the mathematics of the real world, allowing scenario-based assessment.
So what activity creates emissions? Some of the larger contributions are transport and energy requirements, as well as manufacturing and physical industry. However even virtual (digital) has its imprint in energy, materials and building operations, whether it is a business property or dis-aggregation into home office environments. Clothing, packaging, procurement, waste and a host of other aspects of business activity need to be assessed and included in the baseline model.
At this point, the business or activity can see (be presented with) the actual present day situation and the businesses cost in environmental terms. It is usually at this point that the first commitments can be made, and the low-hanging fruit can be seen, in terms of immediate low-cost initiatives that will decrease CO2e emission levels. It is also normal for businesses to consider upstream (supply side) and downstream (customer side) encouragement at this point. In some cases, the business is already in a situation of upstream or downstream pressure to improve their own environmental credentials.
Even a small professional services business with around $3-million in turnover and 10-staff is likely to produce around 200-tonnes of CO2e emissions per year, split in roughly one-third contributions between transport, energy consumption and supply chain procurement.
One of the benefits of a thorough audit and present-day situational report, is the baseline can be used in future stages for analysis, alternative evaluation, program rollout and on-going monitoring and reporting, as well as data for an ISO14001 compliant environmental management system, if ISO compliance is one of the included program objectives. Generally ‘Net Zero’ programs go well beyond simple standards compliance and current legal obligations, seeking to find on-going competitive advantage from a greater level of business transformation.
Serious ‘Net Zero’ programs usually seek to reduce emissions progressively to a long-term amount in excess of a 90-percent reduction, offsetting only the aspects that cannot be removed, usually through programs, or investment in programs, that capture and store residual GWP (Global Warming Potential) to the equivalent counterbalancing level.
If you don’t know your businesses CO2e emission baseline, and its 2021 contributing impact to global warming, then hopefully this article has made you consider getting that data. A 2021 GWP Audit of your business activity.
Future articles will look at Analysis, Alternative Assessment, Program Operation, and Progressive Implementation, including the role of Machine Learning (ML or AI) and strategic secure data sharing to the progressive stages of a ‘Net Zero’ corporate plan.
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