The combination of pressure, expectation, moral imperative, and genuine results that climate action can deliver is compelling—but it’s simply one thing to aspire to change and another thing to do it. We call this delta the “ambition gap,” and it’s where a lot of companies get stuck. For many organizations, the reality of climate action becomes apparent once they’re committed to building and implementing science-aligned, decarbonization strategies at scale.
“Our biggest energy and sustainability challenge in the past 12 months has been striking a balance between realistic and aspirational targets for clean energy” – Survey respondent,
2021 State of Corporate Climate Action Research
To close this ambition gap, speed of delivery is the key. Climate action, like many transition processes, happens on an S-curve: progress is hard at the beginning, but becomes exponential after a certain breakthrough. Early achievements across decarbonization levers and engagement in peer-to-peer forums for best practice sharing can create loops of ambition to fuel future innovations. When your company remains agile and engaged, successful initiatives will grow rapidly when market conditions are favorable, and ideas that underperform can fail fast—leaving lessons learned for future endeavors.
Aligning and right-sizing your decarbonization levers
The decarbonization pathway is relatively straightforward; there are only so many levers an organization can pull to reach its climate action goals. However, the alignment of these levers to deliver material and timely impact requires technological, financial, organizational, and governance capacity. It also calls for an innovative mindset and the acknowledgment that the same processes that created the situation we’re in today aren’t going to work to get us out of it.
Moreover, many solutions that exist today, or are in development, have the potential to create significant opportunities for companies to rethink their approaches to decarbonization.
“To meet the longest-term climate goals, companies will almost certainly need to plan to implement products and solutions that are not yet viable” – Elin Olson, Senior Sustainability Consultant, Schneider Electric
For example, the continuously falling price of clean technologies means that organizations have the potential to make money using renewables. Distributed energy resources like microgrids, batteries, and EVs support the prosumer model, where companies can become both a consumer and a generator of energy, stabilizing energy demand in their communities and creating resilience for their business.
However, it’s all too easy to get caught up in the buzz words and flashy technology. Here’s how we break down the decarbonization pathway into practical chunks:
It starts with energy management
Energy is often a company’s largest source of GHG emissions, so it’s a logical place to start on the decarbonization journey. Understanding the scale, scope, and make-up of your company’s energy footprint—ideally using a centralized source of data—is the essential first step in knowing which decarbonization levers to pull. Understanding the sources of energy generation and the operational assets tied to that generation can help your company manage those assets more effectively. Energy management is about understanding your assets and your operations. If you know what you’ve got to manage, you can develop a responsive plan to use your assets more effectively.
Build a foundation of resource efficiency
The common second step in decarbonization is optimizing for efficiency. Whether to support climate action initiatives or simply for cost-savings, most companies have pursued some level of site-specific energy efficiency efforts. But to make the transformative changes required to address climate change, it’s important to maximize those efforts at the enterprise level. Establishing a strategic energy efficiency plan based on a holistic view will help your company move beyond ‘one-and-done’ efficiency projects to leverage best practices across the entire enterprise.
Once you’ve laid the foundation of resource efficiency across your organization and reduced energy consumption wherever possible, you can then begin to clean up the remaining sources of energy emissions.
Address what can’t be optimized
Most organizations pursuing climate action today find themselves in this stage. Depending on the size and complexity of your operations, there are a number of multi-faceted solutions you can use to replace high-emission energy sources with lower-emission energy sources and balance those energy sources that can’t otherwise be replaced or reduced. These activities include:
- Replacing what can be replaced. Renewable electricity and cleantech procurement, most commonly through a blend of onsite generation, power purchase agreements (PPAs), and energy attribute certificates (EACs), help reduce Scope 2 emissions from electricity use. Electrification and alternative fuels, such as biogas, hydrogen and renewable natural gas, help to reduce Scope 1 emissions.
- Balancing what remains. All companies will inevitably encounter unavoidable emissions that cannot (yet) be reduced or replaced. Air travel, for example, is a common category of this Scope 3 category of emissions. Energy Attribute Certificates (EACs) and carbon offsets are the most commonly used balancing mechanisms to address indirect emissions today. Although they have their critics, highly credible carbon offsets are an essential building block of any climate action roadmap.
Decarbonize the value chain
Addressing the expansive and often ambiguous category of Scope 3 indirect emissions can be a daunting challenge—but one with significant decarbonization potential. True climate action depends on engaging, encouraging, and empowering your company’s suppliers and partners to reduce emissions within their own organizational scope using the same strategies discussed above. A common first step to value chain engagement is defining which upstream suppliers and/or downstream customers to target and assessing those partners to establish a data baseline. From there, you can build a long-term supply chain decarbonization program that not only achieves emissions reductions, but often reinforces relationships along the value chain and identifies opportunities for further collaboration.
With so many companies setting out bold climate action and carbon neutrality commitments, solving the ambition gap problem is mission-critical. A widening ambition gap would threaten a shortfall of the global transformation needed to avoid the worst effects of climate change. If you’ve found yourself tackling a seemingly insurmountable set of climate targets, you are not alone and the help you need is out there. To learn more about the ‘what’, ‘when’ and ‘how’ for corporate climate action, read part one of our Decarbonization Challenge white paper series, Closing the Ambition to Action Gap.