The Business Benefits of Net-Zero

In the face of mounting environmental challenges, the call for a net-zero future is louder than ever. The imperative to curb pollution and strive for net-zero emissions has emerged as a universal goal. Politicians, business leaders, and the public alike recognize the urgent need to address the looming specter of climate change. However, amid global economic unrest, many business leaders find themselves at a crossroads, grappling with the challenge of reconciling sustainability objectives with the imperative of maintaining profitability. Yet, it’s increasingly evident that embracing net-zero practices isn’t merely a moral obligation but also a strategic imperative for businesses seeking long-term viability and growth.

To entice business leaders into better environmental behavior and foster a more holistic integration of sustainability into business processes, it’s essential to underscore the manifold benefits of adopting a net-zero approach. It is but to understand the challenges that businesses could face when charting on a sustainability path. Understanding and confronting them with the right tools is available now more than before. 

The Business Case for Net-Zero

Climate change poses multifaceted risks to businesses, including physical risks from extreme weather events, regulatory risks stemming from evolving environmental regulations and reputational risks associated with environmental degradation. By embracing net-zero practices, businesses can enhance their resilience to these risks, safeguarding their operations and preserving long-term value. 

BHP, the world’s largest mining company understands this well. The company acknowledges its significant responsibility for biodiversity and land management due to the nature of its activities and has outlined an elaborate decarbonization goal by 2030. The mining behemoth not only addresses its Scope 1 and Scope 2 GHG emissions, but also aims to cut down its Scope 3 emissions across its entire value chain. 

In an increasingly competitive landscape, consumers and investors are gravitating towards brands that demonstrate a commitment to sustainability. Adopting net-zero strategies not only differentiates businesses in the marketplace but also enhances brand equity, fostering stronger customer loyalty and attracting socially responsible investors.

Our upcoming Horasis India Meeting 2024, touches upon this subject extensively. At its 16th edition, the event brings together business leaders from India and the host country in developing stronger bilateral relations via trade and economic measures. This year’s two-day event will see business leaders from India and Greece come together in solving some of the crucial questions around climate change and how both countries can work together in charting a low-carbon growth.

With governments worldwide tightening environmental regulations, businesses face escalating compliance pressures. Embracing net-zero practices not only ensures regulatory compliance but also secures the social license to operate, mitigating the risk of regulatory scrutiny, fines and sanctions. For e.g., EU’s CBAM which came into force on October 1, 2023 will have significant impacts in terms of higher tariffs for businesses that are exporting to the EU nations. Businesses that do not comply to EU’s carbon emission rules stand to bear hefty tariffs.

Other than tightening regulations, governments across the world have also taken several actions in mitigating climate change impacts. India aims to become net-zero by 2070, setting four other sustainable commitments to be achieved by 2030 – increasing non-fossil energy capacity to 500 GW, fulfilling 50% of energy requirements from renewable sources, reducing carbon intensity of the economy by 45%, and reducing total projected carbon emissions by 1 billion tons.

Meanwhile, Greece has also achieved significant milestones in its quest to net-zero. It has set a deadline of 2050. The country has already managed to reduce its share of fossil fuels in its energy supply from 91% in 2011 to 82% in 2021. The country is also one of the few that has introduced a new tax, called a “climate crisis resilience fee” which will charge tourists a certain amount of tax depending on their hotel category.

Strategies for Integration

To overcome the impacts brought about by climate change, businesses should foster a culture of sustainability by integrating environmental objectives into corporate values, policies and decision-making processes. Business leaders should also empower employees to champion sustainability initiatives and incentivize sustainable behaviors across all levels of the organization.

Outside their organizations, businesses should strive to establish clear, measurable targets for emissions reduction and environmental performance improvement. They should regularly publish transparency reports showing progress towards their decarbonization targets, demonstrating accountability and fostering trust among their stakeholders.

Forging partnerships with suppliers, customers, NGOs and governmental bodies is another way that businesses can drive collective action towards sustainability goals. They should develop platforms whereby stakeholders are given the opportunity to engage in dialogue, collaboration and shared problem-solving, leveraging collective expertise and resources to kickstart a meaningful change.

Allocating resources towards R&D initiatives aimed at developing and deploying sustainable technologies and solutions is also crucial. Business leaders should be proactive in embracing emerging technologies such as renewable energy, carbon capture and circular economy practices to drive continuous improvement and innovation. ExxonMobil Asia Pacific Pte. Ltd. and Shell Singapore Pte. Ltd. have come together to form a consortium that is working with the Singapore government to develop a carbon capture and storage (CCS) project. The CCS project will be capable of capturing and permanently storing at least 2.5 million tons of CO₂ a year, by 2030.

The imperative to embrace net-zero practices transcends moral obligation and aligns closely with strategic imperatives for businesses seeking sustainable growth in a rapidly evolving landscape.