By Mathias Lelievre, CEO, ENGIE Impact
With COP27 just kicked off, businesses’ climate and sustainability initiatives are once again being thrust into the spotlight. Clear, impactful and data-driven decarbonisation strategies are more and more acknowledged as a business imperative. Recent events such as global lockdowns, war in Europe, energy crisis and the threat of an economic recession have served as a reminder how business priorities need to stay steady when it comes to climate change, despite such a volatile environment.
In fact, the latest IEA World Energy Outlook report shows that the global energy crisis is causing organisations to hasten their decarbonisation plans. In addition to demand for fossil fuels plateauing for the first time, the report states that global clean energy investments are set to increase dramatically by 2030.
How then, can leaders ensure their climate strategy is fit for the long term, robust enough to resist the headwinds of an environment that will stay volatile and focused on short-term implementation?
The ‘Big Why’
It all starts with conviction – organisations must establish the ‘big why’. Leaders need to invest and spend time instituting a baseline for their strategy, understanding the opportunities, and evaluating the risk. All angles should be examined, and the executive team should reach fundamental alignment on sustainability plans, at board and executive levels. Aligning a leadership team on the fundamental belief that the world is going to decarbonise eventually and thus the value will be there is the first step every business needs to take. It is not about doing the ‘right’ thing for the world, it is about doing the ‘right’ thing for one’s business.
Often, leaders centre the conversation around cost and ignore the potential impact on positive additional bottom line as most of the low hanging-fruit sustainability implementation programs are in the money, not even talking about brand, product and overall, the future of the organisation. An organisation’s reputation can take a lifetime to build, yet seconds to destroy. A strong decarbonisation strategy can add buoyancy to a sinking reputation and help with customer retention and loyalty in times of trouble. The impact of a strong decarbonisation strategy cannot be underestimated, so leaders should work to ensure their strategy is rounded, thorough and well informed.
To best mitigate risk, data should inform all financial decisions. Good, clean data that encompasses Scope one, two and three emissions will allow organisations to best understand the financial levers available and produce the right financial action. Leadership can drive change and commitment, so leaders need to understand the financial opportunities alongside the risks. Exploring potential pilot programmes and financing options, understanding how efficiencies can come at scale, and analysing whether it’s cost saving compared to the current situation, will help organisations optimise their financial business case when preparing to implement their decarbonisation strategy.
Building awareness and governance
It’s all well and good leaders being aligned on their decarbonisation strategies, but what about the rest of the organisation? Whatever the balance of talent is, everyone involved has to have a full understanding of how the business works today so they can shape how it will work tomorrow. Employees who share a fundamental understanding of key decarbonisation levers and how these may evolve in the future allow an organisation to trial multiple options to establish the best path forward.
Leaders should also try and implement a cultural change within their organisation, wherein decarbonisation plays a pivotal role in all business endeavours. Leaders must inform employees of the organisation’s climate commitment, make clear the steps that are being taken, and ensure each employee is aware of the role they play. This creates a shared vision of success and empowers employees to play their part in reducing an organisation’s climate impact. Leaders should also ensure employees are updated on progress, allowing them to see the impact they are making through the decarbonisation data. The attention around greenwashing will only rightfully increase and highlights the importance of creating a robust, transparent, data-driven decarbonisation strategy. It’s not only employees who need to be on board, but customers, shareholders, and all stakeholders.
Finally, it’s imperative that we shift the way we look at performance to encompass decarbonisation the same way we look at financial performance. This requires strong governance frameworks including more than just a one-year picture of one’s carbon footprint, but also the new processes and tools needed to steer decarbonisation performance, month after month, quarter after quarter.
Aligning the here and now to the future
With the weight of increased pressure from stakeholders, long-term growth impact, and established science on their shoulders, leaders should avoid delaying their decarbonisation strategies and focus on what they could get done now. Though a short-term shift to carbon intensive fuels may seem like an easy option in the current environment, a temporary break from a defined net-zero strategy could get companies off track if they start adjusting goals or pushing timelines.
Leaders must hold their ground and trust in their strategy, especially if they took the steps of establishing their ‘big why’ deep in the organisation. The instability of the global economic and geopolitical status is nothing novel and we can anticipate that the energy sector will stay very volatile while we accomplish our global transition. A robust decarbonisation strategy can help organisations remain competitive and attractive in such turbulent times. Climate change is not going away on its own, and leaders like in every other aspect of managing a business need to make decisions and trade-offs with both a long-term view and short-term focus.
While the onus to reduce climate change falls on each and every one of us, leaders must take responsibility for their organisations’ own decarbonisation commitments. Leaders who take time to build their decarbonisation strategy, base their decisions on data, transform the way they manage performance and are transparent with their employees about plans and achievements will stand strong, especially during turbulent times. These are the leaders who will see their climate strategy have an impact long into the future.
