Words of deeds: five steps to turn your net zero pledge into action

Ambitious rhetoric and pledges to achieve net zero carbon emissions by mid-century have not been backed up by actionable strategies. It’s time for CEOs to take the lead on decarbonization.  

On the face of it, many businesses are already progressing on net zero. The UN reports that the number of organizations that have pledged to achieve net zero emissions by 2050 has soared by 60% to more than 11,000 (as of September 2022). However, at the World Economic Forum in Davos in January, UN secretary-general António Guterres warned that aspirations have not been matched by action. Guterres asserted that the benchmarks and criteria used to assess progress are “murky and dubious”, adding that well-publicized use of carbon credits and offsetting measures are no substitute for quantifiable emissions reductions in core business activities. 

There is no universal path to genuine improvement. CEOs need to experiment with different pathways and make decarbonization a strategic imperative that is factored into core business decisions. Knowing that they will hit bumps in the road, organizations must be prepared to review and redraw their plans en route. Based on my conversations with leading companies, I believe there are five key areas for CEOs to focus on to build real momentum towards net zero.  

1. Lay the foundations 

The first step for CEOs is to prepare their businesses for change.  

The lack of high-quality data is the most common barrier to obtaining an understanding of where the company is on its journey to net zero, so the bedrock of this preparation should be a life cycle assessment or carbon footprint analysis. What are your emissions, and what are their sources in the value chain (suppliers, manufacturing, distribution, or end-users)?  

The next step is creating a system to monitor, track, and report progress. The CEO has an ally in this regard in the form of digital technology. Over time, the data collected will become invaluable in making key decisions, including allocating funding and resources. And, with regulatory requirements for disclosure beginning to tighten, the ability to satisfy carbon footprint accounting standards will be crucial.  

This capability then needs to be directed towards clear targets for both the short and long term, as 2050 is simply too distant to constitute a meaningful target. As some CEOs have observed to me, “It’s kicking the can down the road; the CEOs that make the pledge today won’t be the ones responsible for delivery in 2030, let alone 2050.” As the Science Based Target Initiative (SBTi) makes clear, interim targets are essential to staying on track towards the final objective.  

One firm showing how to prepare is the Dutch brewer Heineken. Its 2030 Brew a Better World plan incorporates 22 sustainability commitments, with interim targets for 2023 and 2025. By 2030, it aims for net zero emissions in production, with a 30% absolute reduction across the value chain. Progress is tracked and reported online.  

2. Get your shop in order

The second key area is assessing and, where necessary, adjusting the organizational structures and systems required to deliver emissions reductions. Start by identifying operational efficiencies. Use your life cycle assessment to find opportunities to reduce emissions, be that through transport, energy use, improved material efficiency, waste reduction, or any other avenue.  

Next, target net zero by amending product design criteria to prioritize emissions reduction over the entire product life cycle. Logitech has shown what can be achieved in this respect, including reducing material usage, using lower-carbon materials such as recycled plastic, and switching to renewable energy in its production facility.  

Critically, CEOs need to align incentives and rewards with the behavior and practices they wish to see. Obviously, that includes executive compensation for contributing towards net zero, rather than just financial results. Some companies have already gone a long way to achieving this: at French electrical equipment group Schneider Electric for example, one-fifth of executive pay in 2020 was dependent upon achieving ESG-related targets, including lower carbon emissions.