Understanding Decarbonisation and Net-Zero: The Pathway to a Sustainable Future

In the evolving landscape of sustainability reporting in India and beyond, businesses and governments are increasingly committed to achieving net zero emissions. The target is simple: balance the amount of greenhouse gases (GHG) released with an equivalent amount removed from the atmosphere. This article explores the crucial steps toward net zero, with a particular focus on decarbonisation, which is the backbone of these efforts.

The Urgency of Net-Zero Goals

The global push towards net zero is driven by the need to mitigate climate change. As part of international agreements, such as the Paris Accord, many countries aim to reduce GHG emissions by 45% by 2030 and achieve net zero by 2050. Initiatives like the UN's Race to Zero campaign have mobilized businesses, cities, and other entities to cut their emissions drastically. For businesses, the challenge is to integrate these goals into their operations and strategies.

Decarbonisation is not just about compliance with regulations; it's a long-term investment in the company's future. Companies that neglect this may face significant financial risks, as noted by a McKinsey report, which warns of potential losses of up to 20% of economic profit by 2030 for businesses that fail to decarbonize. On the flip side, embracing decarbonisation can unlock new opportunities, potentially adding $9 to $12 trillion in sales by 2030.

Decarbonisation: A Strategic Approach

Decarbonisation is the key to achieving net zero. It involves a strategic approach where businesses reduce their carbon footprint through a combination of technological innovation, operational changes, and supply chain management.

1. Effective Data Collection and Management

‍The first step towards decarbonisation is understanding your current carbon footprint. Accurate data collection and management are crucial. By leveraging platforms like Oren's Sustainability Hub, companies can automate data collection across various touchpoints. This not only ensures accurate reporting but also helps in identifying areas of improvement. GRI guidelines and GHG protocols offer standards for such data collection, ensuring consistency and transparency in ESG reporting.

2. Creating a Sustainable Supply Chain

A sustainable supply chain is central to decarbonisation efforts, given that it often accounts for more than 80% of a company's total emissions. Decarbonizing the supply chain involves engaging with suppliers, conducting materiality assessments, and implementing life cycle assessments. Platforms like Oren assist in creating customized supplier engagement programs, making the daunting task of supply chain decarbonisation more manageable.

By focusing on upstream and downstream emissions, companies can significantly reduce their overall carbon footprint. This not only aligns with BRSR reporting requirements but also improves the company's ESG rating, making it more attractive to investors and customers alike.

3. Setting Measurable Goals and Tracking Progress

Setting science-based targets (SBTs) is essential for tracking progress towards net zero. These targets should be aligned with the company's overall business goals and should be measurable. For example, companies can set targets for scope 1, scope 2, and scope 3 emissions, which cover direct, indirect, and supply chain-related emissions, respectively.

Using platforms like Oren's Sustainability Hub helps in tracking these targets and ensuring that the company's efforts are aligned with global standards like the SBTi and TCFD guidelines. Regular audits and inspections can further ensure that the company stays on track to meet its decarbonisation goals.

4. From Operations to Products: A Step-by-Step Approach

Companies should begin their decarbonisation efforts by focusing on their operations. This includes transitioning to renewable energy sources, adopting electric vehicles, and improving energy efficiency. As the company gains momentum, it can then move to product innovation, ensuring that sustainability is embedded throughout the product lifecycle, from design to disposal.

This holistic approach not only helps in reducing emissions but also aligns with global standards like the GRI standards and ISSB frameworks. By incorporating circular economy practices, companies can minimize waste, reduce energy consumption, and reuse raw materials, thereby contributing to environmental sustainability.

5. Leveraging Expert Support for Success

Given the complexity of achieving net zero, businesses should not hesitate to seek expert guidance. Sustainability consultants can provide invaluable support, especially for companies that do not have an in-house ESG committee. These experts can assist in setting realistic targets, conducting carbon accounting, and developing a comprehensive decarbonisation roadmap.

At Oren, a team of experienced ESG experts is available to support companies in their decarbonisation journey. Whether it's setting targets, conducting scope 3 emissions analysis, or aligning with ESG reporting standards, expert advice can make the difference between success and failure.

Conclusion

Achieving net zero is no longer optional; it's a necessity for businesses aiming to thrive in a rapidly changing world. By embracing decarbonisation and integrating it into their core strategies, companies can not only meet regulatory requirements but also unlock new growth opportunities. With the right tools, data management, and expert guidance, the journey towards a sustainable future becomes not just achievable but also profitable.

Incorporating these practices will not only enhance your company's ESG rating but also position it as a leader in the global effort to combat climate change. The time to act is now—because the future of our planet depends on the decisions we make today.