Becoming a Net Zero Company Means More Profit – Here’s How!
By Sachin Sengar
The author is Founder & CEO of Lowsoot (https://lowsoot.com/ ) India’s leading environmental startup company. He can be reached at firstname.lastname@example.org
Sustainability refers to the business programs, products, and practices built around environmental and social considerations that are often seen as a luxury investment. Sustainability initiatives can help to create profits and business opportunities. This sudden and rapid transition to achieve net-zero carbon emission is such a formidable task that companies often assume, it is impossible to achieve while maintaining their profit margins.
The companies and startups need to focus on short-term solutions such as they offload emissions onto others by divesting high-carbon emitting businesses. It helps different organizations to start off by focusing on here-and-now emissions reductions. The one thing that helps to achieve this mission is to shift to solar energy and switching to renewable-sourced electricity is a good way to reduce carbon dioxide emissions. We need to redesign the business models to reduce emissions in such a way that it can be achievable yet profitable.
The idea of corporate sustainability has become part of the mainstream business discourse in the past 20 years. Recently, a report by the UN Global Compact suggests that 84 percent of the 1,000 global CEOs surveyed agreed that businesses should lead efforts to define and deliver new goals on global priority issues. Achieving net-zero sustainability is usually based on the corporate agenda, there are often problems with execution, even in the most committed companies. To deliver real strategic opportunities, industry players should consider applying four organizational practices. It is attached to performance management but they are not often used to address sustainability challenges.
Try to reduce the carbon emissions across the whole value chain – For many businesses, most emissions – and the potential for climate action. These factors are not controlled by the reporting organization, but also contribute indirectly to the company’s value chain. Reducing Carbon emissions successfully and achieving a net-zero mission, companies have to take action on various scopes:
Find out and tackle the root causes – The places where the big emissions happen are often not the most effective places for action. We need to build a mechanism to track emissions to find their root causes, either within their own business or along the value chain. Reduces emissions through fleet electrification and routing optimization. It helps to get better information and control to the people receiving deliveries, so that they can anticipate and redirect a delivery, reducing the number of delivery attempts. Tech startups and companies in this field need to measure power efficiency down to the code level in their AI and Cloud deployments and work with chip manufacturers to reduce energy consumption in the use of their products.
Not defund high-carbon business – Investors are often tempted to increase their portfolio of low-carbon activities by simply rebalancing their allocation of capital. To incentivize reduction is to invest in activities that currently cause high carbon emissions is the more effective approach when it comes to while setting out a clear and urgent pathway to change. Net-Zero carbon emissions mission requires more than $100 trillion investment the transition will require, 70-80 percent needs to go into some of the hardest-to-abate sectors. It requires a sudden shift from demanding divestment to demanding a managed transition of high-carbon businesses. Many organizations and banks are ready to lend to fossil fuel companies with the view that they will transition with their clients, and that transition will require capital. It helps to develop the credibility of these initiatives that the path of change delivers the pace and scale required by science.
Big giant industry players and startups fail to recognize that sustainable production can be less expensive. We need to change the lowering costs, taking a leap of faith. They need to make more early investments in more-costly materials and methods that will guide them to greater savings down the road. They also need to focus not on reducing the cost of each part but on increasing the efficiency of the system as a whole.
Take the Low key technology path, unlike western companies, which often try to mitigate the environmental damage done by their operations through costly retrofits or by underwriting the development of breakthrough technologies, many companies in emerging markets start small. Businesses can expand conservation efforts to other parts of their operations with low-cost moves reap larger and larger returns. Savings contribute to funding purchases of expensive technologies and R&D initiatives that many Western companies might have started with.
Focus on taking a wider View – Impressive as the cost efficiencies are, more intriguing is the growth that companies in emerging markets have gained by extending their sustainability efforts to the operations of their customers. Boosting customers’ buying power requires building unique business models and, in the process, creating interdependencies that are difficult for competitors to copy.
Industry leaders should make a change to their business models to answer to major discontinuities, such as higher natural-resource prices or changes in demand, that create material risks to the business—or opportunities. Initial investments are more expensive methods of sustainable operation that lead to dramatically lower costs and higher yields. We are required to take a bootstrap approach to conservation: They should start with small changes to their processes that generate substantial cost savings, which they can fund advanced technologies that make production even more efficient. The crucial sustainability efforts are taken by industry leaders to the operations of the customers and suppliers, in the process devising new business models that competitors find hard to emulate.
To reduce a company’s carbon footprint, the best ways will not always lead to net-zero. To grow furthermore and achieve the aim of a net-zero carbon emission task, companies need to engineer emissions out of their entire business system, including their supply chain and customers’ use of their products. It also offers a process to scope out product innovations that use fewer resources or that meet specific social needs. To increase profits and reduce the cost of production, companies can follow redesigning products and services. The focus on the following sustainability can also lead to opportunities for process innovations. Due to the cross-functional nature, sustainability brings different divisions together and provides a common motivation.