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Way back in 1982, I started my career when I became a trainee electrician at the age of 16. The talk at the time was all about acid rain and the ozone layer. The terms “global warming” and “climate change” were only just starting to appear on the public radar. The first-ever COP climate change conference (Berlin, 1995) was still several years away.
Fast-forward to 2023. In the time it’s taken me to go from trainee to CEO of a global leader in energy management and automation, those early hints of global warming have swelled into outright climate crisis. Successive COPs (number 28 is happening soon) have resulted in ambitious decarbonization targets and policy initiatives around the world.
But governments can’t do it all alone. The corporate sector needs to be part of the action, and there’s a lot more companies can do to get us towards net-zero emissions faster.
The good news is that in spite of – or perhaps because of – the geopolitical, economic and energy-market turmoil of recent years, the business world is increasingly making commitments to sustainability and decarbonization.
As of now, some 3,900 companies worldwide have set emissions-reduction targets validated by the Science Based Targets initiative (SBTi). And according to the Net Zero Tracker, 929 of the 2,000 largest publicly-traded companies in the world had net-zero commitments in place as of mid-2023. That’s more than double the number of two years earlier.
But many businesses have yet to set decarbonization goals or deliver as much action as they could.
Why is that? I believe the hold-up is partly due to still-insufficient awareness of the solutions at our collective disposal and of the benefits of action.
Misconception number one is that decarbonization is entirely about increasing the use of solar, wind and tidal power. As important as supplying more clean, renewable energy, however, is tackling the demand side and optimizing how energy is consumed. And while energy efficiency is starting to get more attention, the role it plays on the path to net zero is often overlooked and under-appreciated.
That’s despite the fact that plenty of powerful solutions for energy efficiency already exist. Automation software that optimizes processes and energy usage in industrial sites and value chains, for example. Or digitally-enabled heating and cooling systems that identify and reduce energy waste in homes and commercial buildings. And electric heat pumps and EVs, which are cleaner and far more energy efficient than fossil-fueled technologies.
The second misconception is that such technologies are not particularly effective and that they yield a low return on investment. In fact, the good news is that both effectiveness and ROI are often larger than many assume.
Take the findings of research we conducted with the global design firm WSP. These showed that installing digital building and power management solutions in existing office buildings could reduce their operational carbon emissions by up to 42% with a payback period of less than three years. What’s more, replacing fossil fuel-powered heating technologies with electric-powered alternatives, and installing a microgrid with local renewable energy sources, can achieve an additional 28% reduction in operational carbon emissions.
Yes, policy action is key to setting frameworks and incentivizing action. And the Alliance of CEO Climate Leaders recently called for more to be done to streamline permitting processes, harmonize climate disclosure standards, and phase out fossil fuel subsidies, among other things.
But rather than wait for the policy environment to keep improving further, the corporate sector can and must do more, faster, now.
Even companies that are not directly involved in creating and selling decarbonization and climate solutions can reduce emissions and raw materials usage both in their own operations and within their supply and distribution chains.
They can contribute to the public debate, by sharing research and expertise. They can support communities through corporate citizenship programs, or through training initiatives that address the shortage of skills in the digital, electrification and clean energy sectors, particularly in remote or underdeveloped parts of the world, to ensure the energy transition is fair and inclusive.
And they can provide the commercial acumen and marketing expertise (and sometimes seed capital or financial backing) that’s needed to take innovations from the drawing board to fruition, and to market.
All this requires effort and financial commitment. But it’s time to recognize holistic, cooperative and multi-faceted corporate sustainability action as not just a must-do imposed by regulators, but as a business and job-creation opportunity that can lower emissions and costs faster than many realize.
Take it from a trainee-electrician-turned-software-engineer-turned-company-CEO: there are ample electrification, digital, automation and other technologies at our disposal today. There’s both a moral and a business case for deploying them at much greater scale and speed. And the cost of inaction would ultimately be far greater than the cost of action.