As global leaders and climate activists discuss strategies to avoid an irreversible environmental tipping point, the business world needs to adapt to meet green targets that can help avoid a climate disaster brought on by carbon emissions.
Companies in every nation need to be active players in the plans being laid out at the ongoing 2021 United Nations Climate Change Conference in Glasgow, Scotland. However, many firms do not yet have concrete plans for keeping up with government goals and regulations.
There is no comprehensive approach all businesses must follow to embark on a journey to net-zero carbon emissions. Instead, proposals should be tailored to suit the needs and operations of each company attempting to make the crucial transition toward a sustainable future.
Nations participating at the COP26 conference, which is scheduled to continue through 12 November, have been asked to submit revised, long-term goals for sustainable economies and communities. As sustainability re-emerges as a key priority for governments emerging from the pandemic, countries are setting ambitious goals.
China, one of the most polluting nations in the world, announced its intent to become carbon neutral by 2060, meaning its output of carbon into the atmosphere will not be greater than its carbon reduction mechanisms.
Likewise, Singapore unveiled its Singapore Green Plan 2030, a “whole-of-nation movement” toward net-zero emissions as soon as the country can make the efforts viable in the second half of this century. This plan aims to strengthen the city-state’s commitments under the UN’s 2030 Sustainable Development Agenda and the 2015 Paris Agreement through collaboration with communities and NGOs in initiatives such as planting more than 1 million trees across the island.
A recent study by Schneider Electric found only a third of businesses in Singapore are “strongly aligned” with the city-state’s green plan. Most reported difficulties in turning green strategies into action, indicating more guidance is needed to nudge them in the right direction.
There is currently no single, internationally recognised measurement framework in place, meaning companies should first decide internally on the best framework for operational upgrades before seeking outside advice.
Once companies are clear on their carbon footprints, they will need to develop roadmaps for their individual paths to decarbonisation so they can make good on net-zero goals and commitments. The Institute of Chartered Accountants in England and Wales (ICAEW), where I serve as managing director international, was the first major professional body in the UK to declare carbon neutrality in 2020. We expect to have reduced our emissions by 20% in 2025 and 40% by 2030.
Yet employing new technologies and infrastructure to engineer emissions out of the business system will be expensive. Grants from local governments can help fund these projects, especially as more countries commit to carbon neutrality. Businesses in Singapore are able to receive grants and other support through the Singapore Green Plan’s Enterprise Sustainability Programme, which offers 180 million Singapore dollars ($133.3 million) for sustainability initiatives and new green economy opportunities.
Alternatively, as more companies and governments make net-zero commitments, transition bonds can potentially help carbon-intensive companies raise capital and use the proceeds for activities to reduce their carbon footprints.
It will not be possible to completely eliminate emissions in some industries. Companies can help through carbon offsetting, in which businesses compensate for their emissions carbon reduction projects such as planting trees or restoring land. In addition to regular progress reports, selecting effective offset providers and projects with reliable standards will allow companies to track their progress and remain accountable.
ICAEW has invested in several offsetting projects helping to deliver the UN’s 17 Sustainable Development Goals. These include a clean drinking water programme benefiting 1.7 million people in Cambodia and an initiative supplying small-scale biogas plants to Vietnamese households to power stoves and lamps.
No matter how comprehensive plans are, sustainable progress cannot be achieved without commitment across all levels of an organisation. While board-level conversations on sustainability are encouraging, alignment across all seniority levels must take place before plans can be implemented.
Businesses should avoid token actions through which green plans are not properly implemented and a lack of clear direction and results undermines the reputations of companies trying to achieve net-zero output.
While it may have taken a backseat initially at the start of the pandemic, sustainability must return as a focus for business organisations
Just as society has worked together to deal with the coronavirus pandemic, collaborative participation from individuals, businesses and governments remains crucial to the fight against climate change. Without a collective effort and clear direction set at national levels, driving real change will be challenging.
Recently, accountancy bodies from around the world – including ICAEW, AAT, ACCA, ICAS and the Association of International Certified Professional Accountants – joined to fight climate change by committing to reach net zero greenhouse gas emissions. With our combined expertise, we also aim to provide advice to help governments create the policies and infrastructure necessary for transitions to net- zero economies.
We believe there are similar opportunities across the transport, energy and technology sectors to have a positive effect on the wider community in the fight against climate change.
While it may have taken a backseat initially at the start of the pandemic, sustainability must return as a focus for business organisations through clear strategies reflecting their individual company goals and accounting for the wider economy within their regions. For example, retail companies that may have explored sustainable materials before the pandemic could integrate sustainability across their entire supply, manufacturing and operations chains, making them more resilient.
Businesses should consider climate action and net-zero emissions as investment opportunities to unlock business advantages such as long-term operational cost savings, greater resilience against future uncertainties and enhanced corporate reputation.
Mark Billington is the managing director international at the Institute of Chartered Accountants in England and Wales, a professional accounting membership organisation.