The Path to a Carbon-Free Future: Business Considerations

I just read this great article from McKinsey called “Net zero or bust: Beating the abatement cost curve for growth.” It’s a challenging topic to break down and challenging as well for businesses to chart the path to zero emissions. But the article really captures the essence of what’s needed to move forward. 

Here are some of the points that struck a chord for me: 

1. The upside of going carbon neutral 

Across the public and private sectors, the race to net-zero carbon emissions has already begun. Leading companies and governments alike have set targets to transform themselves into carbon-neutral organizations by 2050, with some more ambitious leaders setting that target at 2030.  

Source: McKinsey

Still, some business leaders worry about the costs that this type of transformational shift may cost them. The “Abatement Curve,” which shows the average costs of reducing pollution across an organization’s supply chains and operations, can induce hesitation, as decision-makers see potential loss of profits in transitioning to more environmentally conscious business practices.  

There is more than enough data, however, to suggest that this interpretation is a surface-level reading. While businesses will incur costs in tackling their abatement curve, the potential upside in transitioning to carbon-neutral practices significantly outweighs the costs incurred by reducing carbon output.  Identifying, tracking, and analyzing practices throughout the business, at small and large-scale points, can have huge benefits. According to data from McKinsey, “one major company in the chemicals industry has reduced carbon emissions by 10 percent while generating savings of about €100 million per year” through a comprehensive program that looks at the carbon emissions throughout the organization. It’s important to note that this program did not identify one sweeping change, but a series of smaller changes throughout the company, tracked and analyzed to ensure both a reduction in pollution as well as costs. 

2. Rapidly changing consumer demand. 

One trend that business leaders can’t ignore is that consumer demand is changing -- and rapidly -- to call for more sustainable practices. Just as businesses in the 1990s might not have been aware of the significant opportunities and profit in the emerging internet and mobile phone technologies, businesses that are too focused on this moment will lose sight of the fact that the potential profits in meeting this shifting consumer demand will greatly outpace the costs in their abatement curve. According to McKinsey, many companies “are already using their sustainability credentials and long-term improvement plans as an argument for their products over rivals’.” 

3. The strategic pivot

If companies need to reduce their carbon emissions to remain relevant, viable players in a mid-21st century economy, how exactly can they go about making these changes? It’s crucial to think big and to think smart, “empowering frontline personnel to drive emissions reductions while making significant long-term strategic bets on markets, technologies, and production footprint” 

Source: McKinsey

Strategically, companies must identify the elements of their processes or supply chains with the largest carbon footprint and examine potential ways to reduce carbon emissions along the way. For example, a car company could source recycled metals to build their vehicles, without reducing the quality of their end product. 

Because of worldwide carbon-reduction efforts, investment capital to make these types of changes is also as available as it has ever been. Moreover, if companies take a longer view on their investments (ex. a 5-year window for transformational changes, as opposed to the traditional 2-year view with normal investments), they provide themselves the time to actually commit to their carbon-reducing efforts, while maintaining long-term profitable return on investment.   

Ultimately, like any challenge business leaders face, “success will require a transformational approach.” Businesses need to be bold, but this moment offers a unique window for companies to establish themselves as profitable, viable, and sustainable leaders. The future for business lies in green energy and sustainability - changing market forces make that self-evident. But with strategic thinking and comprehensive, top-down transformations to their supply chains and operations, companies have the chance to not only remain profitable, but increase their potential earnings in an ever-shifting landscape. Read the article here. 

4. Thinking Bold with Renewable Innovations 

It’s exactly this type of bold thinking where Renewable Innovations is making an impact. We’ve moved beyond imagining what a green clean future powered with hydrogen looks like. We’ve moved into building it today. Clean data center power. EV charging stations powered by hydrogen (H2) that can be used anywhere, anytime to close the Grid Gap™. Towable systems for the military and first responders. Even Greenhouse Grids where entire communities can be powered by H2, enjoy clean air, and create indoor gardens and playscapes. 

Contact us to learn more about how you can increase and improve your carbon-reduction efforts with real solutions today.