Navigating net zero in a volatile world: How can businesses stay on track to meet climate goals?

Cecilia Keating
clock • 8 min read
The City of London, viewed from Stave Hill | Credit: iStock

The City of London, viewed from Stave Hill | Credit: iStock

BusinessGreen's latest business roundtable saw corporate sustainability leaders discuss how they were driving progress towards climate goals against an increasingly fraught economic and political backdrop

How do you move sustainability projects up the agenda at companies grappling with the impacts of the worst cost-of-living crisis in decades and the market volatility that comes with the resignation of a Prime Minister, war in Europe, soaring energy prices, and the faltering recovery from a pandemic?

That was the topic of a business roundtable hosted earlier this week by BusinessGreen, in partnership with non-profit The Project Management Institute (PMI), which brought together the sustainability leads of some the UK's largest food, healthcare, hospitality, and property businesses.

The meeting, which was held under Chatham House rules, saw chief sustainability officers discuss how they were working to keep companies focused on climate and nature goals while wrestling with worsening economic headwinds.

Much of the discussion focused on how to distribute ownership of the net zero and environmental agendas from central sustainability teams to different business divisions, now that 2030 climate plans have been finalised and the delivery stage firmly entered.

Participants spoke frankly about their concerns about delegating sustainability projects to business divisions that were already stretched by multiple other commercial priorities. "I have a strong and ardent desire for sustainability [objectives] to be distributed across the organisation," one participant said. "And yet, it's also quite reasonable to understand that the central sustainability team is the only team for whom sustainability is always priority number one. Other teams always have other delivery priorities. And so, while I am seeking to pass the baton and distribute that responsibility, it also makes me quite nervous."

One way to ensure sustainability projects did not get sidelined once delegated was to cement institutional understanding about the long-term commercial and societal benefits of climate action, panellists agreed. One attendee noted such realisation should start from the top, but embedding an understanding of environmental priorities at board level can remain a challenge. They reflected on how their company board had over 400 years of collective experience running a business, but those skills were developed during an era when sustainability was not always a top priority. "That's a whole load of amazing institutional knowledge but it is also a lot of 'groupthink'," they said. "How do I build their capability and awareness [about sustainability], when, let's be honest, they are retiring in the next five to 10 years?"

The executives noted that the growing push to get management bonuses linked to sustainability targets at top corporates was proving an effective means of ensuring climate and nature goals were factored into all major business decisions.  

However, panellists also noted there was a risk that the cost-of-living crisis had opened up space for those uninformed about the co-benefits of climate action to push for the rolling back of green initiatives and projects on economic grounds. "Those with enough knowledge of the climate emergency and broader sustainability agenda are being pushed to drive faster [by recent events], and those with not quite enough knowledge are pushed to become more sceptical, more doubting of whether there will be the pace of change locked in from targets from government and from organisations," one panellist admitted.

Such pushback cements the case for sustainability leads at firms to embark on a major climate, nature and carbon literacy drive, they added. "The more people we can get over that threshold, that point of inflection, the more we can actually use moments like this [the cost-of-living crisis] to create more of the momentum," they said.

Of course, educating and challenging colleagues is a complex and delicate task. As such, the importance of clear communication was also a major theme of the discussion, with one attendee reflecting that it was important to convey the importance of sustainability projects in words business leaders understood. "There's this constant tension between the sustainability people in the business and the rest of the business," they noted. "A lot of this is self-inflicted. Sustainability people talk a lot of jargon - every week there's a new thing."

They said their team was working hard to "translate" sustainability talk into language that decision-makers understood. "[The rest of the business has] got to understand how it works," they said. "They need sustainability presented in terms of: does it deliver value? Is there a cost saving that we can then invest in marketing? There's kind of almost a re-education that needs to happen, which then gives us permission to push harder, because there's more credibility in the team."

This sentiment was echoed by another participant at the roundtable, who said they had no doubt there was strong desire from their business to shift to greener practices, but senior management was frequently overwhelmed by the seeming complexity of the task. "There is no disagreement that we should do it, no disagreement that they want to do it," they said. "But [what is lacking] is the brain space to allow us to engage with the detail and complexity. I have to be careful to not be patronising when talking about upskilling and empowering and training and building carbon literacy. These are people who care."

However, on some fronts the economic challenges are bolstering the business case for bolder climate action. All the chief sustainability officers said the rising cost of energy had bolstered the case for clean energy power offtake agreements, on-site renewables, and installation of lower-carbon heating systems, all of which now offer a rapid return on investment as a result of soaring gas prices. But they also noted that a more volatile commercial environment inevitably made sustainability propositions with a slower return on investment a more difficult sell with the finance department.

As such, panellists stressed it was crucial for businesses to rethink the way they appraised the value of green projects. "It is important to shift the conversation away from sustainability and climate change as a cost for business, especially when there are cost pressures right now around the cost of living, and macro-economic changes," one commentator said. "We need to ask how can we see tackling climate change as an opportunity. How do we try to position ourselves so that being able to conduct almost a cost-benefit analysis where non-financial benefits can be translated into financial benefit?"

Some high profile firms have done this by introducing an internal carbon price that prompts decision makers to consider the climate impacts of their decisions. Some attendees noted their net zero target meant the price of carbon was now percolating across business decisions. "The inevitable consequence of setting net zero targets is that we're going to have a carbon budget, and we'll allocate our capital alongside our carbon, so we'll put a shadow price of carbon to enable that to happen," one participant said. "So, we're actually kind of constraining our returns, but we are making ourselves more socially useful and therefore, hopefully, our long-term value is actually increasing."

But others counselled the impact of internal carbon prices paled in comparison to the galvanising effect of an economy-wide carbon pricing regime. "When the shadow price of carbon becomes a real price then there's an opportunity to make thing happen," one participant said. He said the fear of stranded, high polluting assets in the future was still yet to really impact firm's current business and investment decisions. "The long-term market is not one which you can use to drive short-term decisions as easily as it looks on paper. The reality is, 'what are the profits next quarter?'"

Whilst in agreement that significant support for the corporate sustainability agenda in the UK was unlikely to peter out any time soon, panellists were in broad agreement that the incoming Prime Minister's green agenda would inevitably have an impact on business ambition. "What businesses always want from government is clarity, certainty, consistency of direction," one said. "The fact that the UK has been a leader - at least in the rhetoric of firm action and setting targets - has been crucial."

Collaboration is going to be key to tackling the more difficult decarbonisation challenges, panellists said, in particular now "low hanging fruit" such as transitioning to clean energy and readily available zero emission vehicles was being picked off by progressive firms.

One panellist mused that his notoriously competitive industry was increasingly starting to open up to the idea of collaboration on sustainability issues, amid growing recognition that the only way to reduce supply chain and materials emissions was by pooling resources and capacity. "It's a bit like health and safety," they said. "People recognise we shouldn't be competing, we all share a supply chain, we all want to work on this. I think sustainability is starting to get into that territory."

After years of being hit by Brexit, Covid-19, and supply chain disruptions, UK businesses are now confronted with the upheaval that comes with a new Prime Minister, soaring inflation and sky-high energy bills. All the while, the climate crisis has still not gone anywhere, as this week's record temperatures and fires have demonstrated.

As such the task at hand for sustainability leads at large firms to orchestrate and coordinate the delivery of hugely ambitious sustainability plans and ensure that climate and nature are placed at the heart of the business agenda has never been more critical. From keeping leaders focused and driving climate literacy across a business to pushing for a major reassessment of how the value of business investment is assessed, it is undeniable the years ahead will require sustainability experts to hone their project management expertise as they work to galvanise their colleagues and industry peers behind the net zero transition.

Chief sustainability officers clearly have their work cut out for them. It is welcome news, then, that they remain broadly optimistic that they can navigate a path to net zero and demonstrate how businesses can be at the centre of the transition to a healthier, happier, and more prosperous economy.

The roundtable was hosted by BusinessGreen in association with the Project Management Institute.


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