As a result, growing numbers of businesses across the economy have opted to take a leadership position on climate change, even in sectors where it is difficult to cut emissions. There is a real opportunity for companies to differentiate themselves by offering low carbon products.
Cement is one of the biggest emitters in the global economy, but Cemex, one of the world’s biggest manufacturers of the product, aims to deliver carbon-neutral concrete by 2050, Vicente Saisó Alva, the company’s Director of Sustainability, told the Carbon Trust Sustainability Summit.
Having reduced its emissions by 22% from 1990 levels, Cemex recently set a 2030 target to cut emissions by a third. However, to achieve this, it will need to use technologies such as carbon capture and storage, which are not currently available, he said.
Glass is another inherently high-carbon product, but the window company Velux has announced plans to achieve ‘lifetime carbon neutrality’ in time for its 100th anniversary in 2041. It will not only cut future emissions but offset all its emissions since its creation in 1941 through forest conservation projects, said Ingrid Reumert, Vice-President, Global Communications, Sustainability and Public Affairs.
Climate action is a strategic enabler
Climate leadership is important even for companies where it seems to be a peripheral issue, argued Uffe Kaare Rasmussen, Senior Director for Compliance and Sustainability at pharmaceutical company Lundbeck. He highlighted his company’s 68% reduction in CO2 emissions between 2006 and 2019, along with a 35% cut in energy consumption. “That has not happened by chance. It was a deliberate effort. It is a challenge for the pharma sector, where we have many quality standards to meet, but climate action is a strategic enabler.”
“We work with many governments that have socialised medicine, which are very interested in how we do business, not just in producing medicines, but other aspects of our operations as well.” While the company has been able to reduce its Scope 1 and 2 emissions by buying renewable energy, the challenge is to deal with Scope 3 emissions, because the company cannot control them.
Improved data quality is key, he added. “Improving the quality of emissions data goes hand in hand with influencing our partners to reduce emissions.”
Telecoms group Safaricom is using the science-based targets and the Sustainable Development Goals (SDGs) to help it implement its sustainability targets. And when it was struggling to work out what a 1.5C pathway looked like and how to get there, it reached out to the Carbon Trust. “At the rate we were going, we would never have reached net zero,” said Karen Basiye, the company’s Head of Sustainable Business and Social Impact. “We had to change direction. We looked at how to invest in our network.”
This led it to focus on solar power, increased energy efficiency and deep-cycle batteries that last eight hours, with diesel as a last resort.
Anna Hamnö Wickman, Group Head of Sustainability at Bonava, the homebuilder whose products are linked to a 1.5C target, said that “there is a lot of correlation between happy neighbourhoods and ecological targets”.
Reducing the risks of the climate transition
Bonava is committed to halving its emissions between 2018 and 2032 and Hamnö Wickman said that the science-based targets are a solid foundation for its ambitions because “they reduce the risks of the transition that we are all involved in”.
This is important as investors become more demanding on climate action. “We can really say that financial institutions are a driver now,” she added. “We have a green financing framework linked to the ecolabeling of our homes. It gives us broader financial opportunities,” she added. When we issued a green bond, it was oversubscribed.”
Similarly, Cemex recently announced a $3.2bn sustainability-linked loan, one of the largest in the world, that commits it to meet targets in five sustainability areas in return for a lower rate of interest. “It’s a virtuous circle,” Saisó Alva said. “It’s a great way to go deeper into our commitments and we get a better interest rate if we achieve our thresholds.”
While it is perhaps too early to see a competitive advantage from going green in construction, “this is the way the sector and the regulations will be moving over the next decade,” added Reumert. “It is a leap of faith but we believe it will be an important differentiator. It will create value for the company and it’s what the planet needs.”
But how do companies start to decarbonise? The first step is to measure your footprint, said Basiye. “Know your status. Set targets. Disclose through organisations like CDP. Set a science-based target. Develop carbon reduction projects, look into your supply chain. When we did this, we discovered a number of products were being delivered by air that could be sent by ship, for example. If you don’t measure, you don’t know where the key gains are.”
This is an area where working with others is vital, pointed out Charles Brand, President of Tetra Pak Europe and Central Asia. “Collaboration across the value chain is critical. Companies cannot make the necessary changes if they act in isolation. We need all stakeholders, including governments, to work together.”