The urgency around global warming and climate change is increasing worldwide, with public and private entities feeling pressure to reduce their carbon footprints. According to the recent UN Climate Change Report, limiting human impact on global warming requires reaching at least net-zero CO2 emissions, coupled with significant reductions in other greenhouse gas emissions. Many private sector companies commit to net zero because they feel it’s the right thing; others are influenced by clients, customers, and shareholders. However, all should consider actionable plans to get to net zero.
Once a company balances its emissions with offsets, it has achieved carbon neutrality. The next step — net zero — happens when the company becomes carbon-neutral across its entire supply chain, including its employees, vendors, and customers. There are financial benefits, too, as research by the NYU Stern Center for Sustainable Business and others shows that sustainability initiatives drive better financial performance.
While these goals seem lofty, companies can start by making small, incremental changes. The following are a few initiatives to consider when creating net-zero plans.
Improve facility and fleet functionality. Relatively straightforward changes such as reducing facility square footage, making facilities LEED-certified, and reducing water and paper use go a long way toward reducing climate impact. Companies with fleets can look into electrifying them, which lowers energy costs, improves energy efficiency, and dramatically reduces carbon emissions. According to a recent study by Climate Group, accelerating fleet electrification could eliminate more than three billion tons of carbon dioxide worldwide by 2030. (Currently, the world emits about 43 billion tons of CO2 per year.)
Make operational changes. Installing geothermal heat pumps and purchasing renewable electricity are relatively simple operational offsets. Making the switch to solar or wind power can also have a significant effect and prove cost-efficient in the long run. These technologies generate some greenhouse gas emissions. But their output pales in comparison to fossil fuels, which have ten times the carbon emissions as the CO2 equivalents for wind and solar.
Support grid decarbonization. Contributing to wind- and solar-based power systems should be a collaborative effort among regional facilities. Some companies, for example, have benefited from installing clean-energy technology to power their facilities and then selling the excess capacity to other companies that wish to purchase offsets for their emissions.
How to Get Started
Businesses can take concrete steps to demonstrate leadership in climate action and contribute to a low-carbon economy.
Look across operations and the entire supply chain to identify potential carbon reduction opportunities. An audit is a great way to determine what a company can do on its own and what might require additional financing, such as purchasing renewable energy from wind and solar energy operators.
Consider offsets as an easily attainable pathway to decarbonization. Companies unable to eliminate carbon emissions can offset them. Some simple steps include buying excess solar power capacity from producers, reducing waste sent to landfills by purchasing 100% recycled products, or ensuring vendors have reduced their carbon outputs.
Participate in environmentally friendly projects. Net zero only happens once a company becomes carbon neutral across its entire supply chain. If net zero isn’t possible for a company, it can still be part of the solution by investing in environmentally friendly projects, like refurbishing forests.
Bank of America achieved carbon neutrality in its operations in 2019, a year ahead of schedule. It is accelerating its progress toward reaching net zero before 2050 and reaching additional interim targets by 2030. By implementing initiatives like the ones mentioned above, companies can have a positive impact on the planet and themselves now and in the future.
Bob Arth is executive vice president and head of the Northeast region for global commercial banking at Bank of America Merrill Lynch.
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