Last November we were in Glasgow for COP26, where we saw first-hand just how many business leaders, including us, were attending COP for the first time. It was clear from conversations that business has woken up to their role in averting a climate catastrophe. The finance community was committed to putting capital flows into clean energy, and governments realized they alone can’t keep alive the goal of limiting climate change to 1.5 degrees Celsius — that we must do this together.
That sense of urgency continues, with organizations noticeably moving from net zero pledges to action. These are unchartered waters, with so much never done before at scale: stripping carbon emissions from businesses, greening supply chains, and reporting non-financial performance on Environmental, Social and Governance (ESG) issues in a meaningful, consistent way across industries.
Companies want to know: What are other organizations doing? What do we need to do next?
In light of this, it’s not surprising that collaboration across the private and public sectors is on the rise, opening opportunities for innovation and more sustainable growth. It can’t just be talk — action is needed, and collaboration is the way to get us there.
We’re finding two challenges at the forefront for clients: how to balance long-term planning with the short-term; and, how to boost industry-wide change.
How do you balance today’s business challenges with plans for the next 30 years?
Businesses are not used to the 30-year planning cycles that net zero demands, except for the energy industry and large-scale infrastructures. What does net zero in 2050 mean for 2030?
Given that technology will advance, innovations emerge, businesses evolve and policies change, what steps should businesses take now? In the next five years? How do they balance short-term signaling with long-term changes?
For many companies, the first step to net zero is switching to a 100% renewable energy supplier or signing renewable power purchase agreements. Beyond that, an overhaul of the enterprise is needed, including supply chains, infrastructure, business practices and purpose.
How do you support the industry-wide scale of change that net zero requires?
In most businesses, carbon emitted by the supply chain accounts for the majority of total emissions. What companies are realizing is that they can’t get to net zero without industry-wide change.
To build a green value chain, collaboration is essential. Change on this scale requires that government, industry, citizens and society act together. We’ve seen this in the emergence of electric vehicles: from the European Union’s mandate on CO2 standards for new passenger cars back in 2009 and the UK government’s “seed money” to support charging infrastructure from 2010, a fast-growing industry has been created. We’ve seen it with renewable energy, where subsidies and innovative regulatory constructs like Contracts for Difference have supported investment into nascent markets and underpinned an environment for innovation and fast growth.
Collaboration is the way forward, and it is on the rise. Clients tell us this is where EY’s strength as a convener is valuable. We collaborate across a diverse community that spans generations, businesses of all sizes, academia, government bodies, ecologists, activists, technology firms, start-ups and innovators to support change and bring new tools to the market.
For example, we’re collaborating with the next generation on initiatives like the Better Working World Data Challenge, where young data scientists apply their skills to create new ways of tracking biodiversity, and the EY UK Climate Business Forum, which brought together senior business leaders with young climate leaders to develop sustainability actions. Other collaborations include the EY and Microsoft Alliance, where we help to design and deliver transformative cloud solutions such as Microsoft’s data platform for reporting ESG data, Microsoft Cloud for Sustainability (MC4S).
