Q: Let’s talk science: Are the commitments made by businesses sufficient to stay on track for net zero? What else is needed?
Linden Edgell: The carbon tracker for the two-thousand largest publicly listed companies, tells us that only six have met their net-zero commitments (externally verified), thirty-one say that they’ve met it, and only six-hundred and eighty-four say it’s in their corporate strategy. That means that over half of the top two thousand companies in the world do not have a net zero strategy. That is shocking.
The good news is that we know what is needed. Companies need to have their greenhouse gas accounting in place. Do you know the amount of emissions you are directly and indirectly releasing year on year? A surprising number of companies don’t know the answer to that question and that’s something that needs to get in order first.
Secondly, companies need to set targets that are informed by science and are aligned with some of the standards that are out there, like SBTi.
Thirdly, this is a whole team sport from across your company. It obviously involves the sustainability team, but it also involves finance, R&D, product development, new market entry, procurement and supply chain. It's a whole company perspective. Get them all involved.
Then get about actually reducing your emissions. That's where the energy really needs to go and make sure you're working towards the targets that have been set. For most of us, it's a change to our business model and this is way more than just saying I have to reduce emissions. It's actually thinking about, how do we do business differently?
And then we know that there will be residual emissions in our system as we work towards net zero. It’s our collective responsibility to address this issue.
That's where natural climate solutions (NCS) come in. NCS involve leveraging nature to capture and store carbon dioxide, through methods like afforestation, soil carbon sequestration, and ecosystem restoration. By integrating NCS into corporate strategies, businesses can counterbalance emissions and contribute to carbon removal efforts while benefiting ecosystems and communities.
So are we on track? No. Are NCS needed? Absolutely.
Q: So you’re talking about shifting from an “either-or" strategy to an "and-and" strategy. We know that it’s necessary, but how do you convince businesses to invest in NCS? Isn’t it challenging to convince your clients to spend more money?
Linden Edgell: Indeed, we're witnessing a paradigm shift. It’s no longer a matter of choosing between emissions reduction and nature-based solutions; rather both are essential. Companies must adopt comprehensive strategies that address both emission reduction and nature conservation to effectively tackle the climate crisis.
Integrity should lie at the heart of your strategy, due diligence, aligning projects with corporate strategies and values, and having a deep understanding of project impacts are crucial. It's about ensuring that our actions not only reduce emissions but also contribute positively to environmental and social outcomes. Natural climate solutions make sense then in terms of overall business strategy.
I also encourage businesses to think about the long term. Carbon markets will become increasingly important as we go forward as a society to shift finance to help meet our global targets and standards. But the carbon markets need to evolve and mature, including the voluntary carbon market. So there's definitely a first-mover advantage that we encourage people to think about. The advantage to this is that you're learning, you’re building capacity in your organization and you're helping to build momentum and integrity in the system.
There is also a question of credibility with stakeholders. Both internally and externally, our employees, investors, consumers, others in our value chain have an expectation around integrity and accountability. So being very clear about how this comprehensive strategy works is really important for companies.
Q: Would the possibility of making a claim make a difference?
Linden Edgell: In the age of skepticism and greenwashing accusations, we’re seeing two ends of the spectrum develop – on one end “greenhushing” where companies are not saying much of anything and hoping they don’t catch any attention. But others are remaining firm and adhering to standards, communicating clearly and with integrity. This is about building trust and credibility into our actions, which is why I would encourage companies to be bolder. Transparency and boldness are paramount.
This is why the claims code of practice from VCMI is really important – the more that companies use them, the more robust the system will become and integrity will grow. Eventually, these claims will be key in setting businesses apart from competitors.
Q: Why did ERM join the NCS Alliance?
Linden Edgell: For ERM, the decision to join the NCS Alliance was driven by a commitment to collaboration and knowledge sharing. The Alliance provides invaluable resources and guidance, essential for businesses navigating the complex landscape of the voluntary carbon market. We are also knowledge partners, delivering together the Natural Climate Solutions and Voluntary Carbon Market Guide for C-suite Executives, and we’re currently working on a guide for investors.
We also joined because we want to help build momentum. The time we have to get this work done for nature, for climate, for people is running out very fast. We’ll only do it if we work together and challenge each other.
Q: Do you have any final messages for our audience?
Linden Edgell: Start. If you’re not already investing in NCS, you have just got to start. It can feel overwhelming but you can start. There are lots of tools and resources out there that will help you, you can engage with the NCS Alliance for example. Just start taking tangible steps because we don’t have time to waste.
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About the Natural Climate Solutions Alliance
Convened by the World Economic Forum and the World Business Council for Sustainable Development (WBCSD), the Natural Climate Solutions Alliance conveys the voice of business, NGOs and solution providers on the need to mobilize a high-integrity demand for high-quality natural climate solutions. The NCS Alliance focuses on identifying opportunities and barriers to investment in the NCS voluntary carbon market and also serves as a forum for knowledge sharing and technical capacity building to ensure natural climate solutions reach their full potential in abating climate change. Businesses can learn more by reaching out to ncsalliance@wbcsd.org.
About ERM
ERM is the world’s largest advisory firm focused solely on sustainability, offering unparalleled expertise across business and finance. ERM partners with clients to operationalize sustainability at pace and scale, through our unique combination of strategic transformation and technical delivery capabilities. Their diverse global team of experts works with the world’s leading organizations to help them set clear sustainability targets, measure progress and operationalize strategy through deep implementation and business transformation. Find out more at www.erm.com.
