Towards Net Zero: How the economy is taking up the challenge.

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To avoid catastrophic climate change, the world must reduce greenhouse gas emissions to “net zero” within the next three decades. This is the message of climate science, and it is a message that the economy has woken up to. In a survey of more than 300 multinational companies, two-thirds of respondents said that the latest report of the UN’s climate authority IPCC influenced their company to raise its ambitions.

But more than science – our research is helping to confirm that climate change is now impacting the economy. Seven out of ten companies say that the availability of inputs is limited due to climate-related events. Adding those who have experienced rising supply costs, the proportion of companies affected by climate-related supply chain disruptions rises to almost nine out of ten. For more than six out of ten companies, climate change also has a direct impact on their business.

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Companies, particularly very large companies, which are being scrutinized by shareholders, customers – and increasingly by their own employees – are starting to act. Of the companies we surveyed, about three-quarters said they planned to achieve net zero emissions, with nearly nine out of ten saying they will achieve this by 2030. By then, global emissions must reach half of current levels.

The key question is whether this will be enough. The majority of many companies’ emissions are generated in the supply chain – directly, through the way inputs are sourced and transported and how products are used and then thrown away. Currently, most companies are targeting the emissions of their own operations, but leading companies, investors and pressure groups are increasingly focusing on emissions in the value chain. Many companies are in the process of revising their procurement standards; leading companies are actively engaging and supporting key suppliers in reducing emissions. This is underpinned by our survey, in which six out of ten executives say they will require key suppliers to switch to renewable energy as part of their net zero targets.

This means that smaller companies will also need to prepare for a net zero problem. However, our survey shows that ambition decreases with company size. Smaller companies face greater financing constraints and may not have the knowledge and tools to measure their impact and achieve deep reductions.

This makes it all the more important that policy is also coordinated. Leaders are urging governments to set the right standards and incentives and to set a price for carbon to encourage faster progress – something that an overwhelming majority supports. Although more and more countries are setting net zero targets, the world is still far from where it needs to be. Now that the business case is clear, it is certainly time for all players to act.

Click here to download the full Vantage report.

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