Fewer than one in five companies (18%) are currently on track to reach net zero emissions in their operations by 2050 and more than a third (38%) said they cannot make further investments in decarbonization in the current economic environment, according to new research from Accenture. However, according to Accenture, industry leaders can break this economic stalemate within three years by reinventing decarbonization strategies that enable growth for energy-intensive, hard-to-abate heavy industries — such as steel, metals and mining, cement, chemicals and freight and logistics — the operations of which generate 40% of total global CO2 emissions.
Released ahead of the 28th UN Climate Change Conference of the Parties (COP28), the research from Accenture analyzed net zero commitments, decarbonization activities and emissions data for the 2,000 largest companies globally. Additional primary research included a survey of more than 1,000 executives across 14 industries and 16 countries to understand the near-term challenges and priorities of industrial decarbonization.
Accenture’s analysis in found the percentage of companies that have set targets for net zero has risen to 37%, up from 34% last year. Despite reasons for tempered optimism, half (49.6%) of the companies that disclose emissions data have presided over increasing emissions since 2016. One-third (32.5%) are cutting emissions but on current observable trends are not on track to reach net-zero in their operations by 2050. To address the issue at an enterprise level, the report identifies a broad set of decarbonization levers that can enable and accelerate progress. These range from well-established actions, such as improving energy efficiency and switching to renewables, to more complex measures, such as the implementation of green IT, the reinvention of business models and carbon removal.
“It’s promising to see an increase in public commitments to net zero targets again this year, but the adoption of key decarbonization measures is not uniform, with some companies still unable to master the basics,” Jean-Marc Ollagnier, CEO of Accenture for Europe, the Middle East and Africa, said. “Reaching net zero is a unique opportunity for every organization to reinvent themselves and their value chains by aligning business growth with the net zero imperative, despite the many obstacles they must overcome. However, it is not just an enterprise challenge but also an ecosystem one, as there is a need to address the disconnect between supply and demand.”
Accenture found that heavy industry reinvention is critical to achieving all global net zero targets, both because companies in these industries are the world’s biggest emitters and due to their interdependence with manufacturing, or “light” industry, which includes pulp and paper, aerospace and defense, automotive, industrial equipment, life sciences and consumer goods. However, the economics of decarbonization and the structural misalignment between industries are at the core of what’s constraining progress:
“The rapid, affordable decarbonization of heavy industry requires collective action across the value chain and urgently compressed transformation. We believe this can break the economic stalemate by inspiring new levels of growth and help accelerate net zero in just three years of focus,” Stephanie Jamison, global resources industry practice lead and global sustainability services lead at Accenture, said. “If heavy industry is burdened with the full cost of decarbonization and fails to meet net zero targets, all industries will fail.”
Most organizations use a three-year strategic planning cycle, and while three years will not be enough to fully achieve net zero for most, Accenture laid out what must be accomplished during this crucial timeframe to eliminate the economic growth trade-offs and advance net zero. According to Accenture, to build this foundation, three key steps must be taken within the next three years for viable decarbonization pathways that simultaneously pull on as many decarbonization levers as possible:
“To provide the business growth that is necessary to put net zero back within reach, these imperatives must be executed in parallel and scaled to meet the moment, starting right now,” Jamison said. “Stakeholders around the world — across industries and governments — must come together to create a new frontier for the economics of decarbonization, giving heavy industry a firm foundation for reinvention.”
Like this story? Begin each business day with news you need to know! Click here to register now for our FREE Daily E-News Broadcast and start YOUR day informed!