Examples of Net Zero Strategies from Businesses

Considering the findings by Newell in his summary and analysis of academic literature regarding corporate decarbonization strategies, a successful action plan for rapid transition of business is characterized by:

  • Adoption of new technologies which substitute old inefficient ones with clear climate benefits highlighted
  • Movement of capital towards a green financing of the company's assets in order to shift the long term gains and interests
  • External governance pressure either from public domain, in countries where the governmental push is aiming at a less carbonized private sector
  • Pressure to ownership shareholders to modify their business strategy, aka return on investment KPI, not exclusively related to financial profit in order to create shared liability towards net zero
  • Transparent and accountable target setting in order to disclose and report a coherent climate strategy throughout all levels of the organization
  • Finally and most importantly, external consumers pressure towards smarter and greener choices which would impose corporations to fasten their decarbonization based on increase in demand

To this extent, I will analyse three companies' decarbonization strategies in order to classify them as more or less effective.


EXXON MOBIL CORPORATION:

https://corporate.exxonmobil.com/climate-solutions/advancing-climate-solutions

https://corporate.exxonmobil.com/climate-solutions/advancing-climate-solutions-progress-report


Key highlights:

  • No Scope 3 emissions is addressed throughout the actions of the climate solutions progress report, which might however represent the second largest sector considering the voluminous logistical costs the company must incur.
  • Several mentions of CCS technologies as a solution for the company's decarbonization which Implies an already existing efficiency as a variable for decarbonization. Nonetheless, the implementation of Carbon Capture Storage possibilities still has not confirmed the possible scale and timeline for such technology to be implemented.
  • Exxon mentions the development of innovative technologies towards lower-emission assets even though it does not specify in which area the technologies are being developed nor any fully decarbonized solutions, leaving the question open for interpretation.
  • Focus on exploring hydrogen as a renewable energy, however without mentioning if it's green blue or brown hydrogen thus once again creating a half truth for their decarbonization strategy to be fully in line with the Paris Agreement
  • It addresses the need to impose a market price on carbon in order to re-direct capital investment towards innovation, however this can lead to providing temporal margin for a de-prioritization of a faster decarbonization losing valuable years until the Earth System's tipping point is reached.
  • Exxon advocates for policy support towards enhanced governmental incentives especially in the technological sector, which however would eventually benefit the corporation itself in lower emission solutions and not total decarbonization.

Overall the strategy appears to be in line with the Paris Agreement requirements, however it lacks for fundamental details and accountability in terms of company's targets as well as closing the remaining gap of GHG emissions which would still be present after all solutions would be developed. 

I believe this is an example of well drafted green washing strategy from a major beneficiary in the oil and carbon industry.


NESTLÉ S.A.:

https://www.nestle.com/sustainability/climate-change/zero-environmental-impact


Key highlights:

  • Scope 3 emissions are addressed in the first sentence as the major contributor (95%) of Nestle's GHG emissions creating already a sense of awareness for the company's net zero ambitions.
  • The Net Zero Roadmap addresses improvements throughout the whole agricultural chain with a focus on potential benefits for local communities as well, hinting at a just transition as well as a rapid one.
  • The company explicitly pledges to not use any offsetting mechanisms, such as Carbon Credits, in order to achieve their net zero goal, however it admits as well the possibility for certain brands to adopt such solution to mitigate life cycle emissions, thus once again proving the effort towards open communication for the company's climate impact.
  • The website provides clear numbers in terms of how much million tonnes of CO2 are emitted in each sector, from Scope 3 sourcing the ingredients (dairy farms mostly) as the highest cause of pollution to Scope 3 travel and employees commuting as the lowest, creating a sense of clarity towards their climate change contributors.
  • R&D investments will be made to drive innovation in dairy products' methane emissions.
  • Nestle provides highly detailed reports specifying the expectations for the company's future according to different climate pathways with clear and well described actions and numerical targets.
  • Clear initiatives in long term big scale investments in the internal production chain are maybe lacking, however considering the initial remark of 90+% emissions from scope 3 the lack of such technological focus could be justified.

Overall the strategy is well presented, highly detailed and transparent in terms of actions, focus areas and current numerical facts. However, I am maybe missing an internal focus on the potential R&D development for a non-dairy sector and R&D in new ingredients, which would substitute the methane emissions, as well as an interest in decarbonizing its assets with near term capital investments.

This is an example of a well written strategy, however it does not switch the general corporate mindset towards creating a company's mission based on its service rather than the product itself which most of the time is inherently polluting.


PATAGONIA INC:

https://www.patagonia.com/stories/2025-or-bust/story-74769.html

https://www.patagonia.com/climate-goals/


Key highlights:

  • Patagonia claims responsibility for its 90+% emissions coming from supply chain and materials manufacturing proving the pledge to an overall emission reductions
  • With the introduction of Environmental Profit and Loss (EP&L) metric they are able to set internal KPIs which prioritize sustainable product choices and creating accountability for every piece created
  • Pledge to stop using virgin oil fibers by 2025 and investing in certifications for new sustainable materials to be adopted such as Yulex® Natural Rubber, Regenerative Organic Certified™ Cotton or NetPlus™ Material Made from Recycled Fishing Nets
  • In order to tackle the pollution derived from its supply chain, which represents the vast majority, the company actively invests in partners who focus on energy efficiency
  • Patagonia supports as well efforts to remove emissions already present in the atmosphere by financing outside of its organization at community level into afforestation and re-forestation as well as on a more national scale boosting R&D investments in CCS projects
  • At the same time, it encourages the valorisation of local knowledge to be involved in their climate reality as well by financing renewable energy in providing sustainable power to communities

Overall this is a very sound and successful company strategy which is as well proved by its climate neutrality goal by 2025 and its continuous promises then after.

However, Patagonia is positioned into a favourable condition towards decarbonization policies as it is perfectly in line with the overall company culture, strategy and values making it as well a profitable choice for the corporation considering its environmental friendly consumers.


References:

Newell, P. (2020), The Business of Rapid Transition, Wiley Interdisciplinary Reviews: Climate Change 11(6) 



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