Net Zero Unpacked: The Essential Guide for Business Strategy & Corporate Communications
Net Zero Unpacked: The Essential Guide for Business Strategy & Corporate Communications
Net Zero Unpacked
The Essential Guide for Business Strategy & Corporate Communications
1 | FOREWORD: BE THE CHANGE
2 | INTRODUCTION: FROM CARBON NEUTRAL TO NET ZERO
3 | DEEP DIVE: POLICY DEVELOPMENTS
3.1 The UK: At the Centre of Global Attention
3.2 The European Union: Leading the Race of Continents
3.3 The UAE: What Net Zero Means in the Middle East
4| Net Zero: A shared challenge
4.1 Brands with Purpose - Consumers in the Driving Seat
4.2 Shareholders Flex Their Muscles
4.3 Thinking Circular
4.4 A Whole System Approach
4.5 Addressing Climate Impact - The Health Paradox
4.6 Big data for an Enormous Challenge
4.7 The Clean Energy Conundrum
5 | DRIVEN BY PURPOSE
5.1 Insight: Recruiting With Purpose
5.2 A Business Model for the Net Zero era
6 | COMMUNICATING FOR CHANGE
6.1 The Power of Partnership
6.2 Extinction Rebellion and the Limits of Protest
7 | CONCLUSION – PULLING TOGETHER
The path towards
At Hanover, we speak often about the need for ‘uncommon sense’ in uncertain times such as these. The path towards Net Zero may seem lengthy but business planning must start now, with companies and governments taking an integrated approach from the very beginning to ensure that they are on track to meet targets.
Grassroots pressure for business to step up its role in addressing major environmental challenges is growing globally. Technological innovations to decarbonise product design and manufacturing are ever closer to commercialisation, with the potential to revolutionise multiple industries.
Climate issues are firmly in the public consciousness. In Greta Thunberg, a new generation has found an inspiring environmental leader, while mass participation in Extinction Rebellion protests and climate marches has spurred hundreds of public bodies to declare a Climate Emergency. The European Union has an ambition to become the first climate-neutral continent by 2050. Seven countries, including the UK, have set legally binding Net Zero emissions targets, while another 110 governments are debating adoption.
Meeting Net Zero will mean unravelling a hugely complex web of policy levers across all sectors - well beyond the ‘usual suspects’ of just energy and transport.
The debate on responding to the threat of climate change is not a new one.
There will almost certainly be reference to it within every corporate strategy. Yet the speed of transition required for 2050 – or sooner – means doing the minimum on sustainability will rapidly see companies shut out of markets.
There is no silver bullet to solving the climate challenge. The plethora of technological solutions breeds uncertainty on where the winners lie, and governments continue to wrestle with preferred decarbonisation pathways.
For business, sharing expertise, modelling and consumer views with decision-makers is vital to ensure that future opportunities can help shape the policy framework. The best business and communications strategies will be informed not just by how competitors are responding, but by cross-sector knowledge to forge positive partnerships, enabling campaigns with broader reach, as well as insight on genuine technological progress.
In a world of savvy consumers, the public must be engaged whilst shifting gear on environmental issues.
Customers expect products and services to be high quality, reasonably priced, and environmentally sound, with no impact on their first two demands. In a world where Net Zero ambition is increasingly normalised, branding and engagement with customers must be meaningful and must stand out.
The days of greenwashing are thankfully behind us. Having an undeliverable company target to gain a near-term headline won’t cut it, as our polling shows. Developing a team that understands and buys into your brand vision is the only way to drive whole company change – a point reflected in so many of the client case studies within this report.
Building these issues into your purpose and culture creates a foundation for future innovation. Trusting your people to be entrepreneurial in the face of major change is the best way to adapt and thrive in periods of transition – such as that presented by Net Zero.
Our team are passionate about providing the insight, expertise and counsel to help inspire and transform communications to create market-leading sustainable businesses.
The challenges are complex, and no one has all the solutions yet. But as drivers of innovation, and as drivers of our economy, businesses must play a key role, taking responsibility, leading the debate and driving their purpose.
To ensure change, our businesses need to be that change.
Has your business got a clear sustainability strategy?
From Carbon Neutral To
The terminology around carbon ambitions has undergone several changes over recent years as ‘climate change’ has been upgraded to ‘climate emergency’. New language can indeed help better shape aspirations and rally support but definitions have changed too and cannot be used interchangeably. Before we meet the Net Zero challenge, we need to understand what that ambition means.
Carbon Neutral means that a company, product, city or state is balancing out the carbon emissions that it creates by funding (‘offsetting’) an equivalent amount of carbon savings elsewhere. Such efforts can include financing renewable, energy efficiency or reforestation projects but the organisation does not need to be actively reducing its own emissions footprint.
Net Zero takes this further. To claim this status, businesses, products and local jurisdictions must ensure that they remove as much carbon as they emit. There are two main strategies: reducing carbon emissions by switching to renewables and increasing energy efficiency and removing them, for example by large-scale tree-planting or carbon usage and storage.
Carbon Negative involves going beyond this to the point where the organisation, authority or geographical territory is removing more carbon than it emits. This is dependent on developing and scaling up technologies that can enable large-scale removal of carbon emissions: such as bioenergy with carbon capture and storage, where plants are grown for energy generation and the resulting carbon emissions are stored, or Direct Air Capture, which removes CO2 from the air.
Timelines: Many targets for Net Zero aim at 2050, though there is increasingly a push for targets, particularly for individual businesses, to be more ambitious. The date is rooted in the UN Intergovernmental Panel on Climate Change report of October 2018, which found that limiting global of 1.5C above pre-industrial levels would mean that global net human-caused emissions of carbon dioxide would need to fall by 45% from 2010 levels by 2030 and reach Net Zero 20 years later. Given the technological leaps required for delivery, very few organisations or governments are wholly on target for these dates.
Meeting Net Zero is a collaborative exercise. Keeping apace of innovative strategies and products from across markets and different sectors will be crucial in maintaining business performance and meeting regulatory requirements.
In developing this report, colleagues and clients from across Hanover have shared insights from different markets and sectors on meeting the Net Zero challenge, and seizing benefits ranging from increased staff engagement and retention, to greater operating efficiency and broadened and more meaningful customer relationships. We explore how business can and should be tying decarbonisation and sustainability into corporate strategies, political engagement and communications.
We start by setting out the context and scale of the Net Zero challenge and what it means for business. All industrial processes, and therefore all product supply chains, will be impacted by the chosen strategic vision for rapid decarbonisation. The technology in our homes, the clothes we wear, the food we eat, even how our financial products are designed by our bank, will all have been considered in the route to Net Zero. How individuals go about their day to day lives will be fundamentally altered by how we choose to structure a green economy.
Next, we investigate how this shared challenge is being approached across different markets and how different geographies offer varied opportunities and issues for those moving towards a decarbonised economy.
Delving deeper into the nature of the challenge, we explore where companies can learn lessons from other sectors. Companies including Sky, Apple, H&M Group, Novo Nordisk and Facebook outline different approaches to the challenges of decarbonisation and sustainability.
This section explores why and how brands find purpose; the role of green finance and the influence of shareholders; whether today’s ‘waste’ is the critical resource of the future; and how you can engage suppliers and customers in your emissions reduction plans. It also investigates how healthcare companies address the dual challenge of reducing their manufacturing carbon footprint, while increasing production of new solutions to tackle climate related disease, and how technology companies balance the benefits of big data and digitalised ‘smart’ solutions with the emissions impacts of data centres.
We also explore the concept of companies operating with purpose, with data from our Insights team showing that demonstrable company values are fundamental to attracting and retaining talent, and we look at a case study of a business structured around environmental goals.
Finally, we consider the role of good communications in driving change. This includes a case study of a client campaign where an NGO partnership elevated existing multi-platform public outreach, and our thoughts on how the Extinction Rebellion campaign can be taken to the next level.
A Deep Dive:
Whilst the effects & challenges of
climate change are felt differently
across regions, business innovations
& policy lessons provide valuable inspiration and frameworks globally.
THE UK: At the centre of global attention
HEAD OF SUSTAINABILITY, UK
2020 must be the year of action. COP26 now takes on major significance, as the next major UN Climate Summit. 9th November 2020 is the date that the Glasgow COP will commence. It is therefore the date by which the UK must have put its house in order. Not just setting a Net Zero target, but making credible plans to meet it. We have the opportunity to play the role of persuasive host. Let’s take it.’
Chris Stark, CEO of Committee on Climate Change, December 2019
The 26th United Nations Climate Change Conference (COP26) in Glasgow in November looms large on the UK’s political agenda. After what many perceived to be a frustrating summit in Madrid at the end of 2019, politicians are under real pressure to achieve a meaningful outcome that moves forward the global debate on climate change.
For Prime Minister Boris Johnson and his new cabinet, this comes with the added weight of setting a coherent and convincing domestic policy plan to get the UK on track for Net Zero by 2050.
Industry and the public are eager to understand where government sees the overarching structures and regulatory framework to drive change. Never has there been a greater need for clarity and concrete actions to provide confidence that ambitions can be met.
Brexit sapped energy away from the domestic policy and legislative agenda. Now that the direction at least of that debate has been settled, building a green economy, framed around investment towards Net Zero, will increasingly take centre stage as a core focus. Many of the areas primed for further boosts to green industries and investment, such as Redcar and Blyth, were strategic Conservative gains from Labour in the recent election. These constituencies may very well feel the benefits of the £6bn pledged to improve the energy efficiency of social housing. The regional focus of Net Zero has never been more prominent, and businesses with manufacturing footprints need to be ready to push for and seize the funding opportunities which will inevitably spin from this.
Alongside this, some big-ticket strategic and legislative work must be dusted off and made ambitious enough for a Net Zero economy. The outputs of the Treasury’s review of funding the transition to a Net Zero economy, due in Autumn 2020, will be fascinating but they feel distant, given the scale of the challenge. The jigsaw puzzle of maximising opportunities for growth whilst creating equitable balance of contributions among households, businesses and the taxpayer will be hugely complex.
Ministers have promised that the Budget will support the drive towards Net Zero, and the Energy White Paper – on hold since summer 2019 – is promised to appear early this year. Expected to set out a new structure for nuclear project financing, it can be a bolder, more strategic framework addressing issues such as financing for transport infrastructure for carbon capture and storage and addressing questions on infrastructure for hydrogen or electrification to replace gas heating.
Seemingly more comfortable with traditional green Conservatism, much of the focus of Boris Johnson’s Government has been on the wider environmental agenda.
The Environment Bill, which fell when the General Election was called, would introduce powers to tackle air pollution, biodiversity net-gain, waste management and deposit return schemes, banning plastic exports to developing countries, and increasing sustainable water management. Yet there are ripples of concern from the environmental community that short-term trade deals made post-Brexit could undermine current environmental regulation, even with a promise of two-year reviews of significant developments in international legislation.
To maintain credibility on the far more challenging Net Zero target, the Government will need to ensure that there is no rowing back on wider environmental standards built up over 40 years within the EU. Businesses committed to driving sustainability are in a strong position to do that – holding decision makers to account on behalf of a customer base who are increasingly bought into the environmental agenda.
At the core of Boris Johnson’s leadership there is a dilemma: squaring the potential risks of post-Brexit economic pragmatism softening environmental standards, while promoting and leading an ambitious programme of Net Zero and international decarbonisation. Options such as forcing City financial institutions to divest from coal internationally may have symbolic appeal in the immediate term but cannot exist as governmental greenwash.
For companies committing to climate action, there are plentiful opportunities to drive the policy agenda around Net Zero. Sharing ideas and innovations with government – from new technology, to finding new means of raising capital for green projects or carbon pricing mechanisms, to driving customer behaviour-change - will help unlock existing regulatory barriers and prevent new frameworks hindering future solutions.
COP26 provides a focal point for UK businesses to showcase their new deeper ambitions through targets and meaningful plans for action on climate change. Economy-wide Net Zero will only be achieved in the UK with buy-in from businesses across every sector and that will be a tougher and longer journey, likely laden with regulation and likely new financial incentives. Success will depend on UK businesses and government finding that path to 2050 together.
The European Union: Leading
the Race of Continents
Head of SUSTAINABILITY, Europe
I want the Green Deal to become Europe’s hallmark. Those who act first & fastest will be the ones who grasp the opportunities from the transition.
Ursula von der Leyen, European Commission President
The European Union hopes to become the world’s first climate-neutral continent by 2050 – at least if it is up to the European Commission, the non-elected administrative body.
The Commission presented its European Green Deal in December 2019, an ambitious and comprehensive package that should enable EU citizens and businesses to transition to carbon-neutrality by 2050.
EU member states have not been able to reach full consensus on this target yet: while almost all member states have endorsed the objective after months of discussions, sensitivities remain. Poland for example – still heavily reliant on coal and other fossil fuels - is holding off any commitment demanding increased financial support from the group. As co-legislators and crucial in the implementation of EU policy, member states, with different regional challenges and opportunities, need to be on board to make the transformation work. Member states are at different stages of progress, due to economic, social, political, historical, but also geographical reasons. The Republic of Ireland, for instance, had to devote so much political and administrative energy to “resolving the massive unemployment crisis, bringing public finances back into balance and restoring economic sovereignty1” that climate change has not been a core priority over the last decade. Economic growth often goes in parallel with growth in emissions, and decoupling is a major challenge of any Net Zero strategy. Nonetheless, despite different starting positions, many capitals are drawing up and implementing their own ambitious energy & climate strategies, some even going beyond what is required by the EU.
Over the last decades, the EU has been driving environmental policy developments, among others through the set-up of the European Emission Trading Scheme, but also through stringent regulation of chemicals (REACH), policies and binding targets on renewable energy and alternative fuels, biodiversity, sustainable fishing and many more. During the last legislative term, the EU adopted an ambitious Circular Economy Action Plan, which led to revised legislation on waste, as well as a stringent directive on single-use plastics, further pushing the global debate on plastics.
Where environmental policy area was once addressed in silo of other domains such as agriculture, mobility or industry, its increasing cross-sector impact has been acknowledged and embedded in the Green Deal. The Green Deal is built around core policy pillars: clean energy, sustainable industry, a cleaner construction sector, sustainable mobility, protecting biodiversity, sustainable food systems and eliminating pollution. There are synergies across these, such as energy & resource efficiency; circularity; the interface between chemicals, products and waste legislation; digitisation; and social impact.
A core concern is managing the complexity and the need for coherence whilst avoiding the development of policies that lead to “regrettable substitutions”, contributing to one environmental objective while harming another. Bringing together the right people with the right set of expertise from the European institutions and Member States will be crucial – and so will be the role of industry and organisations. It is up to businesses which have an unmatched level of technical expertise and knowledge of innovation to proactively contribute, engage with European policymakers, and shape the debates and the future policy framework. The coming months and years will see a plethora of legislative initiatives, offering an enormous opportunity for businesses to drive the transition on an ambitious, yet feasible path.
Despite the many challenges, EU leaders recognised that the transition to climate neutrality can also bring significant opportunities, with potential for economic growth, business and technological development. However, while that may be true, in the shorter term, there is no doubt that a transition will be costly. An aspect that is less clear currently - but is fundamental - is how the transition will be financed. In early 2020, the Commission will present a Sustainable Europe Investment Plan to help meet additional funding needs, which will include the launch of a Just Transition Mechanism, that will combine public and private money of up to €100bn, leveraged by the European Investment Bank. In addition, the ongoing work on sustainable finance, through the taxonomy, eco-label and others, aims to shift investment flows towards a green economy.
Following the 2019 European elections, the European Parliament has never been greener. With growth of 38% for the Greens, green parties particularly in Western and Northern European Member States managed to mobilise a ‘green wave’, and due to public pressure, most political parties this time explicitly addressed climate and environmental policies in their manifestos, albeit with various levels of ambitions. Upon appointment of the new European Commission, sustainability was a key issue for MEPs, and the strong signal sent has certainly had an impact on the urgency and ambition of the European Green Deal. Declaring a climate emergency in November 2019, the European Parliament urged the Commission to ensure all proposals are aligned with the 1.5°C target and is fully supportive of the carbon neutrality target. With the backing of the Parliament, the Commission will have a powerful ally to push through its green plans, starting with the European climate law in Q1 2020, aimed at enshrining the 2050 Net Zero targets into law.
If all member states gather behind the targets, the first big hurdle will be taken on the path towards becoming the first carbon-neutral continent.
THE UAE: What Net Zero Means
in the Middle East
Hanover Middle East
Stepping out into the humid summer heat of Dubai or Abu Dhabi provides an instant demonstration of the Middle East’s sustainability challenge.
Due to climatic conditions, the obstacles the region faces to delivering Net Zero are on a vastly different scale from much of the rest of the world. The Middle East is already experiencing the impact of climate change. Rising sea levels and increasing temperatures may drive substantial changes to the geography of the region in coming years. The World Bank recognised it as the most water-scarce in the world.
A 20172 report from Emirates Wildlife Society and World Wildlife Fund exploring “UAE Climate Change: Risks and Resilience” suggested climate change risked spikes in temperatures and humidity resulting in an 11% increase in energy consumption for cooling by 2050. It estimated associated costs of as much as $834m per year to the building sector, based on the modelled increase of 10-35% energy demand.
Global polling conducted by YouGov in Sep 20193 revealed that 85% of respondents in the UAE recognised climate change and felt human activity was wholly (52%) or partly (33%) responsible. Indeed, the polling revealed that people in Middle Eastern – and Eastern – countries are much more likely to believe that climate change will have a serious impact than many in the West.
And this recognition is of course linked to the perception of impact. Respondents in the UAE ranked 6th amongst the 28 countries polled in terms of anticipation that climate change would impact their lives, with 56% expressing a view that climate change would have ‘a great deal’ of impact, compared to a mere 17% in Great Britain4.
Interestingly, those polled in the Middle Eastern countries were also more likely to think climate change would cause serious damage to the global economy than those in European countries and the USA. However, the survey revealed that the core challenge in the region lies in a disconnect between the perception of impact and the feeling that there is more that both the country and individuals ‘can reasonably do’ to prevent further damaging impacts.
Nevertheless, the combination of a wealth of natural resources and year-round sunshine create both a need and opportunity to encourage the use of renewable energy, most notably solar power. The UAE has led the region in recognising the role of innovation in securing a sustainable future for the planet.
Over the past 15 years, significant focus has been devoted to the advance of renewable energy solutions. Abu Dhabi’s investments both within the UAE and abroad have been spearheaded by local renewable energy and clean technology firm Masdar, launched in 2006 and owned by Mubadala Investment Company. It has invested in the commercialisation and deployment of renewable technologies with the aim of establishing the city as a global centre of excellence in the clean technology sector.
This has included investment in the 100MW Shams 1 solar project – Abu Dhabi’s first solar utility. The launch of Noor Abu Dhabi plant in Sweihan - a joint venture between the Abu Dhabi Power Corporation and a consortium of Japan’s Marubeni Corp and China’s Jinko Solar Holding - which went live in summer 2019 and has capacity to produce over 1GW of power from 3.2 million solar panels. In Dubai, the Mohammed bin Rashid Al Maktoum Solar Park represents one of the world’s largest renewable projects based on an independent power producer model. Once completed, its planned capacity of just under 2GW could power as many as 1.3 million homes and reduce emissions by 6.5 million tonnes annually.
The targeted speed of increase in clean power in Dubai is ambitious. While 7% of Dubai’s total power output is forecast to come from clean energy by 2020, the Clean Energy Strategy seeks to increase this to 25% by 2030, with 75% sought by 2050 (equivalent to 42GW).
The YouGov survey revealed that respondents in the UAE felt that the greatest power to combat climate change primarily lay with international bodies like the UN and national governments of wealthy countries (82% respectively). However, much like respondents in Great Britain, around 80% also felt that business and industry have the power to instigate change.
Businesses are rising to this challenge. Masdar will work in partnership with EDF to develop the Dumat Al Jandal onshore wind project in Saudi Arabia, which will be the largest wind farm in the Middle East. In partnership with environmental management company Bee’ah, Masdar is also developing a cutting-edge waste-to-energy plant in Sharjah which will process more than 37.5 tonnes of municipal solid waste into power per hour.
Positively, those surveyed by YouGov in the UAE had a far more optimistic view of the role of individuals in combatting climate change than in many other countries. Indeed, 70% in the UAE felt individuals could change things versus a mere 43% in Britain. Public pressure has already sparked a shift in the region. Many businesses have responded to consumer calls by committing to reduce carbon emissions, eliminate single-use plastic or increase clean energy use in the coming years.
Those commitments may feel distant now but 2025 will arrive quickly. With regular communication, consumers will better understand why products are changing or, in some instances, why prices may increase.
Communicating why change is required, what the impact on consumers will be and ultimately how consumers will benefit is critical for companies introducing innovative products to the Middle East markets. For brands operating in the region, that means bringing consumers and the wider public on a narrative journey that is open and honest about the challenges of making products or services more sustainable, as well as the many opportunities.
A shared challenge
No one sector is responsible for solving the challenge or seizing the opportunity of Net Zero. Shared knowledge and collaboration between industries
Brands with Purpose:
Consumers in the Driving Seat
‘Consumers want to know what is behind the brand, so standing still when the world is moving forward is not a route to survival and growth.’
Alan Jope, CEO, Unilever
Corporate & Brand
Imagine you are the chief marketing officer of a global fast-moving consumer goods company, such as a clothing or footwear brand. The business is thriving in the US and UK with ambitious plans to grow and dominate in the Middle East, China and Africa but there is one pressing question from your CEO. The company is going to throw its marketing budget behind a single, global, brand ambassador.
There is a shortlist of two and the choice is yours: Donald J Trump or Greta Thunberg?
Much discussion of the relationship between brands and their consumers accepts the broad principle that consumers are the ones to make a choice and that a brand should take steps to make themselves attractive to those consumers.
This remains true, but today we live in a world of ‘affective polarisation5’ – meaning that we identify strongly with our ‘tribe’ and dislike the ‘other’ tribe, even if in practice we don’t necessarily disagree with a lot of their traits or preferences.
In the UK, the obvious example is Brexit, with most individuals defining themselves as either a Remainer or Brexiteer. The reality is that moderates in rival camps have more in common on specific issues than differences. We identify as ‘us’ as opposed to ‘them’ and the strength of our feelings towards ‘them’ becomes increasingly intense. Brands also face a choice along these lines. And while you may not actually be caught between the choice of using Greta Thunberg or President Trump in your brand activations, as a consumer brand you are being pushed increasingly to identify with one of those two camps.
In fact, consumers are going to demand nothing less. Two-thirds of consumers want brands to take a stand on the issues of the day6.
The nuance for brands is that, although marketeers won’t express it so bluntly, this means rejecting customers as much as it means attracting them.
Rather than thinking of consumers choosing brands, we are entering an era when brands are choosing consumers. And this is an incredibly important strategic commercial decision.
Footwear brand Nike illustrates both the opportunity and risk that come with this new consumer landscape. In 2016 NFL Quarterback Colin Kaepernick ‘took the knee’ during the American national anthem. In the resultant cultural conversation, Nike explicitly and triumphantly backed its man. It picked a side, and knowingly faced down furious protests from the ‘others’7.
Within this era of cultural, tribal self-identification, sustainability and climate is a big deal. Major brands need to pick a side.
More often than not, the decision to use a brand to champion sustainability and to restructure supply chain and logistical operations accordingly is driven from non-cynical motives, not a marketing drive.
But it’s clearly also a commercial decision, if for no other reason than you can’t do good work if you’re out of business. So a smart brand leader wants to know that the tribe it ‘chooses’ has some spending clout. That’s an opportunity that can be turned to commercial advantage.
For brands that choose a sustainable purpose, the signs are good. Last year, researchers found that sustainability was a main driver of growth for the consumer-packaged goods market8. Half of that market’s growth from 2013 to 2018 came from sustainability-marketed products. Tellingly, products marketed as sustainable grew 5.6 times faster than those that were not.
These products win because the audience is growing – Nielsen recently found that a whopping 81% of consumers globally want companies to help fight climate change9.
Unsurprisingly, this is most important to Millennials, an admittedly broad bunch of people, but one expected to have faster-rising spending power than other demographic10 - making them particularly attractive to global FMCG brands.
At the same time, it’s easier to be Unilever if you are the only Unilever. If everyone is in the same space, brands need another way to stand out. And a position of virtue is far easier for a disruptive new brand borne of sustainability, than it is for a heritage brand trying to make a difference. Businesses will also have one eye on China, India and Africa to see how their decisions are likely to play out there.
For all that, brands are piling into purpose and sustainability. And faced with the evidence we have, as well as the very real climate issues the world faces, that’s got to be a hugely positive development and one that could help save the planet.
Shareholders Flex Their Muscles
2020 will be the year when climate-risk analysis becomes a mainstream feature of capital markets, with investors and company boards taking climate-related disclosures increasingly seriously in investment decisions.
Investor pressure will be the key driver in shaping how institutions view climate risks. Investors are being more and more discerning when it comes to how their investments will impact the environment, with mainstream asset managers now offering a range of sustainable funds. Consumers, particularly Millennials are looking for ways to invest more sustainably and providers are responding to these demands. Accordingly, companies are shifting from a more traditional, limited view of managing their environmental impact to a broader, more transformative approach.
Profitability is still critical. Investment must still be focused on projects which have high potential for success, not least because shareholders will continue to demand strong returns on invested capital. However, the sector is increasingly focused on ensuring that finance must also address climate transition and inclusive growth while achieving and sustaining those returns.
There are still many complex choices and decisions to make as the transition to decarbonisation continues – many of which will be increasingly dictated by shareholder priorities. In a 2019 poll by ClientEarth11, 60% of UK adults felt that financial institutions and banks should be legally accountable if they chose to invest in fossil fuels. While the finance sector may not divest from fossil fuels fully in the immediate term, we will see investors increasingly calling on and supporting their clients in finding ways to reduce their carbon emissions and become more sustainable in their production and supply chains. Central banks are introducing metrics for measuring climate risks among investment portfolios and, in the UK, the Bank of England is leading the way by introducing stress-testing of the financial impact of climate change from 2021.
Nonetheless, wholesale change requires regulatory cooperation, and despite increasing action on the part of businesses, boards and investors need coherent standards and systems to quantify green investment. Regulatory alignment will be high on Mark Carney’s agenda after his move from the Bank of England to become the UN’s Special Envoy for Climate Action. Another critical element in driving incentives to channel capital to low-carbon solutions and powering innovation is certainty on the price of the cost of carbon - whether through a cap and trade system, a carbon tax or other means.
In 2019, the European Commission proposed a framework to consistently integrate sustainability considerations into the investment process by setting out criteria for sustainable economic activities – known as the taxonomy.
Under the EU’s proposals, investments classed as sustainable economic activities must contribute substantively to environmental objectives such as reducing pollution, or prevention or protection of water and marine resources. The technical criteria for climate change mitigation and adaptation are due to be agreed by the end of 2020. It is hoped that these will boost sustainable asset investment and prevent ‘greenwashing’ of unsustainable financial products.
In the UK, the Treasury published its landmark Green Finance Strategy in July 2019, setting up a Government-led cross-regulator taskforce to build on and implement recommendations on climate-related financial disclosures which will apply to all listed companies and large asset owners by 2022. Work is also ongoing to reach agreement on an international standard; the EU and several partner countries launched the International Platform on Sustainable Finance in October 2019 to coordinate on approaches and initiatives, such as taxonomies, disclosures, standards and labels.
Even with the policy frameworks still under development, growth in green finance is booming. The commercial incentives for businesses to invest sustainably - and the pressure imposed upon them by their shareholders to do so - will only increase in the years to come.
Head of SUSTAINABILITY, Europe
Consumption and the circular economy is the story of re-manufacturing, recycling and innovating to reduce the carbon impacts of products. 'Circular economy' is not a new term, but the catch-all nature of the phrase has meant it has not always been readily understood.
The concept dates back several decades, through initiatives such as ‘cradle to cradle’ or ‘closed loop’ calling into question the negative impact of commerce, the excessive use of resources, and addressing challenges of waste and landfill. While there is no one definition to the term, a circular economy’s foundations are built upon extending the life of products; of waste prevention through reuse, repair, refurbishment, remanufacturing and recycling; and the recovery of materials.
There are very real pressures driving a move to a circular economy: not least finite natural resources, and carbon intensity of extracting large volumes of raw materials and intensive manufacturing processes. Within the EU there has also been an appreciation of the risk of ‘carbon leakage’ with factory relocations to countries with lower labour costs and less stringent regulatory frameworks. An economy based on circularity therefore provides solutions to crucial environmental challenges and can contribute to rethinking our broader economic model and its social impact.
At EU level, the European Commission proposed its first Circular Economy Action Plan in 2015 to help stimulate circularity, foster sustainable growth, and generate new jobs. This first plan focused heavily on revising the existing waste framework, considering recycling targets, management of waste streams, and placing greater responsibility upon producers.
A true circular economy, however, encompasses far more than waste management solutions. Elements such as optimising product design to reduce waste are crucial - including considering durability, ‘repairability’, and material selection. Similarly, there is value in creating demand for recycled products, be it through content mandates or educating the wider supply chain and public to appreciate waste as a resource.
There are questions which need to be resolved as we move towards a less resource intensive economy. Not all products have immediate substitutes and recognising this is important in establishing where to focus efforts in driving products and processes for a circular economy.
The Critical Raw Materials list developed by the EU aims to prioritise resource efficiency of those materials that are of significant economic importance, have a high supply-risk and a lack of viable substitutes – helping to identify areas for funding and research programmes.
Equally important is work on the chemicals-products-waste interface, looking how to best track chemical substances across the supply chain and throughout the recycling process, to ensure consistent quality for consumers.
Through this whole system view, regulators and industry can better ensure maintenance of environmental and health standards for recycled products – for all consumer products, but particularly for food contact materials and toys.
Imaging and technology group Lexmark has become widely known for its cartridge collecting and remanufacturing.
Most cartridges that are collected are remanufactured, changing some parts of the product to return it like-new and under warranty.
Increasingly, we are seeing circularity embedded in the core of many companies throughout the value chain, from production to end-of-life. Business models are being developed around the presumption of products and materials being given a second, third or fourth life, which presents exciting new strategic opportunities for businesses to remain relevant in a changing environment.
The combination of public awareness and increasing regulatory focus means that this is the time for companies to seize the opportunity of circular economy thinking. As more and more innovative reusable and renewably sourced products are coming to market, closing the loop can become progressively easier. About 45% of global emissions13 come from creating the items that we use every day, so transforming the way we make and use products is key.
H&M Group sees developing circular economy solutions as intrinsic to meeting its ambition to become climate positive by 2040. Accordingly, it encourages re-wear, reuse, recycling and upcycling through its garment-collecting initiative, and is investing heavily in new technological solutions such as new fibres to simplify recycling. In 2019 the business collected 29,000 tonnes of unwanted clothes for rewear, reuse and recycling – approximately equivalent to 145 million T-shirts. This was an increase of 40% on 2018 volumes.
‘The key to our future is, therefore, to ensure that we move away from an old, linear and environmentally hazardous system to a circular one that ensures long-term environmental and social sustainability. Big leaps towards new and greener solutions are usually taken by companies and countries that are developing and can, therefore, invest in technological innovations. As such consumption that contributes to both reducing global poverty and enabling investment in modern, sustainable production is not the problem, but instead part of the solution.’
Karl-Johan Persson former CEO, H&M Group
Apple is on a bold mission to make products without mining the earth. The company is focusing on emission reduction throughout the supply chain, smarter chemistry, and resource efficiency – including exploration of material efficiency, product longevity and recovery, as well as zero waste. Initiatives include the Full Material Disclosure program, in which Apple’s suppliers provide information on the chemical substances within the parts and materials used in their products, to ensure compliance to regulatory requirements, corporate initiatives, and to support assessment of the impact to human and environmental health. The company has also developed ‘Daisy,’ a second-generation disassembly robot, to remove and sort components from iPhones in order to recover more material at a higher quality. Most of the aluminium recovered from iPhones, for example, becomes part of the 100%-recycled aluminium enclosure of the MacBook Air12.
‘I think it’s really important to go beyond what’s required and start asking what’s possible.’
Lisa Jackson, Vice-President Environment, Apple
A Whole System Approach: From
Supply to Customer
Delivering stretching targets to drive change in a business cannot be done in isolation. Buy-in from customers, suppliers – and critically – from staff across the whole organisation will make or break ambitious plans.
It is vital that even before targets are officially set, business plans consider innovative ways to engage the key stakeholder groups which need to be brought on board as part of the invention and delivery of the solutions.
For sectors like food & drink, packaging and plastics present a central challenge, and this is heightened as we begin plans for economy-wide Net Zero. Even with transportation and processing factored in, use of recycled materials is far less carbon intensive than production from virgin plastics. A 2017 study demonstrated that recycled PET delivered 79% lower carbon emissions than new material, far exceeding previous assumptions. Effort to work collaboratively across the entire plastics value chain has already begun in the UK via the Plastics Pact. This brings together a common set of targets to drive innovation, research and new business models to rethink and redesign packaging and how re-use of packaging can be boosted. Though companies are moving to recycled plastic, UK volumes of recycling do not currently meet the demand. Driving public behaviour change is therefore vital for business strategy.
Lucozade Ribena Suntory (LRS) is the UK’s third largest branded soft drinks supplier in the UK, with brands including Lucozade Energy, Lucozade Sport, Ribena and Orangina. Ribena was the first UK soft drinks brand to use 100% recycled plastic in its bottles and LRS has committed to make all bottles from recycled plastic or plant-based material by 2030. In the following case study, the company outlines how lessons learned from engagement on wider sustainability workstreams are informing its plans for reaching its ambitious plastics target.
CASE STUDY: Lucozade Ribena Suntory
Suntory’s founder, Shinjiro Torii, had a saying: Yatte Minahare. It means to think big, to take on the largest challenges and never ever give up. Simply, it translates as “Go for it”’.
Lucozade Ribena Suntory’s ‘Growing for Good’ vision encompasses the company’s commitment to reducing its impact on the environment and encouraging consumers to do the same. This mission is threaded through its operations, and extends to engagement with fruit growers, suppliers and customers.
Delivering sustainability and efficiency is, of course, fundamental to core manufacturing processes. LRS’s factory in Coleford, Gloucestershire already meets the highest international standards of environmental management (ISO 14001).
Last year, the company announced a £13m investment to install a high-speed bottle-filler at the factory. Producing 1.3 million bottles a day, the new line reduces the amount of water and energy required to produce each bottle by up to 40%. Working towards delivery of its science-based target of a 25% reduction of CO2 by 2030, LRS has also consolidated its distributions centres to give an estimated annual saving of 1.09 million transportation miles a year and 1.56m kg of CO2.
Finding innovative products that work for customers is critical. Work towards the company’s 2030 target to move fully to sustainable plastic bottles (from used, recycled or bio-sources) has already seen the replacement of 46,000 bottles at running events with seaweed packaging alternatives, and a successful trial of a new light weighted 500ml Ribena bottle which will save 325 tonnes of plastic being produced each year. LRS is also redesigning its bottles to enable an increase in bottle-to-bottle recycling and is supportive of a Britain-wide deposit return scheme to bring quality, used plastic back to manufacturers.
Bringing the story of the value of sustainable supply chains to consumers is also extremely important to LRS. Ribena’s blackcurrant growers are committed to increasing biodiversity across 35 British farms and their 4,000 acres of land through LRS’s Environmental Farm Stewardship Scheme. Annual pick-your-own blackcurrant days across the six-week summer harvest mean that the public can see first-hand the impacts of the Biodiversity Action Plans designed with LRS’s agronomist. Feedback has shown that these visitors really value this opportunity.
LRS also partners with organisations which can bring further challenge and creative thinking to how the company can deliver and engage the wider public. Recycling at home and kerbside collections have improved over the years, but the rate of recycling on-the-go is still low - in the UK around 5.5 billion plastic bottles and 2.7 billion drinks cans are thrown away annually. Given the strategic role recycled materials have in driving a circular economy and in meeting plastics targets, shifting the public’s behaviour is incredibly important.
LRS has been using fun and innovative approaches to drive behavioural change through its partnership with environmental charity Hubbub. The latest regional pilot initiatives to kickstart the conversation around on-the-go recycling has seen bubble-blowing bins and eye-catching art installations placed across regional city centres, and the installation of new recycling points in local offices, shopping centres, universities, hospitals and transport hubs. In Leeds alone over 160,000 plastic bottles were recycled across a one-year trial with the #LeedsByExample campaign reaching 18.8 million people on social media.
Building a circular economy is impossible without understanding and influencing the value chain – from supplier to consumer. Ultimately all players in production must collaborate to deliver a decarbonised carbon future, and that means helping support positive consumer behaviour change through all company activity. Working in harmony with people and nature lies at the heart of LRS’s business, and ultimately enables LRS to provide great-tasting drinks that people can feel good about.
Addressing Climate Impact:
The Healthcare Paradox
It will take the work of the 7.5 billion people currently alive to ensure that the health of a child born today is not defined by a changing climate.’
Lancet Countdown on Health and Climate Change 2019
For the healthcare and pharmaceutical industry, the impact of climate change is twofold – responding to the increased risk of certain diseases and conditions and decarbonising their own processes and products to prevent worsening impact.
Observable effects of climate change are already being felt – for example, the Lancet’s 2019 report on the infection rates of dengue fever (expressed as vectorial capacity for transmissions) showed that nine of the ten most suitable years for transmission on record since 1950 have occurred since 2000. In 2018 there were 220 million more heatwave exposures affecting older populations increasing risks of heart and kidney stress and disease and stroke.
Yet, paradoxically, developing and delivering solutions to these challenges has a climate cost. Analysis has suggested that combined CO2 emissions from hospitals, health services and medical supply chains across the OECD group of market economies plus China and India comprise 4% of total global emissions footprint – greater than either aviation or shipping.
The NHS has been found to produce 5.4% of England’s total carbon emissions. For healthcare providers, challenges lie in areas such as transport, building efficiency and waste reduction – where high-quality waste products in operating theatres that could be recycled largely end up being labelled as infectious clinical waste and are incinerated at a high financial and environmental cost. Similarly, some procedures are particularly carbon intensive. Hospitals have been exploring solutions ranging from retrofitting heat recovery technology to dialysis machines, to switching operating room anaesthetics, which account for almost a third of the UK’s health and social care sector emissions, to less-polluting gas. Linked options include introducing technology to capture these gases and seeking alternative clinical techniques.
There is a clear role for industry to support healthcare providers through innovative product design. Boehringer Ingelheim recently introduced the first reusable, propellant-free inhaler for patients with asthma and COPD, supporting objectives of carbon and plastic waste reduction. An associated study suggested that the reusability of the inhaler reduces its carbon footprint by as much as 71% and should mean that over a million fewer inhalers are needed annually.
The challenge of producing sustainable medicines is also being explored by the Innovative Medicines Initiative. The scheme represents Europe’s largest public-private partnership in life sciences, between the European Commission and the European pharmaceutical industry. Its €26.m (£21.2m) CHEM21 project brings together six pharmaceutical companies, thirteen universities and four small and mid-sized enterprises from across Europe to develop sustainable biological and chemical alternatives to finite materials, such as precious metals, which are currently used as catalysts in the manufacture of medicines.
To minimise wider environmental impacts, efforts are being made to introduce biotechnology to the manufacturing processes for medicine production.
Nonetheless, it is critical that pharmaceutical companies retain a focus on driving decarbonisation and best practice sustainability in-house as well as in product design. In 2015 the global pharmaceutical industry produced 55% more CO2 than the automotive industry14. The NHS Sustainable Development Unit’s 2018 National Resources Footprint15 stated that pharmaceuticals are the second largest producer of both water footprint and carbon emissions (12.1%) relating to the healthcare service in England.
Novo Nordisk has set itself the objective of powering its global production with 100% renewable energy by 2020; a target which they announced they were on track to achieve in 2019, after investing $70 million in a 672-acre solar panel installation in North Carolina. The company also puts emphasis on tracking carbon emissions at each step of the value chain, from manufacturing to transport, distribution and product disposal. In 2019 the group announced a new target of achieving zero CO2 emissions from all operations and transport by 2030. The goal is part of a new and ambitious ‘Circular for Zero’ environmental strategy, which aims to minimise consumption and turn waste into resources, design and produce products so that they can be recovered and re-used and collaborate with suppliers to embed circularity in its supply chain.
"By committing to achieve zero emissions across our operations and transport by 2030 and by applying a circular mindset across our entire business, we are working towards a day when we will be able to say that Novo Nordisk is a company with zero environmental impact."
Lars Fruergaard Jørgensen,
President and CEO,
The shift to a far more rapid rate of decarbonisation across the pharmaceutical industry and the broader healthcare sector will require significant action. But trends have shown that focused efforts can deliver results on decarbonisation, and indeed can be delivered alongside economic growth and expansion of service. In the NHS emissions from health and social care have been cut by 18.5%16 since 2007, despite clinical activity rising by over a quarter over the same period. Interestingly, the report on global pharmaceutical performance17 demonstrated that the companies leading on emissions (Amgen, Johnson & Johnson and Roche Holding) were also three of the most profitable in the sector. This is clear proof that there is economic opportunity in innovating for the future.
Big Data For An Enormous Challenge
‘Smart’ is the buzzword of the modern age – applied to phones, cars, televisions, energy grids, factories and more. There is a clear role for smart systems and big data solutions in driving operational efficiency – and reducing emissions.
Big data has helped us understand the impact of global issues – identifying the rate of habitat loss; locating harmful emissions; finding pressure points along the supply chain. The World Economic Forum framed this transformative change in the capability of data as an intrinsic part of the Fourth Industrial Revolution.
Artificial Intelligence (AI) is another critical tool. Research by PwC UK, commissioned by Microsoft, modelled the economic impact of AI’s application to manage the environment across four sectors – agriculture, water, energy and transport – and estimated that AI could reduce worldwide greenhouse gas emissions by 4% in 2030. This is equivalent to the 2030 annual emissions of Australia, Canada and Japan combined.
Microsoft has dedicated $50m over five years through its AI for Earth programme, which has already supported over 450 grantees across more than 70 countries, giving people working on environmental challenges access to their cloud and AI tools.
The biggest efficiency gains and emissions reduction benefits from AI are expected in energy and transport, but - as is the case with all meaningful steps to decarbonisation – these cannot be applied in isolation. For example, AI-enabled distributed energy grids are most effective in combination with infrastructure such as distributed generation and storage, underpinned by dynamic pricing and smart meters. Similarly, there will be missed carbon savings in introducing AI-enabled autonomous vehicles without policy environments which promote ride-sharing and clean vehicles.
But the story of technology and emissions is more complex than simple good news.
Data usage is growing at speed: between 2012 and 2018, the number of data centres worldwide has grown from only 500,000 data centres to more than 8 million18. The amount of energy used by data centres continues to double every four years, meaning they have the fastest-growing carbon footprint of any area within the IT sector.
Companies are responding. Facebook has set a goal to support all of its operations with 100% renewable energy in 2020 – and, critically, to ensure that renewable energy projects are in the same electric grid as the data centres they support– showing how the sector can spur further renewable energy investment. In 2018, the company became the largest corporate buyer of renewable power in the world and as of today, has contracts in place for more than 4.6 GW of renewable energy. Given its commitment, Facebook is a founding member of the Renewable Energy Buyers Alliance and a member of RE-Source and RE100, a global initiative of influential businesses committed to 100% renewable electricity. The company has also created new energy tariffs in collaboration with local utilities and others, enabling other businesses to also purchase more clean energy.
As growing numbers of businesses and individuals start interrogating their supply chains and considering their full carbon emissions, the carbon footprint of data will come under increasing scrutiny. The nimble technology sector, with its history of entrepreneurs delivering cutting edge innovation to market, seems well-placed to lead the charge.
Head of Sustainability, UK
A Shared Challenge:
The Clean Energy Conundrum
Delivering economy-wide Net Zero needs a collaborative and all-sector commitment to change. Fundamental to this however is the infrastructure underpinning this: how we source our energy and clean our industrial processes.
In many respects energy, manufacturing and technology sectors have led the charge in decarbonisation and have proven themselves to be innovative and responsive to the challenge.
With bold new targets – including new ambitions for carbon negativity from companies like Microsoft – companies from all sectors need to acquaint themselves more fully with the opportunities and challenges which come from different future pathways.
The three most often-discussed solutions to greening our power, heating and transport are renewables, hydrogen and carbon, capture usage and storage (CCUS).
Renewables growth is a positive story. Across the EU the quantity of renewable energy produced increased by 64% between 2007 and 2017. Solar and wind power costs have plummeted to the point where they are cheaper than coal in most of the world, and in many countries subsidies have proven successful enough that developers are increasingly able to build profitably without or with significantly reduced support.
Widespread electrification supported by renewables seem like a clear route to decarbonisation. However, technologies like wind and solar still have intermittency issues which can present challenges to meeting demand - a problem which will only increase as more people want to charge their Electric Vehicles and heat their homes via heat pumps. Battery technology is advancing, but not quite fast enough to meet the scale of ambition of full decarbonisation through renewables. Options like nuclear, which provides stable clean power, and gas, bioenergy or energy from waste plant with CCUS, will also have a role to ensure consistency of power supply.
Explained simply, CCUS is the CO2 produced from fossil fuels in electricity production and industrial processes, and either storing it in aquifers, for example, or recycling it for industrial use. CCUS will be fundamental to the greening of manufacturing and industrial processes. The technology is still relatively new and various hurdles exist in areas such as how the means of transportation of captured carbon would be financed. Industrial clustering around planned CCUS projects will make increasing economic sense for manufacturing, and indeed some aspects of food production – such as greenhouses using waste heat as well as waste CO2.
The potential for the use of hydrogen in heating and transport is also regularly raised as a solution to decarbonisation. There is certainly strong appeal in heating – in the UK for example using the existing network and retrofitting of existing gas boilers means a less significant departure from infrastructure than some heat pump options, particularly ground source heat pumps. From a transport perspective, the current efficiency performance makes it less appealing for cars, but it could still be a possibility for haulage, which can better accommodate the large fuel cells. It is also being actively explored for decarbonisation of aviation.
A current limitation of hydrogen is the energy-intensity of its production – which of course has a knock-on impact on demand and how we manage the electricity grid. Furthermore, if we are serious about decarbonisation, producing hydrogen with anything other than renewables (‘green hydrogen’) does not seem like a sustainable approach. At the very least an approach reliant on CCUS (‘blue hydrogen’) will be needed.
Governments have to make major decisions about national infrastructure plans, based on which technology route they choose to be the dominant model. A one-size-fits-all solution will obviously never work; hard-to-reach communities and geographical differences will always mean exceptions to the national ‘norm’ but businesses do need to understand the main rules of the game in order to apply solutions in time to meet Net Zero and drive further invention.
These are some of the most challenging yet most important choices in a generation. And they cannot be delayed. Recent research in the UK19 suggested that more than 4000 EV charging points and heat pumps would need to be deployed every day over the thirty years to 2050 to meet the country’s Net Zero target. Real action is needed now.
More critically it is important that companies for all sectors understand the implications that these technology choices could have upon their supply chains and operational costs.
Any company setting a Net Zero or emissions target needs to make sure it understands the macro-level energy strategy at play in its market. Understanding the wider landscape is business-critical for all sectors. You can only plan for the bottom-line impacts and benefits by having a stake in the bigger Net Zero debate.
Driven by Purpose
An increasing number of companies today strive for a triple bottom line – profit, people and planet, shifting from simple performance-based thinking towards prioritisation of purpose.
Director of Insights
When leading NGOs, sections of the media and substantial parts of the public view corporate sustainability announcements as ‘greenwash’, business leaders can be forgiven for feeling trapped between an obligation to act and concern for the commercial and reputational impact.
What, then, is driving major ‘green’ announcements when the reaction from some quarters is hostile?
Before making a big move on sustainability, senior decision-makers must consider bottom-line cost, reputational impact and customer behaviour.
Reputational impact in the media and among the public is a first consideration for those in PR. We therefore asked consumers across Western Europe for their views on corporate reputation and which issues would most negatively impact the reputation of a company if they failed to act.
Failure to address environmental impact came first. It wasn’t just a background concern. Respondents deemed it bigger than failure to address equal pay for men and women; providing employee benefits and implementing health and well-being policies. This isn’t a surprise when four in five people say that they are very or somewhat concerned about climate change and the environment20.
Millennial customers are usually seen as the main demographic group driving corporate action on the environment. However, fascinatingly, the age group most likely to suggest failure to act on the environment would affect reputation was 55+. The second most likely was 45-5421.
The public across all age groups is also split evenly on whether individuals or companies are responsible for taking action on the environment. Ultimately, people might say that failure to act on the environment would harm a company’s reputation. But that is not the same as saying that you personally would view a company more negatively or stop purchasing from them. Consumers are still choosing to fly, even if Greenpeace thinks an announcement is ‘greenwash’.
Why then might a company choose to take significant action on the environment?
There is a vital driver for “green” announcements which is often missed by business leaders, the media and those who work in public relations, and public affairs. Our fundamental values, and the actions we then take are far more interesting for corporate decision makers than a simple opinion on a corporate reputation. Actions speak louder than words.
For example, about two-thirds of people agree that society should address long term challenges like climate change even if it means short term cost to individuals. Six in ten people say it is somewhat or very important that the values of the company they work for align with theirs. And a similar proportion of people think it is somewhat or very important for peers to know that the company they work for is responsible and acts in line with their personal values.22
This driver is so strong that just under 30% of people would be somewhat or very likely to consider taking a pay cut to work at a company that acts in a way they feel is responsible, acting in line with their personal values. With Millennial employees, this percentage rises to 40%.23
Older generations may be more likely to think that a lack of action on the environment would hurt reputation. But younger audiences may not want to work there.
We did find some differences by country in our analysis. It’s worth noting that that the UK is the only country of the four we polled where a majority didn't agree that long-term challenges should be addressed even with short-term individual cost. Those in Germany are more likely to hold corporates accountable to tackle the climate crisis.24
But the key point is that Millennials are no longer the next generation or a customer subset. They are nearly 40 and they’re managers, directors and decision makers in FTSE 100 and Fortune 500 companies.
For major companies attracting, retaining and motivating staff are just as important as external reputation. And acting on the environment should be a top priority.
A Business Model for the Net Zero Era
Being sustainable does not mean choosing between commercial success and social responsibility. The UK’s adoption of a 2050 Net Zero emissions target means there will opportunities for companies that offer solutions to the most difficult problems in decarbonisation. As the below case study from investment group Octopus demonstrates, putting sustainability at the heart of a business’s ethos also brings reputational benefits that will help companies prosper, including in recruitment and retention.
Octopus have seen first-hand the advantages that come with embracing such a purpose.
The company says it approaches business from an ambition to be a group that someone would be proud to tell their grandchildren about. Some 70% of Octopus is owned by its employees and about 85% of its people take part in a monthly share-save scheme, giving staff a genuine sense that they are
contributing to the organisation’s development.
Octopus says it has been challenging convention and turning bright ideas into game-changing businesses for more than two decades, with a focus on backing high-growth small companies. Offering smart, simple solutions that leave customers feeling totally taken care of by a trusted supplier, its founding principle is that people deserve better.
As a major investor in renewable energy and zero carbon transport, Octopus believes that a focus on innovative
technology and the end consumer can revolutionise the energy landscape and says it relishes the opportunities that will flow from a Net Zero economy.
Since entering the renewables market in 2010, Octopus Renewables has grown to become the largest investor of solar power in Europe, as well as a leading investor in onshore wind. Its portfolio of clean energy assets with a combined capacity of 50GW hours produces enough electricity to power homes in a city the size of Manchester.
Octopus is a firm believer that consumers should not have to choose
between lower bills and going green. Octopus Energy, the group’s energy supply business, was among the first in the UK to ask why energy companies were not making energy greener, smarter and more affordable for everyone. It also recognises that not every firm has the means to move to a sustainable business model overnight. As for its own enthusiasm for tackling Net Zero, it says that stems from a quest to prove the potential of its investments, whilst simultaneously doing its bit to make the world a better and more prosperous place to live.
Communicating with purpose
Winning the hearts and minds of the public is crucial to transition in your business model and ensuring success of new green products. But in a world of 24-hour news and multiplatform media, how can campaigns really cut through?
The Power of Partnerships
Partnerships between business and NGOs have evolved from reputation building and fundraising to more meaningful relationships which broaden communications channels and embed practical knowledge sharing.
The public is increasingly concerned about the environmental and sustainability agenda for business, but equally savvy in recognising inauthenticity.
Fundamentally, ‘greenwashing’ doesn’t deliver for either side of a corporate-NGO partnership. In response, the environmental corporate partnership agenda has matured with longer-term, strategic partnerships which combine on-the-ground delivery and quantifiable public engagement under a clear campaign banner.
Charities and third-party partners are actively sought as critical friends for business, helping to push innovative thinking and foster wider relationships to deliver on a company’s purpose-led campaigns.
Done well, these have business benefits beyond environmental and social good - helping brands grow loyalty, enhance reputations and build deeper relationships with customers, suppliers and decision makers.
With its multifaceted Ocean Rescue campaign, Sky worked with WWF as part of a broad programme of awareness raising with customers and the wider public. Operating across all aspects of the business the campaign sought to ignite a wider debate on the environmental impact of single-use plastics, as well as addressing the company’s own footprint. With its new 2030 net zero target Sky has a larger ambition, expanding and elevating many of the successful approaches that drove the Ocean Rescue campaign. Sky has long believed that better business creates a better world. It has pushed itself to achieve the highest standards of sustainability and responsibility, and uses its voice to make a difference, campaigning for positive change on the big issues of our time.
Business survives and thrives because we are all part of a connected ecosystem. And that means it’s not just the responsibility of other institutions to tackle climate change. It is our responsibility too. Indeed, the future of our businesses and more importantly our planet depend upon it.
Jeremy Darroch, CEO, Sky Group"
Sky has a strong history of environmental leadership it was the first media company to go carbon neutral, and led a Sky Rainforest Rescue campaign that raised £9 million to keep a billion trees standing in the Brazilian Amazon and an Ocean Rescue Campaign that has reached over 47.8 million people across Europe.
Sky launched its Ocean Rescue campaign in 2017. Built on a clear understanding of the need to bring other people and businesses on a sustainability journey, the programme aimed to reverse the alarming trend of millions of tonnes of plastic seeping into the oceans each year.
At a practical level, the campaign is made up of four distinct workstreams which together have made a significant impact. Thus far, Sky invested £25 million in alternatives to plastic, removed 300 tonnes of plastic from their own business, protected 400km2 of ocean with the WWF and engaged 47.8 million people in its #PassOnPlastic campaign. Sky’s campaigning also led to more than 220 MPs and MEPs committing to change their own behaviour and consumption of single-use plastics.
Sky Ocean Ventures is a £25m fund committed to accelerating ideas to help reduce the amount of plastic going into our seas. Sky is supporting 15 high-potential ideas, funding everything from disposable bottles made of paper and sachets made of seaweed, to rainproof clothes that can last kids from the age of nine months to four years and plastic-free tampon applicators. Through partnering with National Geographic, Imperial College London, Innovate UK and Ambienta, Sky has access to deep specialist knowledge to help find the right ideas to invest in, to nurture those ideas in the best way and to report on the impact of their investments.
Closer to home, Sky feels strongly that it must lead by example. In October 2017 it set a target to remove all single-use plastic from its own operations, products and supply chains by 2020, and is on track to do so. By the end of 2017, all new products were made without single-use plastic and the company is helping business partners and suppliers transform their operations too. As the first company to set such a commitment, it hopes to inspire and encourage other businesses to take action to reduce their use of single-use plastic.
A five-year partnership with WWF has helped Sky shine a light on wider threats to ocean health, too. The partnership constitutes field work – which focuses on a network of marine protected areas which provides special sanctuaries for marine wildlife – and works to persuade governments to take urgent action to protect and restore our ocean health.
Through its 100 million broadcast reach, Sky has used entertainment and sports content – whether through partnerships with the Premier League to eliminate single-use plastic at grounds or theming an X-Factor show in Italy around the issue of plastic – to ensure further reach.
Celebrity endorsements, promotions at sports events, expert tips from an array of industry experts, and an exclusive 45-minute TV documentary of its own, have seen Sky use its voice as a force for good, sharing the shocking impacts of plastic pollution around the world with almost 48 million people across Europe.
Sky have now set a net zero carbon target for 2030. To get there, they’ll cut the carbon emissions created by their business, by their suppliers across the world and with the use of their tech products in consumers’ homes, by at least 50%. They’ll plant trees, mangroves and seagrass to absorb the rest, with an ultimate ambition of carbon positivity.
Putting people at the heart of the campaign remains key. Sky is committed to using its voice across channels and shows to inspire as many people as possible to #GoZero.
Extinction Rebellion and
The Limits of Protest
Deputy Managing Director
Corporate & Brand
Any campaign, broadly, needs to be successful in three areas. Awareness. Persuasion. Action.
Extinction Rebellion faces a challenge in coming months. It has been hugely successful in raising awareness, both of itself as an organisation and of its topline objectives.
But does its strategy lead to persuasion and action? Extinction Rebellion must be careful if it’s to really succeed in its aims.
Looking at the big picture, Extinction Rebellion’s purpose is clear. We are facing a climate emergency that has been woefully prepared for by government, both in the UK and globally.
We are reaching a tipping point and – in the view of the organisation – concerned citizens have no option but to rebel in order to force this issue onto the parliamentary agenda.
From a communication perspective, Extinction Rebellion is not really rebelling. It makes more sense to see their non-violent protests as a series of publicity stunts. It is masterful awareness-raising and these ‘stunts’ have been hugely successful. Climate and Brexit have become the UK’s dominant issues.
Does that lead to success – if success means real action from government? It can’t be ruled out altogether, though tangible results have been hard to see, at least in Parliament.
Certainly, the sheer will of forcing this issue and the need for action into the public, repeatedly, moves the Overton window of what is acceptable as “mainstream”. Following 11 days of protests in May, more than half (54%) of Britons agreed that climate change threatens our extinction25. Just 22% said they agreed with Extinction Rebellion. Extinction Rebellion has proved that it doesn’t need everyone to agree with it to make an impact – but it does need to know what behaviour it is trying to shift and who it needs to listen.
The organisation currently has a strategy of civil disobedience, inspired by the work of Harvard professor Erica Chenoweth26. The challenge it now faces is one of redefining that strategy, and clarity. Is Extinction Rebellion effectively a lobbying group, trying to persuade governments to act? Or is it trying to overthrow capitalism, as alleged in a report for Policy Exchange co-authored by Richard Walton, the former head of the Met’s Counter Terrorism Command27?
This is central and important to define.
While there is an argument that the organisation could continue to drag the Overton window in its direction by being extreme, the very point of Extinction Rebellion is that its action is not extreme – it is necessity-driven by the climate emergency we face.
Therefore, Extinction Rebellion needs to do two things: persuade “mainstream” general public to join its cause and persuade policymakers to act with urgency.
Missing from a lot of Extinction Rebellion’s coverage is the so called “Three Demands Bill”28 it intends to persuade Parliament to debate.
The immediate task is to persuade political decision makers, quickly, that the concerns of Extinction Rebellion are primary concerns of the public. To an extent this requires the organisation to be one with which the public can sympathise. But an organisation based largely around protest can find its novelty wearing off amongst the people directly impacted.
With Extinction Rebellion, we can see this happening already. Targeting early morning commuter trains was ill advised at best and stupid at worst. The images of frustrated workers dragging protestors from the Tube generated empathy across the world, and not for the protestors. But more importantly, it created a narrative for anyone unimpressed by Extinction Rebellion– that the protestors are out of touch with everyday people29. This is a dangerous narrative for a group with mainstream ambitions.
The specific narrative points to a lack of diversity. This bleeds directly into another problem: if the movement does not manage to attract the mainstream into its broad tent, the tent will fill with those people sympathetic to its more extremist agenda - those who cheer the overthrowing of capitalism - and they will inevitably create their own echo chamber. In this situation it is likely that its pronouncements will become – or be perceived by the outside world as increasingly removed from the ‘mainstream’.
This is a cycle. The more this happens, the less supportable they seem, the less sympathy they generate, the more their opponents can promote the narrative that they are extreme, the more they attract extremist members. In this environment, ill-advised commentary will blow up across media with more impact to further underline the extremist narrative30.
As this situation develops, Extinction Rebellion faces its third problem – the amount of time devoted to internal management and politics will increase. This will increase in two ways. First, after so many protests, the sheer amount of time that needs to be devoted to helping members with consequent legal issues will increase. For an organisation of limited budget and time this will inevitably impact the amount of time that can be spent on external persuasion31. Second, any organisation which at its heart faces a dilemma over what type of organisation it is, will over time begin to see factionalism develop that will splinter the group – not only making it less effective as an agent of persuasion, but also alienating it further from the mainstream of the country.
None of this should subtract from the incredible impact that Extinction Rebellion has had on UK conversation over the course of its short life. Now it must find a way to create high-profile protests that generate mainstream sympathy, rather than alienate people. It needs to show faces to the UK that reflect the UK. It needs to bring in those people who will not necessarily join a protest but will amplify a message by speaking directly to policymakers about specific demands.
When even The Guardian is suggesting that “numbers aren’t enough,”32 it is clear that Extinction Rebellion is at a crossroads. It will either remain a relevant protest group and evolve into an effective political force or descend into in-fighting and splinter groups.
The final word
How can you take a 360 approach
to the climate change challenge?
Pulling together to meet the challenge
Meeting the climate challenge is achievable but requires the whole economy to act. The targets for carbon neutrality and Net Zero emissions by 2050 – or earlier in some markets - are a call to arms for businesses, legislators and the public.
This is a shared challenge. There are opportunities to learn from other sectors to maintain and drive revenues.
At Hanover, we offer uncommon sense. We relish the chance to help our clients find the best ways to respond to the big transitions that shake up how businesses operate.
Using insights and digital solutions, we help companies to understand their customers, operating markets and supply chains, and how others are tackling the issue. We help you challenge perceptions to create new and exciting strategies.
Our sector and market experts understand the sustainability landscape and can guide you as you map your way forward – be that helping you risk assess on a company Net Zero target, honing your strategic messaging, or plotting the regulatory pathways to help the business transition.
Understanding and sculpting the policy landscape to enable efficient, sustainable businesses can thrive as we move to decarbonisation is critical. Good public affairs campaigns will support this and help make sure the pilot and innovation funding is going to the most effective solutions.
Helping to elevate your corporate reputation as you take meaningful steps towards supporting Net Zero means ensuring that customers and wider public are bought in to your vision. We can help you drive behaviour change to support your business strategy, build innovative partnerships, and get the right messages to the right people.
Your employees play a fundamental part in delivering the benefits that come from greater purpose-led and sustainable business models. We pride ourselves on delivering branded internal communications programmes which engage staff and enable them to flourish. Your people are your best resource in driving towards a new 2050 vision.
The journey to Net Zero has already started. Don’t get left behind.
4 88% of respondents in UAE believed climate change would have an impact; of these 56% assessed this as “a great deal” of impact. In Britain, only 17% felt it would be a “great deal” of impact, with an overall 58% acknowledging that an impact would be felt.
11 ClientEarth climate snapshot 2019. Poll by Opinium (30 October 2019)
13 Completing the Picture: How the Circular Economy Tackles Climate Change, https://www.ellenmacarthurfoundation.org/assets/downloads/Completing_The_Picture_How_The_Circular_Economy-_Tackles_Climate_Change_V3_26_September.pdf
14 International comparison of health care carbon footprints: Peter-Paul Pichler, Ingram S Jaccard, Ulli Weisz and Helga Weisz, https://iopscience.iop.org/article/10.1088/1748-9326/ab19e1/meta#erlab19e1s3
16 Natural Resource Footprint 2018, https://www.sduhealth.org.uk/policy-strategy/reporting/natural-resource-footprint-2018.aspx
17 IDC FutureScape: Worldwide Datacenter 2019 Predictions, https://www.idc.com/getdoc.jsp?containerId=WC20181101 18https://www.scottishpower.com/news/pages/uks_net_zero_pathway_revealed.aspx
19 Censuswide/Hanover Survey Nov 2019
20 Censuswide/Hanover Survey Nov 2019
21 Censuswide/Hanover Survey Nov 2019
22 Censuswide/Hanover Survey Nov 2019
23 Majority of Britons believe climate-change could end human race: poll, https://uk.reuters.com/article/us-britain-protests-climate-change-poll/majority-of-britons-believe-climate-change-could-end-human-race-poll-idUKKCN1S73Y8
24 Why Civil Resistance Works, https://cup.columbia.edu/book/why-civil-resistance-works/9780231156820
25 Extremism Rebellion, https://policyexchange.org.uk/publication/extremism-rebellion
26 Three Demands Bill, https://drive.google.com/file/d/1dXZif0DtyUkwUwQvj6XRQbFY_QwwoIUK/view
27 Too white, too middle class and lacking in empathy, Extinction Rebellion has a race problem, critics say, https://edition.cnn.com/2019/11/24/uk/extinction-rebellion-environment-diversity-gbr-intl/index.html
28 Extinction Rebellion Co-Founder Apologizes for Holocaust Remarks, https://www.nytimes.com/2019/11/21/world/europe/extinction-rebellion-holocaust.html
29 Extinction Rebellion arrests pass 1,100 in week of protests, https://www.theguardian.com/environment/2019/oct/10/extinction-rebellion-protesters-arrested-at-london-city-airport
30 The Guardian view on Extinction Rebellion: numbers alone won’t create change, https://www.theguardian.com/commentisfree/2019/oct/21/the-guardian-view-on-extinction-rebellion-numbers-alone-wont-create-change
Hanover is an award-winning communications consultancy that designs and delivers strategies that unlock insight, shape narratives, harness influencers, activate campaigns, navigate regulations and access markets.
To support our clients' sustainability strategies, we have brought together a specialist team which provides a 360 approach.
Head of Sustainability, UK
Head of Sustainability, EU
Head of Digital
Deputy MD, Corporate
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