The G7 Summit in Hiroshima, 19-21 May, represents a pivotal moment for global cooperation and a commitment to building a resilient, equitable, and sustainable world for future generations.
How are companies accelerating their commitments to net zero? 6 CEOs share their strategies
- Fast-tracking the energy transition has never been more urgent: the latest IPCC report shows that climate breakdown is happening faster than expected and that the window to take action is closing fast.
- Businesses are ready to take responsibility to accelerate global efforts, boost investments, and advocate and support government actions and policies around climate, in line with a 1.5°C future.
- We asked six global business leaders from the Alliance of CEO Climate Leaders about the strategies needed to drive the net-zero transition.
As demonstrated by the recent Intergovernmental Panel on Climate Change (IPCC) report, we already have what it takes to cut emissions and limit global warming and we need to act with urgency.
Efforts need to be directed toward solutions and policies that can quickly transform the way we produce and consume resources.
Corporates will play an important role in driving global decarbonization, from applying strong life-cycle assessments and reporting on climate disclosures to driving demand for green technologies through purchasing commitments and shifting consumer mindsets.
The upcoming Annual Meeting in Davos will be a key opportunity for businesses to strengthen their resolve on their climate commitments and translate ambition to action.
We asked six business leaders from the CEO Climate Leaders Alliance to share how their companies are driving and accelerating action toward net-zero.
‘An internal levy on CO2 emissions provides an incentive for everyone’ – Christian Mumenthaler, CEO, Swiss Re, Switzerland
Swiss Re continues to decarbonize its underwriting business. In line with our oil and gas policy, we no longer provide individual insurance cover to the most carbon-intensive companies and continue to implement the phase-out of thermal coal-related re/insurance in OECD countries by 2030, and in the rest of the world by 2040.
But measuring the carbon footprint of insurance contracts remains a challenge for the insurance industry. To address this, we co-founded the United Nations-convened Net-Zero Insurance Alliance (NZIA) in conjunction with several of our industry peers. Together, we are advancing a methodology to calculate carbon emissions associated with insurance portfolios, which will be essential in steering our underwriting business towards less carbon-intensive activities.
By providing funding for the development of renewable energy infrastructure and financing green projects, our investments play a critical role in facilitating the transition to a net-zero emissions economy.
When it comes to our own operations, our footprint is less sizeable, but by setting a positive example we can inspire others to take action. For instance, we have tightened our business travel emissions reduction target from 30% in 2021 to 50% in 2022, relative to 2018 levels. We have also introduced an internal levy of $100 for every tonne of CO2 emitted and have committed to increasing it to $200 by 2030.
This provides an incentive for everyone within our company to make carbon-conscious business decisions – from business trips to building leases. The funds raised via our new Carbon Steering Levy also allow us to purchase high-quality certificates to compensate for the remaining emissions in line with our goal to achieve net-zero operational emissions by 2030.
‘We grew by 17.6% and yet also achieved a 6.5% climate footprint reduction’ – Jesper Brodin, CEO, Ingka Group (IKEA), the Netherlands
IKEA is committed to becoming climate positive by 2030. Our actions are committed to three parts: drastically reducing greenhouse gas emissions across the value chain; removing and storing carbon; and looking beyond customers, partners and suppliers to reduce our climate footprint beyond our value chain.
To achieve these commitments, we are phasing out fossil fuels and striving towards 100% renewable energy (electricity, heating, cooling, and fuels) across the IKEA value chain by 2030 and have accelerated our investments with an additional €4 billion to support the transition towards a renewable energy future. By 2025, we aim to make energy services like home solar and clean energy subscriptions also available to many more people.
We also aim to become a circular business, use only renewable and recycled materials with lower carbon footprints and design products for circularity by 2030. As of the end of 2021, 56% of the materials we sourced were renewable and 17% were recycled. Together with the recycling company RetourMatras in the Netherlands, we are in the final stages of testing recycled polyol, which has the potential to remove 3 million mattresses per year from incineration or landfill.
We know it’s possible for businesses to grow while decreasing the climate footprint. During the period 2016 to 2021, the Ingka Group business grew by 17.6%, and yet we also achieved a 6.5% climate footprint reduction over the same period.
‘We can only thrive if the community and environment in which we operate also thrive’ – Dolf van den Brink, Chairman of the Executive Board/CEO, Heineken, the Netherlands
As a 157-year-old company, we think in generations. We can only thrive if the community and environment in which we operate also thrive. That’s why we’re focused on driving change fast, and at scale, to reach our net-zero ambitions.
In our 2021 and 2022 strategic planning cycles, we prioritized our top-emitting operating companies, which account for 75% of our total carbon footprint, building detailed net-zero roadmaps and a pipeline of projects to be executed over the next three years.
Many projects are already in place – from solar plants in Nigeria and South Africa to electric trucks in Brazil, to participation in a pan-European power purchase agreement. We’re also engaging with suppliers across our entire value chain to galvanize their commitment to science-based targets (SBTs).
Internally, we’ve launched our Brew A Better World Academy to educate and engage our 82,000 employees and changed our remuneration policy, linking our net-zero ambition with long-term incentives.
Sustainability and responsibility are woven into the fabric of our balanced growth strategy, EverGreen. The journey to net-zero is going to be challenging, but we’re determined to realize our ambition, for future generations to come.
‘When we started out on decarbonization, the word was not well received in Korea’ – Hak Cheol Shin, CEO, LG Chem, South Korea
LG Chem is pulling out all the stops to reduce carbon emissions in and out of our operations. This effort is part of the long journey toward decarbonization we embarked on earlier in 2020.
At that time, carbon neutrality, the word itself, was not that familiar, and not well received in Korean society. However, we took a bold step by measuring the negative impact if we did not make any efforts to reduce the carbon emissions resulting from our business activities. The result was quite overwhelming.
To put this into perspective in Korea, we would have to cough up $3 billion. This harsh realization prompted us to declare LG Chem’s 2050 carbon-neutral growth in July 2020. However, it leaves a lot to be desired as it is not the net-zero pathway our stakeholders would have expected.
Therefore, earlier this year, we took another aggressive step by setting a net-zero target that is committed not only to Scopes 1 and 2 but also to Scope 3 in our supply chain. In this endeavour, we are applying life-cycle assessments to all our products.
‘Our zero carbon transition offers a set of opportunities for global heavy industry’ – Mahendra Singhi, CEO, Dalmia Cement, India
Dalmia Cement was the first company in the global manufacturing sector to announce its commitment in 2018 to becoming net-zero carbon and carbon negative by 2040. As of today, Dalmia is one of the lowest carbon footprint cement producers globally and has made commitments to RE 100 (100% renewable electricity by 2030); EP 100 (doubling the energy productivity by 2030), and EV 100 (significant transition to electric vehicles).
Dalmia aims to eliminate fossil fuels in the cement kiln by using 100% green fuels by 2035. We have already reached more than 12% fossil fuel replacement in our cement kilns (on a heat basis) with an interim goal of reaching about 50% by 2025.
We rely on strong collaborations: Dalmia Bharat Group recently signed a memorandum of understanding with the leading Danish company FLSmidth, for next-generation cement technology towards building a sustainable future.
Dalmia is a founding member of the Leadership Group for Industry Transition (LEADIT), a UN initiative chaired by India and Sweden to drive transformation in hard-to-decarbonize and energy-intensive sectors; and the First Movers Coalition (FMC), an initiative endorsed by the US president and promoted by the World Economic Forum.
The commitments and leadership of Dalmia on the zero-carbon transition offer a whole new set of opportunities for the global heavy industry sector to review the processes, technologies and techno-commercial models for decarbonization and carbon footprint reduction.
‘As a leader in the energy transition, ENGIE is accelerating its net-zero strategy’ – Catherine McGregor, Chief Executive Officer, ENGIE
Supporting the move towards a net-zero world is the essence of ENGIE’s strategy and activities.
While we are currently experiencing a major energy crisis, the acceleration of the energy transition is more than ever an absolute necessity. We have no time to waste and ENGIE is speeding-up its strategy in favour of a carbon-neutral transition.
Our roadmap is very clear and ambitious. We aim to be net-zero carbon by 2045 on all 3 Scopes. This trajectory is aligned with the Paris Agreement and in the process of being SBT certified. This is very ambitious for the sector that ENGIE operates in.
To reach our ambition, our strategy is focusing on accelerating in renewable energy (target of 50 GW by 2025), developing decentralized energy infrastructures (target of 32 GW by 2025) and accelerating the development of green gases (biomethane and 4 GW of hydrogen capacity by 2030).
More than ever, ENGIE is fully mobilized and at the forefront of the global net-zero transition.
This article was first published by the World Economic Forum.
Across the two weeks, non-State actors offered a wide range of actions, announcements, and events across thematic areas. This included the launch of the African Cities Water Adaptation Fund, an African-led insurance commitment to provide cover for up to USD 14 billion in climate losses, and the Sharm-El-Sheik Adaptation Agenda in partnership with the COP27 Presidency.
Africa Carbon Markets Initiative launched to dramatically expand Africa’s participation in voluntary carbon market
The new Africa Carbon Markets Initiative (ACMI), which was inaugurated today at CO27, aims to support the growth of carbon credit production and create jobs in Africa.