Three recommendations for beginning your carbon reduction journey
When building a carbon reduction strategy, it's critical to find the ideal balance between commercial success and environmental responsibility. Focus exclusively on profit without considering your environmental impact, and it's likely you'll be punished by customers, shareholders and employees. Go too far in the other direction, and you may be left without a viable business model. Balance is key.
At Centrica, we have set clear targets to reduce our carbon emissions in line with the Paris Agreement goals by 2030 and become net zero by 2050. We’ve developed a comprehensive carbon reduction plan to help us deliver against these goals in an economically and environmentally balanced way.
We’re already taking a wide range of steps to decarbonise our operations and become a more sustainable business – from investing in low-carbon technologies across our property portfolio, to transitioning our commercial fleet to electric vehicles. These changes have enabled us to reduce our internal carbon footprint by 39% since 2015. We’re confident we’re on the right trajectory to meet our net-zero targets and help create a more sustainable world.
Nonetheless, it can be challenging to develop an effective carbon reduction strategy that strikes the right balance between profitability and sustainability. Based on my experience leading Centrica’s decarbonisation journey, here are my three recommendations to help you set the right foundations:
1) Understand your carbon emissions and set realistic targets
Set the right foundations for your carbon reduction strategy, by baselining your carbon emissions as they stand today. You need to have a good handle on your current energy use and carbon emissions – initially starting with your own scope 1 and 2 emissions, but ultimately including your scope 3 value chain emissions too. If you haven’t measured your current carbon footprint, you cannot expect to be able to effectively manage it.
There is a range of different ways in which you can approach carbon accounting, but it’s beneficial to align with recognised standards from the outset. When building your reporting processes, it’s best to use accurate measurements of your energy use or carbon emissions. But where that isn’t possible, you can calculate or estimate. In my experience, it’s better to have a really good quality estimate than a gap in your data and understanding.
Once you have a clear baseline of your carbon emissions, you can start to prioritise actions and develop decarbonisation targets. A top-down approach is most desirable, where scientific advice guides the targets that are set. Don’t worry, you won’t necessarily have full visibility of exactly how those targets are going to be achieved in the long run. This is the approach we have taken at Centrica, as we recognised that we needed to set targets in-line with what the science is telling us.
However, this might be an unrealistic starting point for organisations at the very beginning of their net-zero journey. In these circumstances, there is still a place for taking a bottom-up approach – where existing asset portfolio strategies and budget allocation are reviewed as a starting point to determine where, when and how targets should be set. While it’s ultimately necessary to focus on the science, it’s better to start somewhere than be frozen by inaction.
3) Collaborate both internally and externally
Decarbonisation isn’t a challenge that can be navigated overnight. Neither can it be tackled by one individual or team. The path can be extremely complex, particularly given the fact that action will be required across many different areas of the business. The key is to engage the right people early in the strategy development process. Colleagues with responsibilities for business units or departments will generally own the plans and budgets for their areas and its important that they also own the plan to de-carbonise the activities for which they are responsible. Furthermore, the wider employee base can often be a source of passion and great ideas that may not have been considered if the strategy was developed in isolation and helps with employee buy-in.
Collaborating with external experts can be priceless, too. External experts can help with activities such as understanding the energy market and its technologies, engaging stakeholders and supporting implementation. This can complement and enhance internal capabilities, and help you streamline your strategy and approach.
While it’s important to take an innovative approach to energy, it is not without risk. To stay ahead, it’s important to understand and account for these risks, as any interruptions to your supply chain, processes or systems can be costly. Broad internal and external collaboration can provide the input required to mitigate this risk.
3) Link your carbon reduction goals with commercial objectives
To successfully execute your carbon reduction strategy, you’ll need to have your leadership fully and visibly onboard. This is best achieved by ensuring there’s a clear link between your decarbonisation goals and the organisation’s wider commercial objectives. How can decarbonising your operations and supply chain help the business to achieve its strategic objectives? The answer to this question should sit at the heart of your business case, in order to gain c-suite support.
We’ve already touched on the importance of collaboration during the strategy development process. But it’s also important to ensure your strategy is relevant to the people in the business who will be supporting its delivery. Clearly communicating the link between energy, your company values, brand image and customers can help raise the profile of your decarbonisation strategy and ensure it gets the support that it requires.
Learn more about our plan for reducing carbon emissions across our operations, and our recommendations for other organisations progressing their sustainability journey.
If you want more insight into building an effective carbon reduction strategy, you can watch edie and CBS’s 45-minute masterclass on the subject, on demand.
Jim Rushen, Group Head of Environment, Centrica