Have we reached peak net-zero?

COP29 and increased regulation

With COP29 (the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change) just having finished, the expectations, ambitions and commitments have indeed been tempered by a backdrop of high geopolitical tensions and economic recovery considerations.

In parallel to this backdrop, we are seeing sustainability regulations across Europe, the United States and globally shift from voluntary to mandatory, as organisations now need to integrate ESG requirements into their strategy and operations to improve data collection, reporting and drive performance.

With the deadlines coming up fast, this places a greater burden on organisations and sustainability functions to invest time and resources into full value chain reporting (based on double materiality principles), >180 minimum disclosure obligations up to a maximum of >1000 for qualifying organisations. Additionally, all this activity requires (limited) assurance from external audit teams, which is time consuming for the teams involved.

What are the key obstacles for most organisations?

1. The availability of resources, data and skills of organisations to deal with the demand, including change management and limited additional funds to compensate
2. Focusing on the here and now (compliance) versus the future (innovation and commercial value) - where organisations once were leaders in this space, resources are now being directed to regulatory compliance activity when global temperatures rise year on year.

All the regulatory and compliance activity is simply table stakes – what drives enterprise value is not necessarily this.

Scope 3 emissions within supply chains represent the biggest challenge and opportunity for genuine decarbonisation progress.

Redefining a top-level strategy and ambition for clients across their end-to-end sustainability journey has highlighted that the biggest area we can support our corporate clients in this space is to deliver enterprise value through collaboration with a focus on driving down carbon emissions in supply chains.

Focusing in on supply chain solutions for decarbonisation means moving from table stakes (Level 1) to proactive supplier engagement (Level 2) and leading in x-industry collaboration (Level 3) as illustrated below.

By enterprise value we mean reducing supplier costs, increasing resilience and accelerating Scope 3 emission reduction. 

How we have supported our clients

We see the biggest contributor to enterprise value through greater focus on a small number of targeted Level 2 and Level 3 initiatives across many industry segments. Some examples of this include:

Focusing on the right sustainability initiatives leads to commercial opportunities, as opposed to sustainability being seen as a cost item

In our next article, we discuss if value is being left on the table with circularity and if ‘insetting’ revolution could be the answer. To find out more or if you have interest in building cross-industry coalitions to deliver these sustainability supply chain solutions, get in touch with Jon Roberts, Jan-Willem Bode or Maureen O’Shea.

Key Terms

• Scope 3: These are the indirect emissions – not owned – created anywhere in the upstream supply or downstream value chain
• Inset: Insetting involves reducing or removing greenhouse gas emissions within a company's own value chain
• Offset: Offsetting involves investing in external projects that reduce or remove emissions
• Carbon credits: Carbon credits are created by projects that have either avoided or removed greenhouse gas emissions
• Circularity: Circularity or the circular economy is a model of production and consumption designed to extend the life of products and reducing waste
• eWaste: eWaste, or electronic waste, refers to discarded electrical or electronic devices