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Successfully executing your net-zero strategy

The 10% NOW Manifesto

The 10% NOW manifesto is about successfully executing your organization's net-zero strategy and living up to the expectations of your clients and talent. It is about taking action today, instead of making net-zero promises about the future. The basic principle is to invest 10% of your profits each year in sustainability-related projects with a concrete plan of action to become net-zero. By the way, net-zero refers to a state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere (source).

Currently, it is too easy to make net-zero pledges and too hard to hold firms accountable. For example, Maersk, Apple, Sony, Vodafone, Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, Ikea, Vale, Volkswagen, Walmart, Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.On SE, JBS, Nestle, Novartis, Saint-Gobain, and Unilever all got called out by the NewClimate Institute and Carbon Market Watch, for not living up to their promises. This manifesto describes how all organizations can do better and deliver on the net-zero promises they have made.

I wrote this 10% NOW manifesto, following my passion to make the planet greener. Contributing to the environment motivated me to finish my chemical engineering degree. Since, I have helped many innovators with bringing their ideas to practice. In recent years, these projects were often more closely related to digital transformation than sustainability. April Earth Month motivated me to take a deep dive into sustainability and ESG issues. The result is this manifesto, as I realized what is missing and what needs to be done if we want all organizations to meet their net-zero goals by 2050. Let’s make sure that organizations can deliver, now that clients and talent are pushing for these goals.

All contributions toward net-zero matter

Recently, a law firm proudly shared that they had made all their supplies durable, from the coffee cups in the conference rooms to the paper in the printers. While it is easy to be skeptical about the impact of such efforts, I would prefer to celebrate these examples. At a minimum, these kinds of initiatives demonstrate how difficult and necessary it is to start working towards making substantial changes today. If relatively simple changes already take a year to implement, we won’t get to net-zero by 2050, unless we significantly accelerate the pace of change.

What you do now matters most

I don't want anyone to get stuck on the 10% of the 10% NOW manifesto. The NOW and the significance of the investment are more important than the exact number. The idea behind this manifesto is that organizations – for-profits and non-profits alike – commit to making significant investments towards becoming net-zero and commit to taking action now.

As a leader of an organization, you may wonder if you can afford to make such a significant investment. Please note, that the 10% NOW manifesto is asking organizations to invest, not to spend. While the results of research into the link between Environmental, Social, and Governance (ESG) commitments and profits have been mixed, it is clear that when the materiality of these commitments is taken into account there is a significant and positive relationship (source). Materiality relates to the factors that are important to your organization. As McKinsey has pointed out, net-zero investments can cut costs through reduced fuel consumption, improved material, and energy efficiency, and lower maintenance costs. In that sense, the 10% NOW should be doable and beneficial for any organization, but it may require a shift in focus and emphasis in the investment portfolio.

In sum, the 10% NOW manifesto is about successfully executing net-zero strategies. It asks organizations to make significant net-zero investments each year, starting now, until they have reached net zero.

Holding leadership accountable

We need to start holding leadership accountable for the actions they undertake toward becoming net-zero today.

None of today’s leaders will still be in leadership positions in 2050, so they won't be held accountable when these net-zero goals are not met by then. Most won't even be around anymore. The average age of CEOs was 54 in 2018 (source). That means that many of these CEOs will be 86 years in 2050. Since the life expectancy for males is 76.3 years on average, we probably won't be able to hold (m)any of today's CEOs accountable for their lack of action, unless we start approaching things differently.

Track what organizations do instead of promise to do

It is relatively simple to track the investments being made each year toward net-zero goals. Public companies already have the obligation to explain what they invested in and why, in their annual reports. The impact of each investment on energy consumption CO2 emission may be more difficult to assess, especially since it is known that organizations struggle to measure their ESG efforts (source). Nevertheless, it should be relatively easy to assess the year-over-year reductions that each organization makes both in percentages and absolute terms. The sustainability report of DLA Piper is a nice example of such voluntary reporting. Their report offers detailed insights into the key performance metrics DLA Piper uses and the progress they made in the past years.

For other organizations, reporting will be more complex. For example, Amazon's business activities resulted in the emissions of 60.6 million metric tons of carbon dioxide last year. After employees pressured Amazon's to disclose its carbon footprint in 2018, these emissions have risen every year. At the same time, the amount of carbon it emitted for every dollar spent on the site fell 16% in 2020. While imperfect, it is clear from these numbers that Amazon made progress and that it needs to do more.

Such information will help customers too, as they can use it to value the products and brands that take the lead, for examples check out Patagonia, Athleta, and Tonyshocolonely.

Learning from each other

Currently, organizations typically only report what impact their actions had. To learn from each other, firms should also disclose what investments they made and what they did. This information is currently missing from the ESG reports. What investments were made in the various areas to reach these reductions and what actions were undertaken? It will be invaluable to learn what works, what does not, where more effort is needed, and what actions provide the best bang for the buck. Comparing notes within and across industries is important - we are in this together.

Walmart, for instance, championed an industry-wide effort to reduce the packaging of detergent in 2007 and saw the fruits of that labor in 2013. The search for more sustainable production methods for thee and cacao has also resulted in industry-wide collaborations that have proven to be more effective than what any one organization could have achieved on its own.

The Pareto principle

It is safe to assume that the Pareto principle also applies to net-zero, which means that the 20% steepest challenges are ahead and will take 80% of the investment and time to accomplish. Take the accomplishments of Fairfax County – where I live. It is impressive that despite a 13% growth in population, emissions were reduced from 14.6 million metric tons of carbon dioxide in 2005 to 13.2 million metric tons of carbon dioxide in 2015. That is a 20% per capita emissions reduction of 2.9 million metric tons of carbon dioxide. These reductions should be celebrated. At the same time, we should also realize that accomplishing these results probably took only 5% of the total efforts required to get to net-zero. So, a lot more needs to be done, if Fairfax County wants to live up to its promise to be net-zero by 2040.

These are just a few of the reasons why we should do what we can do now, to avoid burdening the next generation(s) with an impossible task. We need to start holding today’s leaders accountable for the investments made and the results obtained from these investments, as part of their annual performance. Let’s celebrate the wins and learn from each other about the most effective actions that deliver the biggest bang for the buck. As mentioned above, we are in this together!

What can you do now?

So, what actions can you undertake today to help your organization get to net-zero by 2050?

It starts with making a significant commitment, equivalent to 10% of your profits, in terms of time and resources to help reduce your organization’s ecological footprint.

Define how much you want to invest and in which areas. For example, at Organizing4Innovation, we will go paperless, offset the impact of our travel, and source green energy. On all these initiatives, we will take action today.

Investment portfolio

You may be shooting in the dark and miss opportunities without a clear strategy and assessment of the issues that matter most in your organization. What are the biggest contributors that may keep your organization from becoming net-zero? And how does that relate to other environmental, social, and governance issues that are material to the operations of your organization?

Once you know the areas that need work, it will be wise to use the 70% - 20% - 10% approach recommended to optimize a firm's innovation investment portfolio. The figure below illustrates, how this concept can be applied to a portfolio of sustainability projects. I suggest that you use the 70% - 20% - 10% ratio to spread your investments over horizon 1 to 3 projects while addressing Scopes 1 to 3.

As the founder of a SAAS company, net-zero seems a very doable goal. But, as a chemical engineer, I realize all too well that producing net-zero plastics, resins, steel, etc. will be quite an engineering feat. Since it is unknown, the chemical industry needs to start making R&D investments today, to figure out if, what, and how that can be done. In the figure above, such actions would be part of Reach 3. In parallel, these firms should invest in exploring energy efficiency options. Such projects are part of Reach 2. They will require significant investments, but it is known that it can be done. Reach 1 relates to investments into low-hanging fruit that will deliver results this or next year.

The projects of my own firm can be subdivided similarly. I can start making electronic notes today, as part of the effort to become paperless (Reach 1). I can investigate the options on how to offset our travel and make the commitment to do so by the end of this year (Reach 1). And I can start looking into what needs to be done to source 100% green energy (Reach 2). The latter will require a bit more work, as I currently don’t even know what our overall energy consumption is.

One golden rule for the execution is to do it well or not to do it. As long as teams are learning and progressing in the desired direction, their efforts will be worth it. Lingering projects, however, are costly time and resource wasters.

Since the risk profiles and effectiveness of these various projects will not be the same, it is advisable to allocate 70% of your investment towards projects that will see a result this or next year, 20% toward projects that will yield results in the next 5 years, and 10% toward projects that may take years to materialize. Taken together, such a portfolio of investments should enable organizations to make their net-zero goals by 2050.

Actions for today?

That leaves me with a final thought, what actions can you take today? To stick with the focus on action over promises, I suggest that you:

  1. Share this 10% NOW manifesto with anyone who you think should read it;
  2. Sign up for the LinkedIn group: 10% NOW – to get inspired. It is a community to share best practices, tips, and tricks, with others who are committed to investing and taking action today to make their organization net-zero by 2050;
  3. And take a minute to think about what actions you could undertake in your organization that would make an impact this year, in the near term, and in the future.

Let's make net-zero in 2050 happen, by investing 10% of profits and taking action NOW!

 

 

 

 

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