How to Build Resilience into Your Decarbonization Journey

This blog was coauthored by Oyin Talabi and Gemma La Guardia.

After a summer of quasi-apocalyptic weather events, the need to act against climate change is more pressing than ever. Every day, the warnings scientists predicted would happen 10–20 years from now occur right in front of our eyes. As public opinion changes and government legislation tightens on businesses to reduce their footprints, action is needed, and swiftly. So how should businesses go about deciding how to reduce their carbon footprint and which scope of emissions to tackle first? 

Barriers to Corporate Decarbonization

Businesses aim to build a resilient and flexible strategy that will withstand shifts in policy and public opinion; however, this leaves businesses with multiple dilemmas. Can you maintain shareholder returns while investing in cleaner technology? Can you decarbonize your current assets or use cleaner fuels? And finally, should you focus on improving energy efficiency onsite or invest in new technologies? 

What Are the Options for Businesses Looking to Decarbonize?

The decarbonization journey usually begins with an assessment of the current state of the business. A good understanding of the baseline scope 1, 2, and 3 carbon emissions is important to build a successful decarbonization roadmap: 

• For scope 1 emissions, many companies are investing in a plethora of energy management and decarbonization systems, focusing on aspects such as heat recovery and electrical plant decarbonization and preparing for new disruptive technologies such as hydrogen or carbon capture and storage. 
• Conversely, scope 2 solutions aim to ensure clean power is either generated onsite or purchased. These solutions often include investing in onsite generation including solar, wind, or hydro; contracting renewable power purchase agreements and green energy supply; and finally, purchasing renewable energy credits for any residual emissions. 
• For scope 3, success involves engaging strategic upstream and downstream suppliers in collaborative discussions with your peers in your industry. This also includes using technology and investment incentives for supply chains to invest in impactful carbon dioxide reduction. 
  

Building Resilience into the Decarbonization Roadmap

Businesses could take the following steps to create a robust and flexible decarbonization roadmap:

• Promote clear and informed communication between stakeholders, reconciling views and interests from various parties including investors and site managers. 
  
• Examine scope 1 and 2 emissions carefully to find improved synergies between them, leading to solutions with high decarbonization potential. 
  
• Align their short-, medium-, and long-term goals to enable a smooth transition between phases while considering current assets and their depreciation lifespans. 
  
• Explore funding options and alternative sources such as government grants, green bonds, and innovative financing to alleviate the financial burden of decarbonizing balance sheets. 
  
• Collaborate with competitors on supplier engagement programs to share knowledge; join forces on supplier scope 1 and 2 investment programs and implement technologies to accurately track emissions.
  

If businesses take these steps, decarbonization strategies can withstand external market shocks and changes in public opinion, reduce corporate risk, and align with increasingly stringent government policy. 

Guidehouse specializes in developing decarbonization pathways for global brands and industry leaders. Our team’s vast knowledge in decarbonization and government policy leads to implementable strategies that yield significant reduction in emissions across scopes 1, 2, and 3. We are working with large corporations, governments, and industrial clusters on decarbonization strategies moving to implementation on transition initiatives such as hydrogen, bioenergy, carbon capture utilization and storage, and electrification and renewable energy. Contact Michael Pita to learn more about our work and insights.