Thu Mar 07 2024 | 4 min read

Implementing decarbonization: What consumer companies should know



Lucas Ponbauer

Four key steps to implement a successful decarbonization transformation

The previous two blogs in this series assessed and identified promising decarbonization levers to address Scope 1, 2, and 3 emissions. This final blog looks at what companies should do once they have a clear sense of key decarbonization levers—and the related initiatives—in their own unique context.

Four steps can assist consumer companies as they move to implement a successful decarbonization transformation.

1. Establish a detailed implementation plan, and monitor progress

A detailed implementation plan can help drive effective decarbonization by defining an actionable roadmap, which should lay out the timing and sequence of each initiative. This roadmap should take into account company-specific constraints to ensure that the plan is financially feasible and aligns with the company’s overall strategy.

Assigning a clear owner to each initiative can help ensure accountability and responsibility. Regular progress evaluations also help companies stay on track. Monitoring real-time progress using a single source of truth allows companies to identify underperforming areas quickly and take prompt corrective action. Transparent monitoring can help build trust and credibility with stakeholders by demonstrating commitment to—and progress against—sustainability goals.

2. Engage stakeholders across the organization and value chain

To be successful in their decarbonization goals, companies need to make sustainability part of their organizational culture and to ensure that every team member feels aligned with and responsible for decarbonization efforts.

Leading by example is an important element of cultural change. Company leaders can demonstrate their commitment to change by incorporating decarbonization into both overall business strategy and everyday action. In addition, some companies are now linking leadership compensation to sustainability KPIs.

C-suite leaders are also responsible for ensuring that sufficient resources are allocated toward decarbonization. Incorporating sustainability criteria into project evaluation can be an important part of this effort. Leaders could implement internal carbon pricing, for example. They may also wish to develop a set of criteria for decarbonization-related investment decisions—which will likely be different from the criteria they have used to decide on traditional investments in the past. The criteria for decarbonization investment decisions might include longer timeframes, for example. Incentive structures should encourage all stakeholders to prioritize long-term benefits, including environmental-impact reduction and resilience to climate risks.

The relative importance of Scope 3 emissions means thatsupplier engagement is also crucial for consumer goods companies. The right organizational culture and incentive structures can indirectly influence abatement in an organization’s supply chain, but leadership teams can also form partnerships with suppliers that share their decarbonization ambitions.

3. Establish effective external reporting mechanisms

In addition to internal monitoring, companies should regularly and transparently issue external-facing reports on the progress of their decarbonization initiatives. Effective reporting mechanisms are an important tool to measure and spur progress, inform stakeholders and other external parties, build brand reputation, and attract further investment.

An important first step is to define the approach metrics and targets—which might include, for example, headline emissions reduction and investment in low-carbon technology. Progress metrics should be as neutral and fact-based as possible. Companies will also need to establish clear reporting intervals and stakeholder roles.

4. Ensuring necessary skills- and capability-building

Achieving decarbonization targets will often require new or augmented skills and capabilities. Companies are likely to require technical expertise related to their chosen decarbonization levers and technologies, as well as project management skills to ensure that initiatives are implemented effectively and efficiently. Communicating the decarbonization strategy to internal and external audiences will also require significant stakeholder-engagement skills.

Companies will first need to assess existing capabilities and identify core skills gaps, potentially through company-wide surveys or by reviewing job descriptions against the required core competencies. Gaps can then be addressed either internally—through the development of a comprehensive capability-building plan—or through external hires.

The speed and magnitude of decarbonization required to meet upcoming targets can be daunting for many consumer goods companies. With the right strategy andtools, however, these companies can become leaders in the transition to a low-carbon economy. In doing so, they will unlock significant opportunities for growth and innovation, as well as create a more sustainable future for all.

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