The Strategy Shift You Need to Go Net Zero Now

It has been a watershed year for corporate sustainability promises. Under pressure from consumers, investors, and — quite frankly — the planet, more and more companies are pledging to reduce their carbon emissions to a net of zero by some set date. Even some energy companies that have been among the world’s biggest producers of fossil fuels, such as BP and Shell, have announced similar goals. But there’s a trust gap here: many consumers aren‘t buying it.

Fewer than one-third (32%) of customers view these corporate commitments as meaningful, according to a recent Salesforce survey of nearly 2,400 adults in the U.S. and U.K. Nearly half (47%) said they view the promises as superficial. Against that skepticism, now comes the hard part: turning promises into action.

Becoming sustainable isn’t a single act or even a single initiative. For many companies, it will require a total transformation in how they think and a significant upheaval in how they operate. Interviews with sustainability leaders at companies around the world suggest their efforts will apply to entire business models, and hinge on buy-in from employees at every level.

“The number one mindset shift organizations need to make is to recognize that this is not a siloed agenda, nor is it philanthropy. It’s the only credible growth strategy,” said Anna Lungley, Chief Sustainability Officer at Dentsu, the Japanese advertising giant. “It will require behavioral change. It will require products to come to market. It’s a business transformation agenda.”

The good news: many companies have become more agile during the pandemic, as seen most evidently with the speed of digitization. The same trait can help many reach net zero.

“Businesses are changing the way they do things at a rate we’ve never seen before,” said Ofer Ben-Dov, sustainability practice lead at Traction on Demand, North America’s largest dedicated Salesforce consulting and application development firm. But Ben-Dov said many clients he works with aren’t sure where to start.

Put sustainability under the CFO

A growing number of companies are appointing executive-level sustainability gurus to lead their efforts. But people in these roles can face some inherent challenges. Their teams are often small, and their success depends on cooperation from other people throughout the company, most of whom don’t report to them. Not only do they need to collect data from a range of internal sources – they also need other departments to make the operational changes required to cut emissions.

That’s why, for starters, sustainability leaders say it is critical that CEOs make their efforts a core part of the company’s strategy.

Canva, an Australian visual communications platform that is one of the world’s fastest-growing software as a service (SaaS) companies, is on track to become carbon-neutral by the end of 2021. It has pledged to become climate-positive by 2023, meaning they’ll save more emissions than they generate.

Jared Ingersoll, sustainability lead at Canva, said his ability to drive the changes behind that shift – such as Canva’s ongoing transition to 100% renewable energy sources – stems from the company’s founders: Cliff Obrecht, Melanie Perkins, and Cameron Adams.

“One of the guiding things you often see in documents here is our two-step plan: build one of the world’s most valuable companies and, most importantly, to do the most good,” Ingersoll said. “The founders genuinely and wholeheartedly believe in wanting to do good things for humanity.”

Just as important is structuring sustainability efforts in a way that ties them to the financial success of the company. More and more sustainability leaders are reporting directly to the CFO, whereas until recent years, many sat in marketing or communications. But even then, it can’t just be a C-suite initiative.

Get employee buy-in

Susan Machtiger, a managing director and brand specialist at Ogilvy Consulting who advises large global brands on sustainability efforts, said one common mistake is undervaluing employee buy-in. She suggests measuring managers’ performance not only against financial goals but also against sustainability goals, where applicable. She also suggests celebrating lower-level employees who share even small ideas that could curb emissions.

“Along every supply chain, there are millions of employees that may see an opportunity to do something better,” Machtiger said. “If they’re rewarded and celebrated for it, they’re more likely to do it.”

Use climate initiatives to drive growth

For many companies, the primary financial justification for sustainability efforts has been mounting pressure from investors, consumers, and in some instances, regulators. But the most forward-thinking companies aren’t just placating stakeholders. They’re also using these sustainability initiatives to drive growth, particularly with younger consumers.

In Salesforce’s sustainability survey, 60% of Millennials and members of Gen Z – roughly spanning ages 16 to 40 – said they are willing to spend more on products and services from businesses that fight climate change.

Some companies are strengthening the financial case for curbing emissions by demonstrating how doing so can reduce costs. Dentsu has pledged to reduce flight emissions by 65% by 2030, mainly by encouraging employees to travel less, which will also cut expenses.

Influence consumer demand and lifestyle choices

It helps to choose a sustainability strategy with a clear connection to the larger business purpose. Lungley said too many companies try ad-hoc measures that have some environmental impact but no unique connection to the company’s mission. Take a plastic-toy manufacturer, for instance, that announces a switch to paper bags.

“Organizations generally don’t fail on this journey because they lack passion,” Lungley said. “They fail because they don’t know where to focus. Really understanding the true value that you create in society is absolutely critical.”

As an advertising conglomerate, Dentsu’s vision directly relates to one of the key sustainability challenges facing society: the need for a shift in lifestyles. Once they make greener products, like electric cars and plant-based burgers, companies then need to increase consumer demand for them. Part of Dentsu’s sustainability strategy is to help more clients do exactly that. For a sustainability leader, it’s the easiest kind of strategy to sell: one that will generate revenue.

Measure progress with the right technology

Even for companies that make all the right mindset and operational shifts and embed sustainability perfectly into their business model, measuring their emissions remains a huge challenge.

Many report what are known as Scope 1 and 2 emissions – direct emissions from a company’s operations and indirect emissions stemming from purchased energy such as electricity and heat. But investors are increasingly asking for data on Scope 3 emissions. These are emissions that occur indirectly anywhere in a company’s value chain, such as a supplier’s emissions.

Ingersoll said he spends 90% of his time at Canva working on spreadsheets and models, and that Scope 3 accounting is by far the most complicated. When the company opened a new Austin, Texas, office last year, Scope-3 calculations required pondering such questions as: Where would employees typically order lunch from? How do you account for a sandwich shop that isn’t measuring its own emissions?

“We’re trying to figure out how to work with those downstream service providers so we can assess what the impact is of us engaging with them,” Ingersoll said.

Ben-Dov said technology will be a critical part of the solution. For instance, his consulting firm recently helped Andersen Corporation, one of the largest window and door manufacturers in North America, implement Salesforce Net Zero Cloud, which makes it easier for companies to track their carbon footprint. Andersen had been doing carbon accounting manually for years – now the company will be able to do it in half the time it took before.

“If you need to report your sustainability, you need to monitor your performance, otherwise you won’t know if you’re going in the right direction,” Ben-Dov said. “Doing that manually takes time, effort, and knowledge. Technology can make the whole process more efficient.”