How companies in India can achieve their Net Zero goals - challenges and opportunities

Net Zero goals have been made by governments and organizations all around the world. However, many businesses, including those in India, are still figuring out how to attain those objectives.

As a result, many businesses are falling behind schedule and risk being accused of greenwashing. Companies must undertake many projects at the same time to accomplish their Net Zero targets, each with its complexities and obstacles. Reaching Net Zero necessitates a mental transformation as well. Many businesses currently view this as a compliance concern rather than a source of differentiation and competitive advantage. 

Multiple elements must be included in organizations’ efforts over the next few years for Scope 1, 2, and 3 emissions. 

Accelerating Emissions Reductions in Scope 1

Energy efficiency has always been the focus of company operational improvements. To achieve meaningful Scope 1 reduction, businesses must multiply these programs and investigate new carbon-cutting strategies. This initiative may necessitate collaboration with third-party service providers ranging from utilities and machinery corporations to start-ups. Navigating the appropriate contracting arrangements can be difficult. THE PREVIOUS EVENT 2023 ETEnergy Leadership Summit Tuesday, June 20, 2023, The Hyatt Regency in New Delhi Nominations for the AWARD Energy Leadership Awards 2023 are being accepted until Monday, May 1, 2023. Nominate Right Now Leadership Development & Strategic Innovation GURU MASTERCLASS 25 – 26 JUL 2023 2 DAYS

Companies must also investigate alternative fuel sources and create circular ecosystems by utilizing scrap and discarded materials as inputs. 

These are important levers for lowering carbon emissions. Companies must also negotiate to change supply networks, outdated equipment investments, changing customer views, and overall business economics. Carbon capture technologies are another option for lowering emissions, however, they are not yet commercially viable at scale. Continued investment is required to transform carbon capture into a viable alternative for reducing emissions.

We need Strategic Scope 2 Decision

Most businesses purchase renewable energy as a quick gain toward Net Zero. Energy-mix decisions, on the other hand, should be strategic rather than tactical. For example, where will you get your renewable energy? Who is it? And what is the best operating architecture? 

Although renewable energy is now less expensive than thermal energy, it cannot meet round-the-clock operational needs. Companies require a combination of renewable energy sources (solar, wind, and so on) as well as battery storage, pumped hydro storage, or thermal power. Battery storage is still expensive, and pumped hydro storage is scarce.

As the costs of renewable energy and battery storage fall, businesses may risk locking in too much renewable energy too soon, putting them at a competitive cost disadvantage. 

Efforts toward monitoring and lowering Scope 3 Emissions

Because of the intricacy of Scope 3 Net Zero programs, many firms have not begun them. The primary issues in Scope 3 are determining the carbon footprint and developing appropriate targets and reduction measures. 

Furthermore, it is challenging to undertake efforts spanning both inbound and outward activities – the problem here is to map the carbon footprint across stakeholders and cost-effectively adjust their operations and behaviors.

To date, the most straightforward way has been to persuade logistics partners to embrace alternative fuels and electrification, especially in the last mile, where feasibility appears to be more possible. 

Companies, on the other hand, have more options. Companies can sway suppliers and vendors by making Net Zero a fundamental component of contracting and assisting their partners with their transformations. To target Scope 3 reductions, procurement functions require new talents and a new mentality. 

Carbon credits and the offsets market are also worth considering. Companies must be able to assess, trade, and partner with the right stakeholders to profit from these opportunities.

Choosing Net Zero as a value-centered “sword” Companies must shift their Net Zero strategy from a compliance-focused “shield” to a value-focused “sword.” This necessitates a comprehensive rethinking of a company’s strategy and positioning. 

A fast-moving consumer goods corporation, for example, could market its items as environmentally friendly. To attract premium pricing and increased client demand, a metal firm could alter its product line towards “green metal.” 

Companies should reconsider their organizational structures and their ability to obtain green money to fund Net Zero activities. Green companies are viewed favorably by investors, and they frequently fetch higher valuations than their traditional rivals.

Companies must rethink their Net Zero ambitions and prioritize them as a major component of their value-creation strategy to expedite their sustainability journey. They can gain major competitive advantages, attract more money, and contribute to a more sustainable future by doing so. 

Building and Leveraging Regulatory Environment and Assistance The regulatory environment around Net Zero is a significant aspect of making sound economic decisions. Governments around the world take varied approaches to Net Zero policies and support. 

The government of India has actively encouraged green investments, established a supporting policy environment, and promoted compliance and openness.

The terrain, though, is still changing. To maximize the impact of their Net Zero efforts, organizations must first establish the ability to comprehend and use rules, and then create the expertise to engage with authorities. 

To sum up 

The path from Net Zero commitment to execution is difficult. However, it is advantageous if businesses embrace a ‘Sword’ approach and incorporate sustainability into their DNA. This change is supported by the regulatory landscape, and many developing technologies, businesses, and service providers can act as partners. Net Zero can be turned into a value-creating opportunity if done appropriately.