Even in a year where COVID-19 took centre stage, the pressing challenge of climate change still loomed large. With a growing global movement, governments are committing billions to stimulate economies and strengthen climate commitments ahead of COP26. And we expect to see many retail and consumer goods businesses accelerate their own net zero initiatives this year.
1. Net zero is a financial imperative
Climate change is no longer just a financial risk to organisations - it’s also an opportunity. Those businesses that get it right stand to benefit for many years to come, not just through improved more efficient operations, but also through first-mover advantage, new sources of funding and even brand perception. However, those that get it wrong may face sanctions, struggle with investment and are likely to see significantly damaged reputation.
For premium-listed businesses, there’s an added challenge this year, in the form of climate-related disclosures in line with TCFD recommendations. While many have been working on compliance in 2020, it will be interesting to see how businesses navigate disclosures in 2021, and what the repercussions are for non-compliance.
2. A shift in mindset for organisations and consumers
Organisations are looking to be ambitious and are embracing science-based targets to reduce emissions. Many are looking to tackle emissions throughout their value chain, including suppliers, products, services and investments. They are reshaping corporate strategy and operating models for best impact and are freeing up funding for necessary new skills, technologies and business models.
The BRC’s Climate Action Roadmap, for example, will see more than 60 retailers work together to set a world-leading industry ambition to reach net zero emissions. Focusing on supply chains as well as retail, its target is for the decarbonisation of stores by 2030, deliveries by 2035 and products by 2040.
As a new generation of consumers looks for more environmental products, processes and procedures, they’re increasingly likely to gravitate to those retailers and consumer businesses that can prove green credentials throughout their organisation.
3. Organisations still need help with Net Zero
To deliver on net zero commitments, consumer packaged goods companies and downstream retailers will need to undertake end-to-end change and in some cases business transformation. This includes understanding the implications of net zero for a company’s growth strategy and operating model, and embedding net zero across all business functions from governance, to supply chains, to finance and innovation. The challenge is knowing where to start. Though corporate challenges are now in the organisation, those tasked with the solutions are unsure how to put the plans in action and, more importantly, how to finance them.