First step in moving to carbon net zero

The critical first step in moving to carbon net zero

know where you are

McKinsey has just published an article with a very clear message for industry. Getting to net zero is all about strategy, not about a little bit of tampering with your activities and your supply chains. To get to net zero, you need to understand the fundamental characteristics of the materials you use, how you put them together to make your services and products, and how you can increase value while reducing emissions, by reallocating capital into uses which create fewer emissions.

The McKinsey article identifies three basic moves. The first is – Know your environmental rating. McKinsey states that these ratings can be imperfect, and sometimes obscure, but they are very important. That’s because they provide a basis for investors to make choices and for companies to examine in detail the reasons for their own scores, to compare themselves with peers and rivals, and to make investment choices. This establishes a firm basis for McKinsey’s next two steps, managing your exposure and moving from pledges to plans. We’ll be writing more about those steps in later blogs.

So, how difficult is it to find out your environmental rating? As with many other ratings, it used to be a question of detailed investigations by experts, such as consultants, who would come and investigate you, compare you with other companies they investigated, and provide you with a report with lots of suggestions as to how to improve your rating. The process would be expensive and time consuming, and the results might be confidential to the company commissioning the investigation.

However, in areas where laws or regulations required organisations to be rated (e.g. on matters such as quality of product, fair handling of customers), the results needed to be public and verifiable. This enables customers, investors and other stakeholders such as governments to make decisions about whether to invest in the organisation, to use its products and services, and so on. This is now true of environmental assessment. All over the world, governments are forcing companies to investigate their environmental impact and publish it.

The problem with this approach is that although there are high level standards relating to emissions, comparing details between companies was hampered by the lack of a clear and agreed platform for making those comparisons. We have solved that problem, using our experience of creating a clear basis for comparison between companies in other areas of management. You can find out more about how you can do it that quickly and efficiently, without consultants crawling all over you for weeks, by contacting us below.

May 2022

Richard Davis (richard.davis@51tocarbonzero.com)

Neil Woodcock (neil.woodcock@51tocarbonzero.com)