By Professor Ian Thomson
Director of Lloyds Banking Group Centre for Responsible Business Business, University of Birmingham
2021 was an important year for climate change, with COP26, Global Citizen and the COVID-19 pandemic cementing it as a priority for governments and the public. But time is running out to reach net zero and limit global warming.
To do this, businesses need a clear picture of their emissions, but most don’t implement the effective carbon accounting needed to make this possible.
So, as we kick off 2022, there are three New Year’s resolutions businesses must make to improve their carbon accounting and reach net zero.
Know what net zero really means
Net zero is a great buzzword, but what does it mean? Think about:
- What is it you are attempting to zero?
- Whose emissions are you measuring?
- What timescale are you using?
In order to demonstrate how to go ‘net zero’, accurate and comprehensive measures of the size and sources of greenhouse gas emissions should be recorded. And right now, very few organisations have that knowledge. Unless businesses can address this carbon illiteracy, the problem can’t be solved.
Being unaware of the big picture can result in wrong decisions. Net zero requires good carbon accounting, which means companies need to understand what net zero will mean for them specifically and how they’re measuring and tracking their progress.
Be brutally honest
Businesses need to take a hard look in the mirror and think about the accuracy of measuring carbon emissions. Are they allowing them their carbon emissions to be attributed to someone else, such as other businesses or consumers? Are they passing it off as a problem for tomorrow, or ignoring it all together? If they are, businesses will be under-accounting their emissions.
For example, the UK Net Zero strategy (one of the most ambitious in the world) runs the risk of under-accounting what the UK is truly responsible for. The measures used don’t include greenhouse gasses from imported goods, shipping them to the UK, international travel or exporting goods from the UK.
Similar problems emerge when businesses can define ‘net zero’ to suit themselves. They can exclude historic emissions and those incurred in raw materials, existing assets, business investments and any carbon emitted after a product is sold. In order to know how to reach net zero, businesses must first be honest in their carbon accounting, no matter how uncomfortable or daunting the truth is.
Effective carbon accounting and the appropriate changes need to be put in place immediately. Decision-makers in businesses need the full picture so the next steps can be determined and put into action as soon as possible.
By educating decision-makers and investing in the necessary research today, businesses will be empowered to decide on holistic policies and operational changes in order to reach net zero. These choices need to be coordinated and thought out so that they have the desired impact.
Businesses need to step up and put themselves front and centre of the solution. They need to see themselves as the driving force behind positive change.
So, make 2022 the year that your business takes these steps forward to reach net zero. This is not something that can be put off for another year or for another CEO or board to deal with. There really is no business more urgent.
Learn more about how effective carbon accounting and many more steps your business can take to become responsible in the new book, Urgent Business: Five Myths Business Needs to Overcome to Save Itself and the Planet, which is available for pre-order.
- More about Professor Ian Thomson at the University of Birmingham
- More about the Lloyds Banking Group Centre for Responsible Business
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.