Over one-fifth of the world’s largest corporations have pledged to reach net-zero carbon emissions by 2050. More companies are expected to commit ahead of the November COP26 climate summit in Glasgow. Those that don’t will miss billions in new investments and won’t be ready for increased regulation, competition from rivals already working on solutions, and disgruntled investors, consumers, and employees eager for results. But is one-fifth enough?

Deadly climate events — floods, relentless wildfires, and record-breaking heatwaves — have become routine. Global greenhouse gas emissions are set to increase by 16% in the next decade, yet to get on track toward the net-zero goal, they need to decline by 56% by 2030. 

Innovations continue — recently, one mobility company hit the first 500-plus mile range with an electric vehicle battery. However, while most businesses have good aspirations, many lack tangible plans, without which, revenues and jobs will be put at risk.

Nearly 30 companies across sectors that are pursuing a climate agenda while building a profitable bottom line shared their plans with Oliver Wyman and the Climate Group. Their approaches have many similarities despite differences in company size, location, and sector, from setting ambitious goals, providing training, and offering financial incentives to encouraging experimentation and a cultural shift. And most importantly, they focus beyond their own operations to ensure that suppliers and customers also are decreasing carbon emissions. 

So where do we start?

On Your Mark

Reaching net-zero is perhaps the greatest challenge society has ever faced. Deadlines are tight, and many of the technologies we’ll need to succeed don’t yet exist or need significant refinement. But businesses need to act now. “Going early is a long-term competitive advantage,” said one company executive we interviewed. “Carbon will be more costly and won’t be socially or legally acceptable.” 

Get Set

Until recently, few CEOs prioritized climate or made it part of their business plans. That won’t do at a time when competitors, customers, investors and regulators are increasingly taking or demanding action. Company leaders need to set ambitious carbon reduction goals that force them to acknowledge the challenge and measure the progress of their customized solutions. “If you don’t put the goal out there, you won’t find a way,” said one executive. 

You need to test your climate roadmap on the most difficult businesses.

Training is an important component of success, especially for boards and leadership teams that will be making decisions about funding and direction. One firm we interviewed trains its top three management layers in climate target-setting to get their feedback and to ensure they have a stake in the goals. Another — a major global retail business — provides extensive training for its board and country management teams.

Aligning senior managers’ pay directly to sustainability goals is also a proven incentive. 

Go

Climate change demands urgent action, not a business-as-usual approach. Companies need to rethink their design and invest for major decarbonization, not incremental change. Business leaders need “to embrace the reality of climate change,” according to a sustainability officer for an investment company. 

To understand how to shift from intent to action, this interactive tool from the Oliver Wyman Forum shows 17 impactful actions — like scaling low-carbon power generation or reducing transport emissions — that regions and sectors can take, along with guidance on which areas need immediate focus to reach the 2030 climate goals. 

Companies also need to tackle the root causes of their emissions and solve for the whole value chain. One consumer goods corporation acknowledged the “inconvenient truth” of its Scope 3 agricultural footprint, which accounted for 95% of its emissions. In the end, it decided to commit to net zero, which will require not only avoiding deforestation but also including afforestation in its supply chain.

It’s a Marathon, Not a Sprint

Investment in high-carbon activities is equally critical to change. “You need to test your climate roadmap on the most difficult businesses,” one executive told us. His company is investing proportionately more to decarbonize its dairy, meat and pet care operations because they create the most emissions. Similarly, activists are shifting from divestment to demanding a managed wind-down of high carbon producers. Private equity firms now routinely use environmental, social, and corporate governance (ESG) scorecards when evaluating potential investments. That means even small and medium-sized enterprises must address their carbon emissions.

The race to net zero is grueling in many industries. It requires commitment, endurance, and enormous mobilization, but first-movers already are seeing results — lower emissions, economic opportunities, and supportive employees, customers and investors. It’s now time to quicken the pace.