Net Zero: Strategy and Reporting

A recent report by CDP suggests that less than 1% of the 18,600 companies surveyed by CDP have credible climate change plans to net zero. This result is surprising because achieving net zero is critical to the planet’s well-being. Without getting into a methodological debate, here are some thoughts on why this would be so:

  1. Many companies that provide CDP/sustainability disclosures provide them simply because others are doing so. They do not want to be left behind the competitors. 
  2. Providing such disclosures are short-term oriented and aim to gain brownie points from investors by improving their ESG ratings and scores.
  3. Customers, particularly in the B2B space, push for sustainable products and actions. This helps the customers improve their Scope 3 emissions performance. Many buyers have supplier policies that mandate sustainable actions by suppliers.
  4. Many a times, regulations require presenting of sustainability data. For instance, BRSR is a requirement, and required information needs to be provided. The intent is just to give enough information to keep the regulators and the investor community happy.

Building a sustainability strategy is hard and weaving it into the business strategy harder. However, if we need to achieve net zero targets, we need to take action now.

Published by Utkarsh Majmudar

Utkarsh Majmudar is a Fellow, IIM Ahmedabad and a professional with experience encompassing academics and administration at top business schools in India (IIM Lucknow, IIM Udaipur, and IIM Bangalore) and working with large corporations. His interest areas include corporate finance and CSR.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: