Companies and cities across the globe are aligning to limit global warming to a maximum of 1.5 degrees Celsius above today’s temperatures by 2050. At that rate of warming, some endangered Pacific countries would remain above water, and the worst weather extremes in developed regions such as North America would be mitigated.

To achieve that goal, however, companies will need to achieve 6 percent greenhouse gas (GHG) emissions reductions each year for the next decade, according to sustainability consultancy Engie Impact.

Its analysis — drawn from the Carbon Disclosure Project’s (CDP’s) 2018 Report and explained in detail during a recent GreenBiz webcast titled “Key Accelerators to Achieving a Zero-Carbon Future” — found that leading companies are already executing strategies to deliver 4.6 percent annual reductions in greenhouse gas (GHG) emissions. About 89 percent of those leading companies are on track to meet 1.5 C warming targets, the analysis suggests.

However, many more companies are not on the leading edge.

Among those Engie Impact identified as lagging behind, annual GHG reductions average only 1.7 percent annually, with only 11 percent of these companies on track to meet targets set to cap warming at 1.5 C between now and 2050.

Consider these 3 big barriers to success

Engie Impact, which operates across 60 countries, identified three major hurdles that stand in the way of a successful transition to a zero-carbon future — and overcoming the annual estimated global transition gap of $2.5 trillion:

1. High Complexity: Organizations are split up, not only across the globe but also within various business and operating structures.
2. Capability Gap: Large-scale transformations are difficult to achieve because of lack of skills, tools and capabilities.
3. Financial Constraints: Investments are challenging in a highly competitive financial environment.

Breaking through these roadblocks “takes bold leadership,” said Clinton Moloney, managing director of Engie’s Sustainability Solutions.

While the process of executing on a zero-carbon strategy is difficult, the effort to overcome these hurdles is well-rewarded, Moloney said. That’s because progress in reducing GHG emissions not only benefits the planet and human society, it also drives business value, he noted. Specifically, Engie Impact said executives at companies that have set science-based targets, as defined by the Science Based Targets initiative already have enjoyed the following results:

• 79 percent experienced a brand reputation boost
• 63 percent saw an increase in innovation
• 55 percent reported a newly earned competitive advantage as a result of preparing for a low-carbon transition

The way forward: science-based targets

TJ Schmidt, senior carbon analyst with Engie Impact, stressed the importance of science-based targets, but said many companies that responded to the CDP’s latest surveys are still in the process of setting them and having them approved.

What’s more, Schmidt highlighted the fact that only 19 percent of target-setting CDP respondents had a Scope 3 target, one that looks beyond a company’s own operations to the effect that upstream and downstream emissions from its value chain have. That number drops to just 10 percent in apparel and manufacturing, in which addressing Scope 3 emissions is critical. Even among those with Scope 3 targets, few cover the most relevant emissions categories.

Putting it simply, Schmit stated, “Companies need to pay more attention to their Scope 3 emissions in order to manage them better.”

Engie Impact is in the middle of setting its own science-based targets, Moloney said. “[We need] to think very carefully about how we manage the transition. We’re putting everything into play by looking at Scope 1, 2 and 3,” he said.

Getting the numbers right

To chart the way forward in overcoming the barriers to a zero- or low-carbon future, Engie Impact surveyed 250 companies with commercial and industrial operations.

The results indicated a need for active engagement with suppliers and suggested that there should be a sharper focus on leveraging data to demonstrate return on investment (ROI). Here are three high-level strategies that sustainability teams might use to kickstart these initiatives.

1. Actively engage upstream and downstream suppliers

In dealing with overcoming both convoluted processes and capability gaps, Engie Impact advocated actively engaging upstream and downstream suppliers rather than declaring rules and simply expecting partners to follow them. The chart below distinguishes between the impact that active versus passive upstream supplier engagement might have:

2. Increase funding by demonstrating ROI

One key finding of the Engie Impact survey was that although 68 percent of respondents stated that a lack of finance is the No. 1 barrier to accelerating progress, both companies that deemed their sustainability programs a success and those that didn’t are “unlikely to use data to prove a return on investment,” Schmidt said. Doing so could help organizations raise more money for their efforts. He followed up that revelation with the suggestion that more initiatives should invest in gathering data that demonstrates the ROI related to sustainability programs.

3. Find real projects to accelerate a zero-carbon future

To wrap up the webcast, the moderator, GreenBiz co-founder and Executive Editor Joel Makower, inquired as to where major capital investments are being made in zero-carbon initiatives.

Moloney explained that the sorts of investments that matter look different in each sector and also depend on where a company sits within a value chain. For example, Engie Impact institutional customers are investing in microgrids and energy storage, although that is not necessarily the case in other industry segments.

What’s universal, however, is that companies that use science-based targets are driving demonstrable financial ROI, enhancing brand reputations and benefiting the communities in which they do business, according to Engie Impact.