How can industries transform their net-zero goals from a buzzword to a reality?

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Over the past winter, many of us saw the images of skiers sliding down the Alps on a tiny white strip of snow while being surrounded by spring-like weather and green grasses. On New Year’s in Switzerland, the temperature rose to +20 Celsius degrees - the highest ever recorded in the north of the Alps during January.

While the images might have seemed comical, they should be yet another wake-up call about the state of our climate. In the last century, the Alpine climate has experienced a significant shift, with temperatures rising by an alarming 2°C, twice the global average. The latest IPCC report shows that if the current trend continues, there is little opportunity for reaching the 2015 Paris climate agreement's goal of keeping global average temperature increases below 1.5°C since the rise currently stands at 1.1°C. The world is likely to exceed this verge in the early 2030s, underscoring the urgent need for immediate action to mitigate the impacts of climate change. One of the most memorable statements last year came undoubtedly from the UN secretary-general António Guterres in the COP27 meeting when he stated that the world was “on a highway to climate hell with our foot on the accelerator.”

The urgency of the matter has gotten more companies of all sizes to step up and set their own net-zero climate targets. However, we are still falling way behind on the speed of change that we should be on and there are doubts over the effectiveness of such targets in achieving the goal, as the UN secretary-general referred to them as “varying levels of rigor and loopholes wide enough to drive a diesel truck through”.

Why are the industries not reaching their emission reduction goals?

Net-zero goals fall short due to various reasons. Often promising big words might do wonders for the brand, while the actual feasibility of those targets is left in the second place. Reducing emissions requires a long-term commitment, and companies need to be prepared to invest in the necessary resources and technologies to achieve their goals and ensure they align with national policy. The first step is of course identifying the source of their emissions. Since pollutants from the supply chain and the usage and disposal of products are the common sources of emissions across industries, frameworks such as Corporate Net-Zero Standard by The SBTi advise companies to prioritize actions and investments to reduce the carbon footprint within the value chain over focusing on the emissions outside of it.

A typical pitfall is a pure CO2-focus. 50% of the emissions come from material use and virgin resource extraction has even more severe consequences than "just" accelerating the climate crisis. Companies should take into account the resource question and think about how to de-materialize.

Matthias Ballweg, Co-Founder & Director atCIRCULAR REPUBLIC

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The second big challenge comes often with measuring the outcome of these efforts. From the get-go, companies need to set measurable targets for emissions reduction so that they can track their progress and make adjustments as necessary. They also need to keep in mind that setting targets once is not enough - companies need to continuously improve their emissions reduction efforts over time, setting increasingly ambitious goals as technology and knowledge progress. Increasingly important has also become for businesses to be open with the public about their emissions and the actions they are doing to reduce them. In the EU countries, companies in certain industrial sectors are already required to report their greenhouse gas (GHG) emissions publicly and these regulations can be only expected to become more strict and extensive in the future. Therefore, corporates should prepare for future legal compliances already.

Businesses today have plenty of resources that can support and incentivize them in entering their courses of action to net-zero emissions and translating decarbonization targets into concrete climate action such as the European Green Deal Investment Plan, the European Regional Development Fund (ERDF), and the European Agricultural Fund for Rural Development (EAFRD). Yet, many businesses find it difficult to establish the first point of contact with any of these assets since they are neglecting the essential first step: conducting a thorough analysis of their operations to spot the gaps in their efforts and identify the adequate resources to fill them.

Innovation ecosystems: creating a direct link between corporate and start-ups

Resolving complex challenges requires cooperation between players from all industries and backgrounds. Open innovation frameworks enable stakeholders to pool their skills, resources, and experiences and produce more progressive and effective solutions. Initiatives such as RE100 and CE100 are setting new sustainability standards for industries and governments by bringing together companies, legislators, and academic institutions to accelerate the transition to a circular economy and driving renewable energy transition by pushing petitions, providing new technical criteria for governments, and offering resources, toolkits, and networking platforms. The possibility of a successful energy transition is demonstrated by nations like Iceland, where almost 85% of the country's energy comes from domestically produced renewable energy sources.

Leading companies of the next decade are not defensive around de-carbonization and de-materialization but play offense. They proactively adjust their business models and the way how to satisfy customer needs way ahead of regulatory trends. This strategy was already successful in the past 5 years and will be even more differentiating in the years to come.

Matthias Ballweg, Co-Founder & Director at CIRCULAR REPUBLIC

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As previously addressed, businesses need help finding an appropriate solution and a means of evaluating if it is suited for the issue at hand. One way to combat the lack of tangibility from businesses toward more sustainable paths is to connect with initiatives that effectively address the identified issues in their operations. Innovation centers such as UnternehmerTUM stimulate the development of ideas that challenge the status quo and promote further convergence toward carbon neutrality by connecting relevant corporates and innovators. By offering programs that foster short-term collaboration projects between established businesses and sustainability-focused start-ups, such as the Pilot Project program by TechFounders, businesses get a low-risk environment to test solutions before committing to larger investments in new technologies and infrastructure. The number of start-ups tackling climate change-caused challenges is constantly increasing and that is certainly due to factors such as the availability of governmental funds reserved for innovation, the presence and prosperity of innovation ecosystems, economic recession, and ongoing energy crisis. As an example, of Germany’s more than 60,000 start-ups around 30% are contributing to the environmental objectives of a Green Economy.

Today, especially in sectors like energy, transportation, agriculture, and manufacturing, corporations have a critical role to play in reducing global emissions and realizing net-zero goals. That's why we've partnered with a range of companies committed to making a positive impact on the environment, and through our matchmaking services, we are helping them find sustainable solutions that work. Entrepreneurs are often at the forefront of developing new technologies that can help companies meet their decarbonization targets.

Sylvia Stojilkovic, Managing Partner at TechFounders

TechFounders program has a long track record of cooperating with businesses dedicated to cutting their carbon footprint and finding alternatives for their current processes, products, and services. The impact of such service has been proven by various successful collaborations and projects with industry leaders such as HP Tech Ventures, SAFRAN, Wieland, and ALDI. Some examples of such start-ups and their innovations include:

  • ImpactNexus: Making sustainable reporting easy and understandable for businesses. ImpactNexus’ software helps companies and their investors manage, report, and improve their sustainability efforts. Their solution automates the assessments and provides tailor-made improvement suggestions.

  • Changers promotes workplace health while driving climate protection. Through their app, companies and cities can create CO2 challenges that encourage rethinking in the area of ​​climate protection and motivate employees, fellow citizens, and customers to exercise more.

  • Simplifyber: Using cellulose and 3D printing to produce eco-friendly apparel, Simplifyber is revolutionizing the fashion industry. Their procedure reduces 35% of the material waste in the conventional fashion supply chain, requires fewer resources, and is totally biodegradable.

  • FixFirst: FixFirst makes circular services such as repair easy, accessible, and attractive – for everyone. Their AI-first software enables the ecosystem of local repair services providers, manufacturers, retailers, and insurances by providing an instant error analysis and remote video consultations.

  • Voltfang: Decentralized battery storage technologies are crucial to driving the energy transition. Voltfang has developed a green electricity storage system that utilizes only second-life batteries from electric cars. The system can store excess energy from solar panels and provide clean energy to businesses and private households.

Time to get it right

This article aims to remind businesses that the power is in numbers: no company can by themselves stop climate change and therefore collaboration and cooperation between businesses, experts, legislators, and innovators is crucial. Three things are needed now more than ever: proactiveness, practicality, and unity to pursue the same outcome.

In Oprah Winfrey's words: “Cheers to a new year and another chance for us to get it right”. Let’s take this year as an opportunity to redouble our efforts and truly make net-zero a priority.

Learn more about how we support corporates reaching their net-zero goals here.