Transitioning to net-zero: what governments can learn from business best practice
Steve Howard, co-Chair, the We Mean Business coalition
Governments can do more to support sustainable business, by setting clear targets, discouraging emitters and backing innovators, says Stephen Howard, co-chair of the We Mean Business board and former chief sustainability officer at IKEA. This article was first published on The Economist Intelligence Unit.
Sustainability is rising up the agenda of every business and government. Hundreds of businesses are laying down transformational emissions reduction plans and targets; countries are declaring climate emergencies. But how can business and government collaborate effectively, and what can government learn from business?
Here are five pointers for success that government can learn from business:
1. Go all in and set bold targets
Net-zero carbon emissions or 100% clean energy targets are not beyond the scope of imagination. A few years ago at IKEA we used 100% targets widely, from 100% of our wood from Forest Stewardship Council (FSC) certified forests through to 100% renewable energy and 100% LEDs for our lighting business. These targets create certainty about what success looks like. You don’t leave people confused about whether you’re defending the status quo or backing the future. And for a complex topic like climate change, adopting science-based targets will help any organisation understand its path.
To date, business has been bolder in target-setting: we need more governments to step up and align the scale of their ambition with the scale of the problem—in turn, this will give business the clarity and confidence it needs to invest.
2. Put a price on pollution
Most businesses welcome some form of carbon-pricing, and many have voluntarily implemented their own internal carbon price to drive their focus towards low-carbon solutions. National carbon prices, set by the government, would give a clear signal about the direction of travel.
3. Use your supply chains
A growing number of businesses are using their procurement practices to drive emissions reductions and make their businesses more resilient to the impacts of climate change. Over 200 companies have joined RE100, a global corporate leadership initiative bringing together influential businesses committed to using 100% renewable electricity. These organisations together generate more power than South Africa. Businesses are also supporting hundreds of millions of hectares of sustainably certified forestry through the FSC and driving fair living wages through their supply chains.Certification has become widespread, from the Marine and Aquaculture Stewardship Councils (MSC and ASC) for fish, to the Better Cotton Initiative. The Sustainable Trade Initiative (IDH) has launched collaborative approaches to break the cycle of agricultural poverty by connecting retailers of various products—such as palm oil, coffee and tea—with farms and plantations that pay a living wage to their workers. There is huge scope for greater progress and governments can lead by example by implementing procurement policies that favour low-carbon products and services.
4. Support the sustainable disruptors
Large incumbent businesses have significant power. Many use that to good effect (witness Google or Apple’s commitment to renewable energy). But throughout history, when threatened, businesses have shown that they can fight hard to resist change; the tobacco industry is just one obvious example. Governments need to find ways to back the sustainable innovators as these will become the job-creators of the future.
5. Don’t be afraid of picking winners
The future needs to, and will, look different from the past. It will be renewably powered with electric mobility, we will be eating a more plant-based diet and living in smarter cities. Businesses that succeed in scaling innovation will play a key part in creating this future. And governments should focus on stimulating the outcomes required to win the fight against climate change with clear, long-term and legal frameworks. Many large businesses can and will transition their businesses by embracing new technologies.But there are also many businesses and sectors that are simply too carbon- or resource-intensive to transition. We cannot afford to defend legacy businesses through perverse subsidies and incentives, so alongside clear long-term policies on climate we need transition plans that support those workers and communities that will be affected.
We still have time to make the progress that is needed this decade. With bold and clear policymaking from governments coupled with growing action from business we can accelerate the wholesale transformation of the economy. There is no time to lose.
About the Author
Steve Howard is a leading sustainable business professional and a recognised authority on sustainability and climate change. Steve was Chief Sustainability Officer at IKEA Group and served on IKEA’s Executive Group Management from 2011-2017. In 2015, Steve co-founded We Mean Business, a leading climate change coalition of organisations which helped support the Paris Agreement and has led to more than 500 businesses making more than 1,000 commitments on climate action. Prior to IKEA, Steve was Founder and CEO of The Climate Group, a global NGO which has built networks of cities, states, regions, and businesses committed to a net-zero carbon world. He is currently advising a range of businesses and financial institutions on transformational approaches to sustainability.