the business case for adopting the long-term goal for net zero emissions

A 21st Century Paradigm: Long-term ambition driving transformational

business action on climate change

Track 0 presents this synthesis report to support business decisions that enable the transition to a low carbon economy. By aligning today's actions with the net zero goal, businesses

can realise clean, long-term growth opportunities

The Business Case for adopTing The Long-Term goaL

for neT zero emissions

1

In 2015, which sees the 70th Anniversary of the founding of the United Nations, world leaders are working towards two outcomes that will shape the future for generations to come: the creation of the next set of global development goals, and the culmination of critical climate change negotiations which will take place in Paris in December.

Over the coming year we need to summons new strength and deploy new knowledge to eliminate poverty, generate sustainable economic growth and combat climate change. Each of these is a challenge of immense proportions, but one stands out because of its ability to undermine progress on all the others – and that is the fact that we are rapidly running out of time to avoid irreversible climate change.

By agreeing to keep warming as far below 2°C as possible, the international community implicitly agreed to set a limit on global cumulative carbon-dioxide emissions. Reaching zero carbon is what is required to stay within this “carbon budget”. This can be achieved through a rapid peaking of the world’s carbon emissions, by 2020, and a complete phase out of carbon emissions by 2050.

The climate challenge is immense. To deal with it, demands global cooperation on an unprecedented scale – a whole new era of solidarity based on an understanding of our interconnectedness.

We have known for some time that we must construct a future society where inclusive, low carbon growth advances development and human rights. That means fostering decent jobs and livelihoods, improving equality including gender equality, expanding people’s access to sustainable energy and affordable, nutritious food; supporting sustainable cities; maintaining forests and other vital eco-systems; and enhancing the health of both people and the planet. In designing the global response to climate change we have an opportunity to realise this future we want, if we do it the climate justice way.

For me, climate justice embodies the moral argument to act on climate change: being on the side of those who are suffering most, while also ensuring that they don’t suffer again as the world moves to act. Put bluntly, in transitioning to a zero carbon world we must all be alert to the very real possibility that the most vulnerable people could be left behind.

On the flip side, a transition to zero carbon has multiple opportunities for people in developed and developing countries in terms of energy security, greater competitiveness, decreased mortality, job creation and greater resilience if that transition is fair and respects human rights obligations. We just have to design the transition to zero that is fair and maximises these opportunities for everyone.

Climate justice demands actions from all countries in phasing out carbon emissions and support for those countries that are still developing in order to access alternative sources of energy as well as investment in green infrastructure and sustainable land use.

It is not just up to governments to drive the transition. Real progress will require innovative, mutually beneficial partnerships at all levels between governments, corporations, non-governmental organizations, international organizations and all others committed to a world where fundamental rights are guaranteed for all people.

Business has a very clear role in delivering clean, low-carbon economies and a better way of life for all. Momentum is already growing in finance, business and political circles for a net zero goal. But we need more. The scale of actions required to transform the global economy depend on businesses and investors driving the transition away from today's fossil-fuel based economy to a new, clean system. Leadership can come from all business sectors, as this synthesis report demonstrates, and business can play a role in making sure that the transition to zero is inclusive and beneficial to all members of society.

Adopting the net zero goal is not something to be put off until later. In fact, economic evidence suggests that actions and investments in the next five years and beyond need to target the zero goal to avoid locking economies into fossil fuel intensive infrastructure. The 2050 goal will not be easy to deliver and some companies and industries will find it more challenging than others. But it’s a goal that clearly demonstrates that your company will be fit for purpose 10, 20 or 30 years from now.

Far-sighted business leaders are increasingly directing near-term emissions reductions towards a long-term 2050 goal for net zero. In doing so, they’re sending a positive signal to investors, shareholders and policy-makers that their companies are sustainable and future facing. I trust this synthesis on the business case for the long-term net zero goal will provide business leaders and executives with the information they need to show greater ambition in delivering climate action.

“We already have a head start on the technologies we need. The costs of the policies necessary to make the transition to an economy powered by clean energy are real, but modest relative to the risks… Climate change is the challenge of our time. each of us must recognize that the risks are personal. We’ve seen and felt the costs of underestimating the financial bubble. Let’s not ignore the climate bubble.” henry m. paulson Jr

former united states secretary of the Treasury 2006-2009 Writing in the new York Times, 21 June 2014

foreWardembracing the long-term goal for net zero emissions by mid-century provides predictability in the face of risk and complexity. it defines the pathway to the low-carbon economy.

simply put, the net zero goal is a game-changer, providing clear direction for the near term actions of business – and all sectors – to meet the globally agreed 2ºC temperature rise limit.

Mary RobinsonUN Secretary-General's Special Envoy on Climate Change, former President of Ireland and Chair of the Mary Robinson Foundation-Climate Justice

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2 ThE BUSINESS CASE FOR ADOPTING ThE LONG-TERM GOAL FOR NET zERO EMISSIONS 3

ConTenTs SECTION PAGE

INTRODUCTION 5 SNAPShOT: JANUARy 2015 6Impetus for the net zero goal

ExECUTIvE SUMMARy: 7Defining the net zero goal & 10 reasons to adopt it

ThE BUSINESS CASE: 10 Net zero is a strategy for business action to benefit people, planet and profit

Net zero aligns with policy direction, guided by science 12

Net zero leads to value growth and offers predictability 19

Net zero is a pathway to accelerate innovation, 27 reputation and competitive advantage

MAkING zERO CARBON LIvING A REALITy: 32 The buildings sector: showing the way and reaping benefits

INFLUENTIAL BUSINESS LEADERS PROMOTE NET zERO 34Stimulating private and public sector unity

COMPANIES COMMITTING TO NET zERO 36Momentum from leaders in diverse industries

FAIRNESS IS A BUSINESS ISSUE: 44 The long-term goal for net zero emissions aligns companies with people power and equity for all

AUThORS NOTE AND ACkNOWLEDGEMENTS 50

APPENDIx 52


inTroduCTion

This December a new international agreement on climate change will be adopted by all countries in Paris, making 2015 the year for business leaders to shift gears and seize opportunities for sustainable value creation. Now is our moment re-shape the foundations of our economic system to both live well and heal the planet.

Climate change and its devastating impacts affect every nation. All countries already have debts attributable to past incremental actions. Companies are experiencing the impacts too: rising costs of natural resources, extreme weather disruption to global supply chains and pressure to divest from fossil fuels.

The latest science from the Inter-governmental Panel on Climate Change (IPCC) and other progressive scientists shows that global CO2 emissions and all GhG emissions must reach near zero well before 2100 if we are to have a likely (two-thirds or better) chance of staying below the globally agreed limit of 2ºC. Many scientists say setting a timeframe of zero emissions by 2050 1 would be safer.

On the one hand the majority of business leaders believe the global economy is not geared to meet basic water, food and energy needs of 9 billion people by 2050 2. yet on the other hand acting decisively – and collectively – on climate change can be central to meeting this challenge. In fact, the IPCC's Fifth Assesment Report 3 states near zero emissions can be achieved with a modest 0.06 percent reduction in annualized global consumption of the 1.6-3% growth projected, whilst bringing benefits of energy security, resource protection, improved health and air quality and food security.

The premise of this synthesis is that adopting the goal for net zero emissions, in the timing consistent with science, is a game-changer. Globally it means poverty can be eradicated, natural resources valued adequately and at the same time, opens the gateway to innovation and prosperity for business.

Whilst sectors and individual companies will have different trajectories, setting a long term 2050 timeframe for zero emissions levels the playing field so that we’re all marching in the same direction – countries, companies, cities, even individuals. This means business can prosper whilst driving a low-carbon future, sending the right signals to investors, shareholders, customers and consumers.

The number of business leaders stepping up to this challenge is growing. The B Team companies and many leaders are showcasing momentum for the net zero goal, providing the impetus for the economic transition needed and redefining the categories in which they operate. Business leaders have always anticipated social change in order for their companies to remain competitive. But we need more and we need a collective, cross-sectorial effort.

This synthesis aims to show the business case for net zero is an ambitious long-term goal directing today’s business decisions for a clean, fair, bright future.

Farhana yaminFounder & CEO, Track 0

INTRODUCTION

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January 2015 sees great momentum building

towards the agreement of a new International

Climate Treaty in December of this year. The goal for net zero emissions has emerged as a leading initiative unifying the aims of business, communities, countries, citiies and campaigners over the past year. The net zero goal, supported by science, implies a major, irreversible shift away from fossil fuels toward greater use of energy efficiency, renewables and circular economy (non-wasteful) systems of economic production. Ambitious leaders are embracing achieving net zero by 2050 and certainly before 2100.

The Uk’s Labour Party Leader, Ed Miliband, setting out his party’s international policy agenda this month in the run-up to the May 2015 national election, stated the two priorities are ending poverty by 2030 and promoting net zero by 2050 in the new international climate change agreement.

Speaking at an event during the World Economic Forum in January 2015, Richard Branson committed to use his influence and that of the B Team (an initiative of progressive CEOs, of which is is Co-Chair) to make business leaders widely aware of the net zero goal and to encourage pledges to achieve carbon neutrality by 2050.

World Bank Group President, Jim kim committed the World Bank to play its part in achieving net zero emissions before 2100, by supporting clean transportation, the building of low-carbon, livable cities, particularly in developing countries, and Climate Smart Agriculture. This is in addition to the organisation’s leadership in carbon pricing.

Speaking at the opening of Abu Dhabi Sustainability Week on 19 January, Dr Sultan Ahmed Al Jaber, UAE Minister of State demonstrated the seismic shift in the future direction of the energy landscape. Dr Sultan said, “renewable energy has graduated from an expensive alternative to a competitive technology of choice.” Remarking on opportunites arising from the low oil price, he also suggested revisiting fossil fuel subsidies, saying this is

“money that can be otherwise redirected to improve energy systems and transform economies, by creating jobs, stimulating economic growth, and educating future generations.”

IkEA Group said that investing in clean energy was fundamental to reducing risk and building resilience into their business during the World Economic Forum. The retailer’s Steve howard said, "We took a 9 million dollar hit to our business after hurricane Sandy. Climate change is a real business risk. That is why we decided to go for a full 100% cover of our energy production from renewables... We are eliminating uncertainty over carbon pricing and our energy exposure."

Although non-committal on an emissions peak, India and the USA agreed a pact to include numerous clean energy investment initiatives aimed to help Indians overcome energy poverty, whilst also escalating investment in renewables and low carbon consumption lifestyles. This pact falls short of the US-China agreement in that it does not include a commitment for India to peak its emissions or reduce coal-fired energy development (More on the US-China pact is on page 16).

snapshoT: JanuarY 2015 impeTus for neT zeroThe goaL for neT zero is spreading amongsT Leaders

exeCuTive summarY

The net zero goal is a framework for action to keep global surface temperature rise below 2ºC versus pre-industrial levels. This can’t happen overnight; there is a phasing out and phasing in period between now and the end of this century.

All economies need to decarbonise, both developed and those still developing, in order to meet the net zero goal, although trajectories may differ and developing countries may need support.

Businesses and governments that want to stand out as leaders, especially those with the means in rich countries, can do so by cutting CO2 emissions to near zero through their own activities and those of their value chains, as quickly as possible, knowing that global emissions must be zero in the second half of the century.

TerminologyThere are several terms often used interchangeably for net zero. Whilst there are technical differences, all relate to a similar range of actions. All imply a major, irreversible shift away from fossil fuels toward greater use of energy efficiency, renewables and circular economy (non-wasteful) systems of economic production.

Net zero/net zero emissions Zero net emissions

Carbon neutrality Climate neutrality

Decarbonisation Phase out - Phase in

Global total GhG emissions must peak by no later than 2020. Total GhG emissions need to be zero well before end century, between 2060 and 2080 and likely negative thereafter. CO2 emissions from fossil fuel combustion and industry need to be zero around mid-century, between 2045 and by no later than 2065 and be negative thereafter 4.

The implications of phasing out emissions to net zero include:

Rapidly shifting away from fossil fuels towards investment in renewable energy to equal or exceed the carbon-based energy utilised through companies’ own activities and their value chains

Activities that optimise the use of, or restore natural carbon sinks, including:

Sustainable use of finite natural resources: forests, oceans and freshwater

Contribution to restoration of depleted resources that provide natural sinks, including forestry and oceans

Reduction, recycling and re-use of waste sources related to own activities and consumption

SNAPShOT / ExECUTIvE SUMMARy

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1. The science is clear and is directing action to zeroFor a strong chance of reducing the human and financial costs of climate change, surface temperature rise cannot exceed 2ºC as compared with pre-industrial levels. The net zero goal directs actions to be compatible with 2ºC, in the timing consistent with the November 2014 IPCC AR5 Synthesis Report which states that all greenhouse gas emissions must be near zero by 2100, with radical reductions in CO2 sooner - around mid-century.

2. zero is the direction required by new policy and regulationAt the UN Climate Summit in September 2014, 60 countries’ statements included support for the net zero goal, as did the statements of major business, cities and civil society. By December 2014, at the UNFCCC negotiations in Lima, Peru, nearly 100 countries supported the inclusion of a long-term goal in the draft agreement text being negotiated this year, to be signed in Paris in December 2015. This sets the direction for zero emissions goals at the national, sub-national and city level policy.

3. Adopting the net zero goal makes sense of near-term targets Delays and fragmented actions in the past sent global emissions in the wrong direction. A 2050 horizon sets the strategic direction for business to align short-term investments with long-term global economic, political and investment shifts. 2020 and 2030 actions and investments are essential to ensure a 2ºC world is possible. With USD90 trillion to be invested in long-lived infrastructure in the next 15 years, companies that are setting their near-term actions towards achieving net zero by 2050 are demonstrating leadership and enabling predictability.

4. Low-carbon growth is sustainable and puts risk under control The assumption that economic growth needs high-carbon energy has been wholly disproved. It is in the direct interest and control of business leaders to (a) reduce the energy intensity of their value chains; (b) radically cut overall emissions through growth-directed commercial innovations and (c) invest in renewables to offset any remaining fossil-fuel based energy use, transitioning to 100% clean energy as rapidly as possible.

5. Net zero actions offer savings to businesses of all sizesThe energy sector, which supplies all other sectors, is reliant on a complex range of subsidies that cannot survive the policy directions of countries, regions and cities. This will make energy from fossil fuels increasingly expensive, whilst wind and solar power, already cost-competitive, are growing rapidly and attracting private and public investment. The less carbon a company emits, the less exposure it will have to carbon pricing. Paying for carbon through taxation or other instruments will bring about new and additional costs to doing business. It is likely new carbon pricing tools will include mechanisms to ratchet up cost over time, diminishing profitability of business as usual.

6. Committing to net zero sends a positive signal to investors and shareholdersLong-range investors seek predictability. A decisive statement by a company that it is committed to the net zero goal, demonstrated by linking 2020 and 2030 targets to a 2050 horizon, makes its intentions clear and in turn attracts investor confidence. Many progressive investors are withdrawing from companies invested in coal and all inefficient fossil-fuel sources, with vocal encouragement from political leaders, youth and even the United Nations Secretary-General.

reasons for Business To adopT The neT-zero goaL

7. Net zero stimulates innovation, growth, jobs and value creationBusinesses of all sizes that have placed net zero at the heart of their strategies are showing commercial success through innovative products and services, new revenue models, new customers and exciting partnerships. These leaders, from large transformational corporations, people-powered sharing economy businesses and entrepreneurial new ventures, are redefining sectors, assuring long-term profitability and topline growth. Their products and services improve customer productivity or consumers’ quality of life, and forge low carbon consumption habits through their use. Moreover, investing in low carbon solutions leads directly to retaining and creating sustainable employment and value growth, which improves lives and livelihoods, even in slower growing developed economies.

8. zero unifies all stakeholders and demonstrates shared value

Empowered and connected better than any previous generation, the public is well informed on global challenges. Expectations that companies will play an active role in accelerating solutions to these issues run high; in fact people assign equal responsibility to companies and governments for their future quality of life. Aiming for zero is easily understandable and signals a company is committed to real change and clarity. By demonstrating their actions are aimed towards a net zero emissions goal, in the timing compatible with the 2ºC limit, companies authentically enhance their reputations and create purchase preference for products and services that improve consumption behavior throughout the value chain.

9. Phasing out emissions to net zero signals leadership in the movement for a sustainable future By 2050 there will be 9.6 billion people in the world, 70% in urban areas. To ensure food, water, energy and health systems can meet basic needs is a major focus of the United Nations. Governments can’t address these challenges alone; the private sector must participate. Emissions reductions by business, aligned with governments, contribute to eradicating poverty and ensure future generations’ health and wellbeing. The poor need access to energy to develop, but should not be locked into generations of health-threatening carbon pollution. Our youth and subsequent generations will need to sustain larger populations with lower impacts on resources. The transition to a low carbon future is necessary to sustain resources for future generations. This is not only a moral argument; business too needs affordable resources today and in the future.

10. Net zero aligns business with people powerNGOs, campaigners and not-for-profit organisations are increasingly important partners for progressive companies. The tools, organising capability and intelligence of civil society groups influence the media, the general public and political decision-makers. Leading civil society groups promote the adoption of net zero by mid-century, as an ambitious, fair pathway. Their calls for divestment, decarbonisation and the transition to 100% clean renewable energy have changed the conversation on climate change globally and nationally. These groups have the mandate for corporate scrutiny and can catalyse citizens to censure companies and pressure investors. Businesses aligned with civil society can benefit from people-powered movements for sustainable consumption and a bright future.

10 REASONS OR BUSINESS TO ADOPT ThE NET-zERO GOAL

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“We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment – or allowing environmental havoc to create economic havoc.

Many committed business leaders, mayors of cities around the world and global investors are acting in line with the zero emissions pathway and they’re galvanising action in the international political arena. The pathway to reach net zero will vary by sector and by company, and effective measurement tools may differ. The lesson from past inadequacy is that a common goal is needed to unify government, business and citizen action. Net zero offers a tangible, direction setting, unifying goal, which makes it clear which actions are on track for transition, with the end result of staying below the globally agreed 2ºC temperature rise limit.

Adopting net zero is a strategic pathway for business actions to benefit people, planet and profit

robert rubin, united states secretary of the Treasury (1995–1999), risky Business report, June 2014

Net zero or carbon neutrality as a strategic driver of investment and financial success is already being realised by pioneers across the political, local authority, business and investor spectrum. There are three core drivers guiding the business case and generating momentum for adopting net zero as a strategic goal driving business in the 21st century.

The drivers guiding The Business Case for neT zero

us Treasury secretary Jacob LewThis is the first statement about the economics of climate change from a us Treasury secretary in office, signaling clear commitment from the worlds’ largest emitter to base action and policy on climate science.

“The world can either choose to ignore the challenge today and be forced take more drastic action farther down the road at greater costs. or we can make sensible, modest and gradual changes now and in the process, create jobs, reduce business and household expenses and drive innovation, technology and new industries.”

1. Science and Policy Clarity

There is clear scientific evidence that net zero defines the horizon

New policy instruments will incentivise action to zero Policy makers at all levels see net zero as a game-changer and unifier

2. Economics & Financial Performance

Acting early offers risk and cost advantages

Investors are ‘betting’ on low-carbon

Renewables offer high return offsets, jobs and growth

Carbon pricing incentives to reduce emissions

3. Innovation, Reputation and Growth Advantages

Some business leaders are already winning with net zero / zero innovation strategies

The idea of ‘zero’ becoming part of everyday lifestyle unites companies with consumers and citizens

zero is a driver of sustainable business since eliminating CO2 drives zero waste, low impact resource use and increased clean energy use

Incentives for businesses to adopt net zero long-term commitments are coming from both regulation and economics. It is the clear science that is driving policy-makers and the economic direction towards actions that are 2ºC compatible.

ThE BUSINESS CASE: INTRODUCTION & 3 DRIvERS GUIDING ThE BUSINESS CASE FOR NET zERO

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neT zero aLigns WiTh poLiCY direCTion, guided BY sCienCe

For leaders in all sectors, there are three key points the IPCC report signifies in the context of adopting the long-term goal for net zero:

a) Acting early and decisively over the next few decades reduces the long-term cost of actions needed and enhances resilience

b) Energy systems must be transformed so that CO2 from fossil fuel sources is reduced rapidly since CO2 emissions are the main driver of warming

c) The cost of getting to net zero in the timing required is affordable at 0.6% reduction in projected annual consumption growth of 1.6-3% per year is, excluding the co-benefits reduced social costs associated with climate change

The November 2014 IPCC AR5 Synthesis Report is a stark call to action for immediate and decisive shifts in policy and economic activity, directed toward the long-term goal for net zero.

The Report calls for near zero emissions globally by 2100.

“adaptation can reduce the risks of climate change impacts, but there are limits to its effectiveness… There are multiple mitigation pathways that are likely to limit warming to below 2ºC relative to pre-industrial levels. These pathways would require substantial emissions reductions over the next few decades and near zero emissions of carbon dioxide and other long-lived greenhouse gases by the end of the century.”

For a 66% or better chance of keeping global warming below the 2˚C limit:

The IPCC concludes that by 2050 total global GhG emissions must be 40 - 70% lower than the 2010 baseline.

The science case is clear: all GhG emissions must be near zero well before 2100

Ambitious leadership by business can accelerate global action

The net zero goal is a game-changer. It offers direction for transparent actions and gives a comparable framework for all individual strategies.

BY 2020: Global total GhG emissions need to peak

BY 2050: CO2 emissions from fossil fuel combustion and industry need to be zero around mid-century, between 2045 and by no later than 2065 and be negative thereafter

Before 2100: Total GhG emissions need to be zero before end century, between 2060 and 2080 and likely negative thereafter

For n 85% chance of staying below 2˚C, other influential scientists recommend reaching net zero emissions by 2050 5.

ThE BUSINESS CASE: NET zERO ALIGNS WITh POLICy DIRECTION, GUIDED By SCIENCE

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Past incremental action has placed a heavy cost burden on business and societyFor multi-national and local business activities, climate event impacts have caused disruption to supply chains, transport and deliveries affecting revenues and share price. In the 2015 Global Risks Report 6, issued by the World Economic Forum in advance of its annual

gathering in January 2015, lists numerous weather and environmental factors as high likelihood and high impact risks. Much of this can be directly related to – and mitigated in large part by – tackling climate change with the adoption of a long-term goal.

To avert increased frequency of climate related weather events, future water crises and biodiversity loss, the science case for the net zero goal is unequivocal: emissions reductions across all sectors should direct a shift in economic activities to be 2ºC compatible.

International political momentum is building: nearly 100 countries already support including a long-term goal in the new, climate change agreement

dr rajendra pachauri, Chair of the intergovernmental panel on Climate Changespeaking at the launch of the ipCC ar5 synthesis report, intended to inform international policymakers on the underlying science of climate change

“We have little time before the window of opportunity to stay within 2ºC of warming closes. To keep a good chance of staying below 2ºC, and at manageable costs, our emissions should drop by 40 to 70 percent globally between 2010 and 2050, falling to zero or below by 2100. We have that opportunity, and the choice is in our hands.”

The Ten Global Risks in Terms of Likelihood and Impact

Top 10 risks in terms of

likelihood:

1. Interstate conflict

2. Extreme weather events

3. Failiure of national governance

4. State collapse or crisis

5. Unenployment or underemployment

6. Natural catstrophes

7. Failure of climate-change adaptation

8. Water crises

9. Data fraud or theft

10. Cyber attacks

Top 10 risks in terms of

Impact:

1. Water crises

2. Spread of infectious deseases

3. Weapons of mass destruction

4. Interstate conflict

5. Failure of climate-change adaptation

6. Energy price shock

7. Critical information infrastructure breakdown

8. Fiscal crises

9. Unenployment or underemployment

Categories:

Economic

Environmental

Geopolitical

Societal

Technological

World economic Forum Global Risks Report 2014

Ban Ki moon, un secretary generalChair’s summary, un Climate summit, sept 2014

Christiana figueres, executive secretary, un framework Convention on Climate ChangeWriting with mario molini, nobel-prize wining chemist in the guardian, sept 2014

“many leaders, from all regions and all levels of economic development advocated for a peak in greenhouse gas emissions before 2020, dramatically reduced emissions thereafter, and climate neutrality in the second half of the century”

“There is ample evidence from the un’s climate science panel that global greenhouse gas emissions have to be zero or near zero by the end of the 21st Century if we want to achieve the goal of holding a global temperature rise below 2ºC. Climate neutrality is not nirvana or an alternative universe.”

ThE BUSINESS CASE: hEAvy BURDEN / POLITICAL MOMENTUM

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Appetite for the clarity and unity the net zero pathway offers began to scale up in September 2014 at the United Nations Climate Summit hosted by UN Secretary General, Ban ki-Moon, where more than 60 countries made statements committing to the idea of a long-term goal with many announcing their own national actions in terms of net zero, carbon neutrality or decarbonisation by 2050.

Support for including a long term emissions reductions goal to be part of the Paris agreement is getting traction from a range of large developed countries and regions (the EU and several of its members are in support) as well as from developing countries in Africa, the Alliance of Small Island States (AOSIS), the Least Developed Countries and many AILAC countries from the Latin America & Caribbean region.

Momentum continues to build in the international political circles as the negotiation rounds continue in 2015, towards the final agreement in December.

The momentum for tackling climate change, with a clear and decisive long-term goal is also emerging as a national political issue.

In the Uk, Labour Party leader Ed Milliband has made leadership on climate change a core part of his campaign for upcoming national elections, to be decided by British voters in early May 2015. In a speech in January 2015, Miliband set out his leadership agenda for the international arena on the basis of poverty eradication and tackling climate change by committing to the net zero goal.

According to Labour’s press release, policy direction would include “a separate development goal on climate change [in the sustainable development goals to be agreed at the un in september 2015] and a binding international agreement on climate change leading to zero net carbon emissions by 2050 with the uK leading the way by decarbonising electricity supply by 2030”.

Of 195 parties to the United Nations Framework Convention on Climate Change (UNFCCC), nearly 100 support the inclusion of a long-term goal in the new international climate treaty currently being negotiated.

The announcement in November 2014 by China and the USA of a pact to cut GhG emissions sends an influential signal to all other countries, investors and businesses. It follows the announcement by the EU to reduce emissions by at least 40% by 2030. Thus all major economic blocs are aligning around emissions reductions.

The USA-China pact shows the worlds’ two largest economies, accounting for 45% of total global emissions, are shaping ambitious policies towards the long term horizon

It is the first time a US President has committed the USA to a target beyond 2020, signaling to business, investors and the public that long-term commitments should be set to make sense of near-term targets

The commitment sees the USA doubling its rate of emissions cuts between 2020 and 2025 to meet its 2025 target of 26-28% below 2005 levels

China’s commitment to peak emissions by 2030 signals that the country is aiming its emissions trajectory downward and investments will be directed away from fossil-furl based energy.

China, already the largest investor in renewable energy, has committed to providing 20% of the country’s energy from zero-carbon, clean power, requiring new infrastructure about equal to the size of the entire USA electricity market

The announcement sends a clear signal on the jobs, investment and innovation China will add to the renewables sector in the next 15 years

To illustrate, currently China completes a coal-fired power plant every 8-10 days. The country’s 2030 renewables pledge means building zero carbon energy infrastructure that is larger in capacity than all the coal-fired power in China today, demonstrating that the worlds’ largest developing economy anticipates growth through zero-emissions

What the China-USA landmark climate pact means for net zero this centuryCities lead with innovations driven by commitment to action for net zero

Cities make up 80% of global GDP and 70% of global carbon emissions. By 2050 70% of the global population will live in new and existing urban areas (versus 53% today). The steps cities take today to curb emissions offer learning examples that can benefit future new urban environments, where the majority of citizens will live. Setting new standards for connected, compact energy efficient urban infrastructure is important, since these investments last for up to a century.

Many cities are now setting 2050 commitments and offering clarity they’re on track for net zero emissions. In doing so, cities demonstrate leadership on citizens’ issues – their quality of life and economic wellbeing. This attracts private investment and business growth, leading to economic prosperity, alongside lifestyle and health co-benefits. These cities are finding thriving local economies go hand in hand with emissions reductions.

By stating 2050 targets leading cities are reducing emissions at three times the rate of cities that don’t report emissions cutting targets 8.

Cities can and should be ambitious, since they compete with each other for investment and commerce, which in turn brings the population required for growth.

Leading cities are getting on track for net zero by committing to emissions reductions of 80% or more by 2050 8:

Antwerp, Berlin, Boston, Boulder, Chicago, Colwood, Cleveland, Copenhagen*, District of Columbia, hamburg, London, Melbourne*, Minneapolis, New york, Oslo*, Portland, San Francisco, Seattle*, Stockholm*, Sydney, Toronto, vancouver, vasteras, yokohama and zurich

* Committed to 100% emissions reduction by 2050

ThE BUSINESS CASE: UNFCCC / CITIES LEAD WITh INNOvATIONS DRIvEN By COMMITMENT

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“Climate change is fundamentally a product of market failure, and if national governments can’t intervene, local governments must. We shouldn’t be afraid of good regulation – it drives successful markets, for example, the Clean air legislation in Los angeles cleaned up air pollution and now mayor garcetti leads a trade delegation to China to sell the technology solutions. in the uK, Bristol is setting up its own energy company to provide a district heating solution that a poorly incentivized national market won’t provide.”

mark Watts, Ceo, C40, a collaboration of 70 global cities united to tackle climate change

Citizen power matters increasingly as more cities elect their mayors. Today cities account for 7 million air-pollution related deaths 9 each year. zero emissions is a solution to the long-term financial health of cities and offers co-benefits to the social costs of climate impacts, such as health costs and societal wellbeoing.

The concept of ‘zero’ also has a political upside: Citizens understand the concept and it resonates with expectations of better living standards and resilience. voters and tax payers expect clean air, clean water, clean transport and transparent use of taxes to facilitate these, all of which can be related to a net zero policy frame for cities. In this way, city leaders are already making net zero a part of the language of everyday life.

Sub-national governments around the world are also viewing net zero as a pathway to enhance living standards and address the needs of voters, business and citizens. These governments increasingly use environmental regulation to impact on local economies.

A Compact of States and Regions has now been formed that will report emissions and targets 10.

Sub-national governments with 80% or greater emissions related targets include:

Baden-Wuerttemberg (Germany), California (USA), Connecticut (USA), New york (USA), North Rhine-Westphalia (Germany), Ontario (Canada), Scotland (Uk), Wales (Uk), Wallonia (Belgium) 11

Other organisations are developing pilot projects at the community level to promote greater sub-national engagment with determining net zero long-term goals. For example the US-based Clean Energy States Alliance profiles eight innovative projects that are already at or near zero emissions energy provision. These include powering a remote Alaskan island with 99% of energy from renewable sources, saving the 6,300 residents $13 million in fuel costs 12.

oeCd environmental outlook to 2050

“delaying action [on emissions reduction] is costly. delayed or only moderate action up to 2020 would increase the pace and scale of efforts needed after 2020. it would lead to 50% higher costs in 2050 compared to timely action, and potentially entail higher environmental risk.”

“in a year’s time, the international community will have the opportunity to send a clear signal that we, as a global community, are determined to manage our economies to achieve zero net emissions before the year 2100. The higher the ambition, the greater the demand will be for programs and projects that will transform economies. ”

World Bank group president Jim Yong Kim,Washington, dC, united states, 8 december 2014

The incentives for early action on emissions reductions that are driving the strategies of forward-looking city leaders are also influencing business leaders from all commercial sectors. The science directing actions to zero long-term emissions also shows that early action is advisable, since the cost of tackling climate change escalates with every year of delay.

According to a July 2014 White house economic report 13, net mitigation costs increase on average by approximately 40% for each decade of delay. A delay that results in warming of 3ºC versus pre-industrial levels can cost 0.9% of global GDP, a loss of around $150 billion for the USA alone. These costs are not once off, they are projected to recur on an annual basis.

Near-term investment aiming for net zero offers long-term savings

The Global Commission on the Economy and Climate launched a September 2014 report, entitled “Better Growth Better Climate”. A comprehensive review of the global economic outlook, it concludes that growth and emissions can and must be decoupled,

that this is technically feasible and offers a lower cost solution in the long run than the current system incentivising high emissions growth, based on subsidies and short-term economic modeling.

“The ipCC shows that for a two-thirds or better chance of holding warming to 2ºC, ghg emissions will need to fall to near-zero or below in the second half of the century… technological innovation is very likely to make it achievable – and even likelier if governments adopt the goal and incentivise its achievement.”

new Climate economy report, september 2014, from the global Commission on the economy and Climate, Chaired by filipe Calderon, and including former heads of state and finance ministers, Lord nicholas stern (London school of economics), Chen Yuan (former Chair of China development Bank) and others

neT zero Leads To vaLue groWTh and offers prediCTaBiLiTY

ThE BUSINESS CASE: INNOvATIONS DRIvEN By COMMITMENT / vALUE GROWTh

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The potential gains of early leadership in low-carbon transition and innovation offers attractive returns now and over the long run. Actions that align with net zero pathways, including retiring inefficient fossil fuel fired power stations, retrofitting buildings and investing in a range of technologies to reduce GhG emissions has a net economic cost that is relatively small, amounting to 1-4% of GDP by 2030 14. This action will impact to drive global emissions down to near zero in the second half of the century, achieving the likely 2ºC pathway.

The cost (economic loss) of cutting coal is relatively low since coal fires 40% of global electricity but accounts for 70% of the CO2 emissions

To be 2ºC compatible, 88% of today’s coal reserves must stay in the ground 16

Traditional power plants are cost-inefficient: operating costs are high, with around half going to combustible materials. The traditional business model locks in high cost, high emissions and in future, disincentives such as carbon pricing

Many are calling for the re-distribution of subsidies away from fossil fuels to low carbon alternatives

The International Energy Agency (IEA) estimates a partial phase out of fossil fuel subsidies will lead to reducing 12% of total global GhG emissions, yet for every $1 of support for renewables in 2011, $6 was spent on fossil fuel subsidies 17

Net zero is an action frame directing investment to maximise returns

“The uK already has world-leading low-carbon businesses and a good [2015 international Climate Change] deal can drive further investment, innovation and market growth, while ensuring that all businesses and nations can compete on an equal footing.”

John Cridland, director-general CBiseptember 2014

Investment in the next 5-15 years guided by the long-term goal of net zero emissions, can lay the foundation for low-carbon growth

For businesses of all sizes, eliminating energy bought from coal-fired sources offers low-cost high-carbon reductions on the pathway to zero

Political direction, science and now economics have escalated investment in renewables. 2014 saw global investment of $310bn, almost at its 2011 high of $317bn in value terms

In 2014 the dollars bought nearly double the energy capacity of 2011 18

Solar and wind at large scale are cost-competitive with coal, natural gas and nuclear power plants. In the last 5 years the costs have dropped for large-scale solar by 80% and for land-based wind by 60% 19

The reduction in warming projected by 2100 achieved with a switch from coal to gas is only 25-45% of what is obtained with a switch to renewables 20

Over the long run, zero emissions energy has zero source costs (sunlight, wind), offering long term predictability, cost-efficiency today and strong returns as government actions scale up

Replacing near term energy emissions from fossil fuels with the equivalent investment in zero-carbon renewables leads to long-term returns

Demand for energy is likely to rise by 20-35% in the next 15 years, which must be met in sustainable ways, not through high-carbon sources

Emissions will be concentrated in cities, land use and energy systems where $90 trillion is likely to be invested in long-lived infrastructure 15 presenting an opportunity to meet growing energy demand through investing in:

Zero emissions technologies

Restoration of natural carbon sinks (especially forests) and agricultural land

Resource-efficient products, particularly products influencing low carbon consumption and reducing waste by incorporating circular economy principles

ThE BUSINESS CASE: NET zERO IS AN ACTION FRAME DIRECTING INvESTMENT

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Businesses with net zero actions give investors the right signal

The Environmental Protection Agency (EPA) has calculated that 10 times the jobs arise from clean energy initiatives as from fossil fuel energy schemes 21.

Co-benefits include income improvement at local or sub-national level, as well as reduced costs of illness associated with the poor air quality resulting from fossil fuel combustion. health and wellbeing adds additional benefits to business and society in the form of improved productivity, reduced crime

The global low carbon and environmental goods & services market is currently valued at b4 trillion a year and is expected to grow by 25% to b5 trillion by 2016.

very few industries can boast that kind of growth rate. The EU’s 22% share of this market is accountable for 7.8 million jobs in 1 million companies 22.

Growth in Low Carbon Environmental Goods & Services Market - Europe

Net zero is growth and a jobs multiplier

“a low carbon energy union is europe’s opportunity to solve the energy trilemma of costs, security and decarbonisation whilst addressing jobs and growth. under one iea scenario that is consistent with 2°C policies, by 2035 the eu’s annual fossil fuel import bill could fall by 46% - or it could increase by as much as 80%-90% if left unchecked. as if that weren’t incentive enough, the european Commission estimates that up to 6.5 million jobs could be created or retained by 2020 in renewables, energy efficiency and from reinvested emissions Trading scheme (eTs) revenues. portugal has saved 1 billion euros per annum and is currently experiencing a trade surplus of energy.”

sandrine dixson-declève, director, The prince of Wales’s Corporate Leaders group

Source: BIS LCEGS Data, provided by The Prince of Wales’s Corporate Leaders Group

Investors are increasingly educated on the risks of climate change. At the Principles for Responsible Investing (PRI) Summit in Montreal in September 2014, the Montreal Carbon Pledge was launched asking investors to commit to the goals of the recently announced Portfolio Decarbonisation Coalition, which will mobilise investors to measure, disclose and reduce their portfolio carbon footprints at the scale of hundreds of billions of dollars by the December 2015 UNFCCC COP in Paris 23.

Long-range investors, acting on fiduciary responsibility, are withdrawing from assets that are not climate resilient. Businesses showing a clear pathway to long-term zero emissions, across the value chain, demonstrate resiliency to attract investor confidence, alongside strong returns.

Examples of investors shifting from assets with a high exposure to fossil fuels to those with long-term clean growth are:

Norway’s largest pension fund manager, kLP, with b33m under investment, announced in November 2014 it would divest from companies that derive a large proportion of their revenues from coal. About 5% of its assets are invested in renewable energy today and the company is seeking to expand that portfolio

In July 2014 the World Council of Churches announced, “The committee discussed the ethical investment criteria, and considered that the list of sectors in which the WCC does not invest should be extended to include fossil fuels.”

Altogether, institutions and individuals responsible for at least $50bn of investment have said they will sell some or all of their fossil fuel holdings, according to media reports 24

Long-range investors are likely to be directed to develop more secure investment pathways than that offered by fossil fuels

The recent US-China 25 ‘deal’ on climate change sends a strong signal to investors who may have previously shied away from fossil fuel divestment

Weak oil prices ($50 per barrel in January 2015) are likely to reinforce this view. The USA’s shale oil ‘boom’ becomes cost-inefficient at this price and is likely to impact on ‘small oil’, the many employers who will not survive cancelled and shortened contracts of an unsustainable and short-lived bubble 26

“The fact is that global temperature increases of any more than two degrees Celsius will put our global economy in jeopardy, and we’re currently on a path to significantly exceed this threshold. in order to protect our way of life, the world must invest an additional trillion dollars per year into clean energy. Yet, the fossil fuel industry is still spending more than half a trillion dollars a year to develop reserves that will likely need to remain in the ground.”

mindy Lubber, president of Ceres and its investor network on Climate riskincluding 100 institutional investors with $10 trillion in assets

ThE BUSINESS CASE: NET zERO IS A GROWTh MULTIPLIER / NET zERO ACTIONS

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Carbon pricing: shifting incentives and cross-sector unity to net zero actions

“There has to be a price on carbon, because there is a price on carbon: it’s the consequences to health, to the economy and to our climate. We face an existential challenge with the changes in our climate. The time to act is now.”

“The science is clear. The economics are compelling. We are seeing a shift toward the economic architecture that will be necessary to avoid a 2-degree-warmer world, an architecture that supports green growth, jobs and competitiveness. ”

Jerry Brown, governor of California, usa, september 2014

rachel Kyte, World Bank group vice president and special envoy for Climate Change

Carbon pricing incentivises united ambitious action for governments and businesses to work together for a zero carbon economy. Whether through ‘cap and trade schemes’ or carbon taxes applied regionally, such as in Canada’s British Columbia region, putting a price on carbon emissions shifts financial decisions and therefore entire economies to low-carbon growth through innovation, and encourages lowering emissions intensity in current economic activities.

Local, sub-national and national governments are using carbon pricing to shift their economies towards net zero emissions:

Active carbon pricing schemes exist in nearly 40 countries and 20+ cities, states and provinces

Many governments are testing pricing instruments: For example China has seven local pilot carbon markets that are helping the government plan for a national carbon trading system

Leading companies are preparing for carbon pricing and are seeing it as a tool directing investment to maximise returns for zero carbon and low carbon actions 27

150+ large businesses are using internal carbon pricing in their decision-making

600 large companies see regulations creating new business opportunities

164 business leaders have committed their companies to support a strong carbon price via The Prince of Wales’s Corporate Leaders Group Carbon Pricing Communiqué 28

Putting a price on carbon opens a range of disincentives for emitters once fully mobilized. The IMF has reported carbon pricing offers a “double dividend”. Their study looked at the world’s 20 largest CO2 emitters, and found the average national benefit, excluding any climate effects, would justify a significant carbon price of $57.5 per ton of CO2 on average 29. The report found that domestic environmental benefits such as reductions in pollution-related deaths exceed the mitigation costs.

For some energy intensive businesses, a price or value on a unit of carbon opens R&D opportunities to scale up carbon capture and storage (CCS). This is unwelcome news to campaigners and some environmentalists, who believe that treating carbon as a commodity incentivises emissions, rather than the rapid reductions supported by science. Many investors and businesses believe CCS may aid in more rapid CO2 reductions in the short term, where the process of ‘phasing out-phasing in’ is taking place. Significant capital investment is seen as a stumbling block for the technology, since renewables are increasingly affordable and offer a 2-3 year payback, yet CCS projects are not yet sufficiently viable to scale at the optimal pace to be effective.

Growing momentum for carbon pricing: the global picture in 2014

Source: World Bank Report: State & Trends of Carbon Pricing 2014, published 28 May 2014

ThE BUSINESS CASE: CARBON PICING

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1. Governments, citizens and businesses need to unify action towards global ambition for deep economic transformation, showing clearly phased trajectories towards meeting the net zero goal in the timing that is 2ºC compatible

2. Deep economic transformation means businesses should take the lead by setting targets for their own activities, and those of the full value chain, including outsourced activities, transport and deliveries, supplier procurement standards and consumption behavior

3. Decisions and investments should be directed towards zero to begin as quickly as possible in order to avoid the higher costs associated with more rapid reductions later on

4. Near-term reduction goals and investments should demonstrate how they relate to meeting the long-term 2050 targets

5. The aim of meeting the net zero goal must be achieved by phasing out fossil fuel based energy and phasing in clean, renewable energy through the full value chain

6. Targets and activities aligned with the long-term goal for net zero should be clearly stated and reported in order to demonstrate resilience to shareholders and investors

For business to break with the past and transition to a low carbon economy, actions to be taken are:

By nature all businesses are competitive and strive to innovate to remain ahead of the game. The low carbon economic transition will have to be primarily brought about by business, with the correct policy enablers.

Large future-facing incumbents are showing leadership alongside a new group of emerging leaders that are taking advantage of the market potential for low-carbon innovative products and services. It is many of these that can enable the rapid transition needed to avoid costly lags in the journey to a zero emissions future.

The incentives to innovate, in new ventures or existing companies of all sizes, are grounded in market forces. The size of the prize includes increased revenues, profits and rapid carbon reduction or avoidance.

The voice of business is critical in catalyzing ambition in policy at all levels. Progressive business needs enablers that level the playing field, allowing those who invest and act early to command industry advantage. At the same time, the ambition of companies to introduce new market opportunities for zero emissions innovations influences governments at all levels, including the international process.

The examples here are just a few of those driving momentum for economic transformation, through their own operations, and through the influence that companies and brands exert across the value chain.

These businesses offer stories that:

Unlock infrastructure investment from investors and governments to enable low and zero carbon models to scale

Attract consumers purchase preference and loyalty in a world where people expect their expenditure to improve their quality of life

Educate suppliers and insist on resource-efficiency from providers of input technologies and materials, as well as outsourced services

Change behavior by educating employees and consumers

Change lifestyles by offering products and services that decrease or eliminate the end-users’ carbon consumption

The net zero goal catalyses entrepreneurial innovation taht shifts consumption

The neT zero paThWaY aCCeLeraTes innovaTion, repuTaTion and CompeTiTive advanTage

ThE BUSINESS CASE: NET zERO PAThWAy ACCELERATES INNOvATION

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Whilst large-scale energy grids will continue to offer beneficial factors to many communities, off-grid and independently owned energy generation projects have been considered thus far as only suitable for very large corporations or for small, social energy initiatives, such as local micro-schemes in rural and developing communities.

In fact, the developing world initiatives to overcome energy poverty have proven to be innovation lighthouses, showing the way that millions of city and town dwellers can reduce their reliance on high carbon energy. These solutions are tapping into consumers’ interest in collaborative consumption, ‘rented’ (rather than owned) infrastructure and other types of service delivery models grounded in mutuality. Two examples are showcased below.

Geostellar 30 has gone a step further in scaling the marketplace for micro-renewables. The competitive business-to-consumer solar Pv market, with high associated marketing costs, is attracting greater numbers of competitors in different countries. Geosteller is making solar affordable by providing it as an employee benefit to householders via corporate employers. This is not only smart marketing,

it escalates the potential to scale clean energy solutions in old and new built environments, tapping into the demands of employees who expecting their companies to show the way on sustainable lifestyles. Geosteller customers are large-scale employers, including 3M, Cisco, kimberley-Clark, and the National Geographic Society.

Decentralised Community Energy: New businesses are showing the way to a multi-model circular economy energy future

Consumers are increasingly interested in products and services from ethical sources, including energy. Mosaic and Solar City are two examples of clean consumer electricity models demonstrating the potential for scale. They have created a marketplace for individual household investors out of people willing to have a no-cost solar installation on their homes’ roofs. In fact the schemes have transitioned to offer added value financial products, giving innovative leasing solutions to households. They’re becoming so popular, there are expectations of a price war between competitive firms.

Solar Leasing: Power to the people, owned by the people

Employer-led Community Energy: Employee Benefits Beyond the Pay Cheque

On-grid clean energy: taking on big energy and succeeding

A study from Citigroup investment bank shows large energy retailers in the Uk (‘the big 6’) are set to lose £500m per year in revenues to smaller clean energy providers by 2020, despite an anticipated 20% increase in the average energy bill in the country. 31

Pioneers of the collaborative economy are engineering resource-efficient, flexible, resilient high-growth business models all over the world. These entrepreneurial companies are uniquely structured to deliver the service levels associated with powerful corporations, whilst offering users the individuality and creativity of local business owners. Services ranging from car sharing to ride sharing and from product re-use to event management, are radically changing perception of consumption and ownership. The secret to their success lies in the fact that the Peers Incorporated models use connective technologies to foster mutuality, or people-power, enabling people to consume more efficiently, paying for what they need or use. Since user recommendation – and trust – lies at the core of marketing and revenue growth, service providers and consumers have a shared interest in ensuring these businesses live up to their promises transparently. In both fast-growth developing economies, as well as those demonstrating slow and often jobless growth, people-powered Peers businesses are not only sustainable and resource-friendly but they also help to save money and often fill an un-met need for employment. For example in the USA, 20% of emissions come from driving personal cars and car ownership costs 14-18% of personal income.

Each zipCar replaces 15 personal cars in urban areas and each renter drives 80% less than when they owned their own cars. Twelve years after founding zipCar – which made sharing normal – its founder Robin Chase is creating a global platform, Peers Incorporated, help ensure co-operative opportunities to let Peer businesses scale their models. A few examples of industrial strength Peers companies include: 32

Carpooling.com is 10 years old, has 3.5 million members and 1 million people using the service every month

Fivrr.com connects people who’d do a particular task for $5 with those who need the tasks to be done

Topcoder.com is a platform where 400,000 engineers complete complex design and engineering projects and has awarded $66 million to date

Etsy.com is a 10 year old online marketplace for handmade or vintage products that last year delivered over $1.5 billion of sales to its maker community

“When combined with declining demand and lower margins the total profit pool available to the large energy suppliers could fall by about 40% from about £1.2bn in 2013 to just £700m”.

Smaller Uk firms offering 100% renewable energy, including Good Energy and Ecotricity, are picking up the customers leaving the ‘big 6’, growing not only their revenues, but also setting new high benchmarks for customer satisfaction and trust.

ThE BUSINESS CASE: NEW BUSINESS

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Demand for zero Emissions vehicles (zEvs) is growing rapidly, brought about by a combination of cost, brand appeal and local authority incentives. Even in gas-guzzling USA almost 250,000 Evs are sold each year. Worldwide sales of Evs doubled between 2011 and 2012. The goal is 20 million electric vehicles on the road by 2020.

Tesla and BMW have aided consumer market appeal for Evs by demonstrating through their products that it is possible to have a zero emissions luxury city or performance car

Nissan reports its Leaf customers give the vehicles a 93% satisfaction rate, showing the opportunity for customer loyalty, unseen in traditional vehicles

Toyota, already a global success story with its hybrid Prius (the biggest selling car in California) is betting on zero emissions hydrogen fuel-cell technology with its latest release, the Mirai. The fuel-cell can reportedly power an average house for a week in case of a crisis

Toyota is not alone: honda, hyundai are working on zEvs and a joint project from Renault, Daimler, Ford and Nissan is also in the works 33

The challenge of infrastructure for fuel cell charging will need to be overcome for mainstream success of hydrogen fuel cell cars, relying on government cooperation. California is offering $50m in grants 34 for construction of fuelling stations

Other regions and cities can be expected to follow suit. The City of London just completed public consultation for a proposed Ultra Low Emissions zone in the city, to be in place by 2020. This is intended to improve air quality, reduce emissions from road transport and stimulate the low emissions vehicle market 35

British Telecom (BT): technology forging low carbon consumption behaviour

10-15 years ago, BT was, like many heavy weight fixed line incumbents, straining to retain retail customers in the face of a changing telecommunications landscape, with challengers to every service it offered. Today it is a highly diversified global company and at the heart of the business is their Net Good strategy (case study on page 40). In addition to renewables investments for their own energy consumption (operations accounts for 5% of total CO2 emissions) and ongoing work to reduce supply chain carbon impacts, as of 2013/14, the total carbon emissions created by BT roughly equalled the emissions their products and services helped customers to avoid, making the company ‘net zero’ already. BT aims to go further, using circular economy thinking. By 2020 their aim is to help customers reduce their emissions by at least three times the end-to-end carbon impact of the business. They see the new services they develop to reduce end-consumer emissions as a major area of growth over the coming years.

Siemens AG: Industrial scale carbon reductions changing heavy industry

Siemens is a forerunner in supplying heavy industry, the energy sector, health care sector and infrastructure customers with products and services that scale carbon reductions. In 2014 the company’s Environmental portfolio generated 46% of total reported revenues (b33m) and helped their customers reduce annual CO2 emissions by around 428 million tons according to the company’s own audited calculations 36. This is close to the total Uk annual CO2 emissions to Q2 2014 37. Products like the ‘world’s biggest dump truck’ produced by a Siemens customer in Belarus, with Siemens engine technology, can transport more than 500 metric tons of material — equivalent to seven fully fueled and loaded Airbus A320-200 planes – and is driven by four 1,200 kW electric motors from Siemens. Making changes to how industry runs of this scale can’t be underestimated.

[Note: Siemens do not report long-term or short-term carbon reduction targets

and are therefore not able to be listed in the later sections showing leaders

committed to net zero targets]

zero carbon automotive: From niche to mainstream, loved by their drivers

Embracing net zero through the value-chain drives innovation for long-term value

There are many more exciting stories of companies creating the low carbon revolution as a core business growth strategy. Companies like Philips and Silver Spring Networks are lighting up the transition to smart cities, by changing from a product to a service model, selling increments of light instead of poles and bulbs. Low-energy lighting solutions in turn make city life safe with low or no carbon emissions and provide infrastructure that can be used for other intelligent networks.

Telling all of these stories could make for a very lengthy report. For now, this synthesis is designed to showcase the momentum of frontrunners who have placed the net zero pathway at the heart of commercial strategy – and are winning.

The built environment is one of the areas where economists see the highest potential and the greatest need for transition. The building sector has been transforming itself through collaboration and innovation that is benefitting all of the stakeholder firms in the sector.

ThE BUSINESS CASE: AUTOMOTIvES / NET zERO vALUE-ChAIN

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Leaders in the building sector are striving for net zero built environments

Cities will host 6.4 billion inhabitants by 2050 – 70% of the 9 billion projected global population 38.

Today cities are home to half the world’s population, generate 80% of global economic output, creating 70% of energy-related GhG emissions 39.

In the next 15 years $300-400 trillion is likely to be invested in the global economy, of which around $90 trillion is likely to be invested in infrastructure across cities, land use and energy systems where emissions will be concentrated 40.

In developed countries, buildings account for greater carbon emissions than transportation or industry. In 2010 buildings were responsible for nearly half (44.6%) of U.S. CO2 emissions. By comparison, transportation accounted for 34.3% of CO2 emissions and industry 21.1% 41.

Most population growth leading to 2050 is likely to occur in emerging Asia and China 42, where it will be essential to build compact, live-able, transport efficient cities, to stimulate economic performance and reduce GhG emissions. Around 80 million square metres of new building stock are likely to be built by 2050 43.

Since building stock lasts 80 years+ the design decisions made in the next 15 years are critical.

It is in this built environment context that some of the most exciting, far-reaching leadership is emerging from a new group of companies and organisations.

One of many examples of how the building sector is profiting from reaching for the net zero goal lies in one of the world’s oldest and most iconic skyscrapers, the Empire State Building, demonstrating that many buildings – new and old – are already transitioning work and living standards to meet the needs of a low carbon economy.

inTernaTionaL union of arChiTeCTs: 2050 ImperativeAt its tri-annual global meeting, the International Union of Architects (UIA) adopted the “2050 Imperative” in August 2014. This means that every national or regional member association (globally more than 1.3 million architects) has committed to a ‘net zero’ imperative so that all new builds and refurbishments will meet the design specifictions required to be carbon neutral by 2050.

The UIA reaches all of the world's professional architecture bodies, as well as many organisations involved in town planning and building sector and construction specification

Well-coordinated guidelines are being rolled out to all firms suggesting specific ‘codes’ to be adopted

Since architects and planners also specify materials, there is enormous potential to spur market forces in a range of associated industries, including cement, the largest major emissions source after fossil fuels.

Skanska, the Nordic construction sector company, has its North American headquarters in the Empire State Building.

Working with the building owner and partners, Skanska undertook a complete retrofit of the building, meeting LEED Platinum standards

It is a beacon for the energy savings achievable with older buildings

Skanska, just one of many tenants to realise the savings in social and financial terms, has measured the co-benefits of the consequent energy reduction:

Attractive net benefit returns in energy cost savings

Improved health outcomes (sick leave reduced by 15-18%)

Improved employee productivity

The Track 0 Spring 2015 Briefing on the Built Environment will showcase more of the momentum and businesses leading the drive for low-carbon cities, offering sustainable lifestyles and commercial opportunities.

maKing zero CarBon Living a reaLiTY The buildings sector:

showing the way and reaping benefits

arChiTeCTure 2030

The empire sTaTe BuiLding and sKansKa

In 2006 Architecture 2030 issued its “2030 Challenge” asking the global architecture and building communities to adopt a range of easily understandable targets for new buildings and refurbishments to ensure every new project was carbon neutral by 2030.

This has impacted on the design decisions of hundreds of projects, and the quality of life of countless people in developed cities. But it also began to re-shape the way the design and building community were thinking about spaces for living and working.

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“The We mean Business coalition urges policymakers to establish a net zero emissions target well before the end of the century. doing so will help businesses unleash low-carbon innovation, invest in clean energy, create jobs and secure economic growth.”

The prinCe of WaLes’s CorporaTe Leaders group 44

WorLd Business CounCiL for susTainaBLe deveLopmenT (WBCsd) 45

The timeline supported by science for achieving net zero emissions is before the end of the century.

Energy systems must be holistically transformed to meet this goal

Investments to phase in clean energy

Disincentives for fossil fuel powered energy

A robust carbon price

Fossil fuels to be phased out, subsidies removed

Removing cheap coal is a least-cost, high emissions reductions option that is feasible and beneficial.

WBCSD is a CEO led organisation of 200 global companies. It advocates for the ‘net zero’ long-term goal to accelerate

growth with equity.

WBCSD’s ‘net zero’ perspective on the 2015 Climate Change Agreement says its members agree to

keep global temperature increase below 2ºC,

Promote peaking global emissions by 2020

Limit cumulative net emissions to a trillion tonnes of carbon

Fulfil development needs

build climate resilience

“a global commitment to phase out global net emissions by the end of this century and concerted efforts towards a global carbon price to change the rules of the game and provide impetus to a global rewiring in favour of low carbon investment.”

Influential business coalitions are promoting the long-term goal for net zero emissions to direct decisions compatible with 2ºC pathways

We mean Business 46

The B Team 47

We Mean Business is a coalition of organizations working with thousands of the world’s most influential businesses and investors. These businesses recognize that the transition to a low carbon economy is the only way to secure sustainable economic growth and prosperity for all. To accelerate this transition, We Mean Business is a common platform to amplify the business voice, catalyse bold climate action by all, and promote smart policy frameworks.

Sir Richard Branson

kathy Calvin

Arianna huffington

Mo Ibrahim

Guilherme Leal

Strive Masiyiwa

Blake Mycoskie

Dr. Ngozi Okonjo-Iweala

François-henri Pinault

Paul Polman

Ratan Tata

zhang yue

Professor Muhammad yunus

Jochen zeitz

“The B Team believes the transition to a ‘net-zero’ emissions economy is an historic opportunity that, if managed responsibly, fairly and collaboratively, will bring economic benefits to countries at all levels of income, including new jobs, cleaner air, better health, lower poverty and greater energy security."

We Mean Business partners includes the following leading business coalitions and organisations:

The Prince of Wales's Corporate Leaders Group

World Business Council For Sustainable Development

The Climate Group

The B Team

CDP

Ceres

BSR

The Trillion Tonne Communiqué is a global call to arms from businesses that take the science of climate change seriously. It states:

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energY iberdrola CLp holdings Limited

Consumer goods L’oréal nestlé Tiger Brands unilever royal philips

reTaiL h&m marks & spencer group plc pick ‘n pay stores Ltd

iCT Konica minolta, inc. Koninklijke Kpn nv (royal Kpn) ricoh Co., Ltd. Wipro

auTomoTive honda motor Company nissan motor Co. Ltd.

indusTriaL philips

puBLishing reed elsevier group

finanCiaL serviCes axa group Commerzbank ag principal financial group inc J. safra sarasin T.sinai Kalkinma Bankasi ConsTruCTion morgan sindall group plc

BioTeCh ag BT group

food serviCes sodexo

CommuniCaTions dentsu inc

TraveL Tui Travel

ToBaCCo philip morris international

Consumer goods mars nestle

iCT BT group sap Kpn

puBLishing reed elsevier

indusTriaL philips

finanCiaL serviCes Commerzbank J. safra sarasin

CerTifiCaTion & verifiCaTion sgs

fashion reTaiL h&m Yoox

moTorsporT / enTerTainmenT formula e

Large companies from many sectors around the world are already showing they intend to remain leaders for the long term by decoupling their growth strategies from carbon. This synthesis shows a number of visionary companies on the pathway to the low-carbon economy, incorporating a long-term target into their short-term strategies. It is encouraging to see the momentum coming from companies in Energy, ICT, Retail, Consumer Goods, Financial Services, Automotive and more, delivering what is needed for a low carbon future.

Note: some companies are mentioned more than once based on stated commitment

Companies CommiTTing To neT zeroMoMentuM froM leaders in diverse industries

energY e.on nrg verbund

Consumer goods Colgate-palmolive Kering Kirin holdings mars natura

reTaiL ikea marks & spencer Walmart

iCT amazon Web services apple Corporation BT group Konica minolta Kpn

auTomoTive nissan

finanCiaL serviCes goldman sachs swiss re

CerTifiCaTion & verifiCaTion sgs

moTorsporT / enTerTainmenT formula e

Leading companies committed to net zero emissions or carbon neutral strategies with a stated 2050-2100 (or earlier) target (See a selection of case studies starting on page 40)

Leading companies transitioning to power their businesses by 100% renewable energy by 2020 48

Companies stating commitment to limit global warming to 2ºC 49

COMPANIES COMMITTING TO NET zERO

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38 ThE BUSINESS CASE FOR ADOPTING ThE LONG-TERM GOAL FOR NET zERO EMISSIONS 39COMPANIES COMMITTING TO NET zERO: ENERGy / CONSUMER GOODS

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Showcase: Stories from companies driving growth through embedded net zero targets

CoLgaTe-paLmoLive 52

The Colgate-Palmolive Company operates in 200 countries and has annual sales of $17.4 billion. With a proud history of sustainable commitments to people and planet, the company has strengthened its commitment to a range of measures across resource use, packaging, ingredients and health. In 2014 the company stated its commitment to addressing climate change by shifting its goals from a 2015/2020 strategy to a long-term 2050 goal:

“We are pleased to announce our commitment to

reduce carbon emissions on an absolute basis by 25%

compared to 2002, with a longer-term goal of a 50

percent absolute reduction by 2050 compared with

2002. These goals are in line with the Cdp and World

Wildlife fund report – the 3% solution – and will

allow us to play our part in limiting global warming

to 2ºC, as recommended by the intergovernmental

panel on Climate Change.”

mars 53

“We will make our operations ‘sustainable in a

generation’ by eliminating fossil fuel energy use and

greenhouse gas emissions, minimizing our impact

on water quality and availability, and mitigating the

impacts of waste by 2040.”

The maker of some of the world’s favourite confectionary brands announced its “Sustainable-in-a-Generation” (SIG) program earlier in 2014, saying,

“our targets are based on science and reflect our

belief that we must play a role in mitigating the worst

consequences of climate change. for comparison,

our greenhouse gas reduction goals are more

challenging than the most ambitious local, regional

or national targets.”

The company’s targets for 2015, using 2007 as their baseline year, are to:

Reduce fossil-fuel energy, greenhouse gas emissions and water use by 25%

Send zero waste to landfill

Kirin hoLdings 54 kirin holdings is a Japanese company with over 41,000 employees and 257 consolidated subsidiaries, conducting business in alcoholic and non-alcoholic beverages, and associated products globally. It is also the only Consumer Staples category company on the CDP Climate Performance Leaders Index 2014 A List that has a stated goal for carbon reduction beyond 2020. As part of a comprehensive environmental sustainability package, kirin’s leadership has committed the company to:

“Keep Co2 emissions across our value chain within

the earth’s capacity to absorb them by 2050.”

The company is a frontrunner with strategies grounded in science for its overall global emissions. This forward-looking approach enables kirin to incorporate medium and long-term goals in deciding actions.

“in august 2009, the Kirin group formulated action

plans for Becoming a Low-Carbon Corporate group,

and has since been taking initiatives to achieve its

medium-term target for reducing Co2 emissions

directly associated with its businesses, as well

as its long-term target of cutting Co2 emissions

throughout the value chain, ranging from r&d

to disposal and recycling, to half the levels in 1990

by 2050.”

uniLever 55 Unilever in partnership with US power firm NRG Energy aims to use100% renewable energy by 2020 in all of its US sites, aligned with the global Unilever Sustainable Living Plan, which aims to double the size of its business whilst reducing its footprint by half.

Kees Kruythoff, president at unilever

north america said:

“This transformational partnership with nrg to move

all of our us operations to 100% renewable energy

will make our business more resilient, sustainable

and profitable. it is our hope and expectation that

our collaboration with nrg will also inspire a broader

acceleration and uptake of renewable energy

technologies.”

Kering 50

kering is a group comprising 22 Luxury and Sport & Lifestyle brands, with 35,000 employees globally and revenues of b9.7 billion. kering’s 2016 Sustainability Targets include reducing carbon emissions resulting from the production of products and services by 25% from a 2012 baseline, as well as ensuring deforestation is not a factor in its supply chains whereby 100% of leather in products do not result in converting sensitive ecosystems into grazing lands or agricultural lands for food production for livestock.The company takes a holistic view on cutting carbon emissions as a key driver of a highly progressive sustainability strategy built on four pillars, encompassing both mitigation and resilience. These four pillars are seen as business critical, in order to 'future-proof' the company:

EP&L: that measures, monitors and highlights “climate change” footprint in a very sophisticated way. Measuring and understanding the Group’s full footprint associated with carbon emissions, water consumption and pollution, waste, air pollution and land use across the supply chain and down to the raw materials underpins kering’s overall strategy. To do so, kering developed the Environmental Profit and Loss account (E P&L), which is an innovative solution enabling business decisions to be responsive to climate change challenges in the supply chain, thus serving as a catalyst to develop a more sustainable business model for the Group. Through the E P&L analysis, kering identifies the “hotspots” in its supply chains and is able to strategically target the reduction of energy use and greenhouse gas emissions to become more energy efficient throughout the manufacturing processes, as well as working with suppliers to support sustainable sourcing - such as leather sourcing for its brands - and production systems, and implementing new technologies.

Commitment to sustainable sourcing of raw materials – supporting agricultural approaches that are “climate friendly and/or climate resilient” through improved agricultural practices (grazing as well as fibre production), promotion of new varieties of fibres, ensuring no conversion of natural ecosystems and more

Carbon offsets for all remaining Scope 1 and Scope 2 emissions annually is done through REDD+ projects. These projects help kering mitigate its carbon emissions, while investing in green infrastructure beyond kering’s immediate supply chains and ecosystems and ultimately helps the Group become more resilient to climate change in the future.

Focus on communities and women. kering looks at its impacts on local communities and women through the supply chain, particularly where raw materials are sourced, and seeks opportunities for building resilience, such as supporting and promoting organic cotton, sustainable silk production and certified gold

naTura 51

Ranked the second most sustainable company on the planet in 2012 and 2013 by Corporate knights and also a certified B-Corporation, Natura is the top cosmetics company in Brazil with revenues of $3.15 billion. Natura's competitive difference is the development of products based on the biodiversity of indigenous flora, sustainably sourced from the Amazon. Their sourcing programme is backed by the company's $500 million investment in the region to ensure its impacts are sustainable. This competitive difference led to Natura's 2007 commitment to become carbon neutral, in order to retain its market position. Natura's commitment to carbon neutrality forced a re-assessment of the company's entire value chain from ingredient sourcing through to post consumption waste. 300 opportunities were identified for emissions reductions through the value chain and between 2007 and 2013 tackling these led to the company slashing GhG emissions by 33%. Work is currently underway to seek a further 33% of GhG emissions cuts by 2020, putting Natura on track for its commitment to be "Planet Positive by 2040".

Consumer goods

40 ThE BUSINESS CASE FOR ADOPTING ThE LONG-TERM GOAL FOR NET zERO EMISSIONS 41COMPANIES COMMITTING TO NET zERO: RETAIL / AUTOMOTIvE / FINANCIAL SERvICES

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BriTish TeLeCom (BT) 58

BT is a diverse telecommunications company employing 87,800 people with presence in 170 markets. Through its comprehensive integration of carbon and emissions reductions across the business’s Net Good programme, the company is a beacon to other technology companies. As of 2013/14, the total carbon emissions created by BT roughly equalled the emissions their products and services helped customers to avoid. The company aims to go further though, stating: “By 2020, our goal is to help customers reduce carbon emissions by at least three times the end-to-end carbon impact of our business”

Currently their end-to-end emissions comprise:

supply chain (66% of total emissions)

own operations (5% of total emissions) and customer product consumption (29% of total emissions)

Innovative products and services offerings substantially change consumer behaviour. In 2013/14 BT had 15 ways their products and services helped customers to avoid carbon emissions, including flexible working, cloud services, and field force automation. They see this as a major area of growth over the coming years as connected technologies that help climate action rapidly increase in scope and scale.

BT is cutting carbon from its own operations through a number of initiatives including:

Incentivised staff education and schemes for energy saving, with 78% of employees participating so far

Purchasing 100% renewable electricity within the Uk and making direct investments in large wind farms

BT also incentivises its suppliers’ emissions reductions through:

Procurement practices that actively favour the largest reducers in carbon, waste and resource impacts

Supplier education on carbon, waste and recycling best practices

appLe CorporaTion 56

The iconic company is amongst a sleuth of tech giants racing for a low emissions future. Apple has been significantly slower than Google or Microsoft in committing to and achieving carbon neutrality (both of which have long held carbon neutral goals). Whilst there are still significant measures underway on reducing emissions associated with its products, according to the 2014 Sustainability Report, its services business is already run entirely on clean energy.

“all our data centres are powered by 100 per cent

renewable energy sources, which result in zero

greenhouse gas emissions, and we’re committed to

keeping it that way. These energy sources include

solar, wind and geothermal power. This renewable

energy comes from both onsite sources and energy

obtained from local resources. The data centres

run services like siri, the iTunes store, the app

store, maps and imessage. so every time a song is

downloaded from iTunes, an app is installed from the

mac app store or a book is downloaded from iBooks,

the energy apple uses is provided by nature.”

amazon WeB serviCes 57

Amazon web services power some of the most viewed websites in the western world, including Netflix, Spotify and Pinterest. The company has been notoriously lagging in its approach to embedding sustainability in its business, but this trend is turning. A recent Greenpeace report showed Amazon Web Services division behind Google and Facebook, with only 15% renewable energy use. Amazon Web Services has now embraced ambition for energy transformation, stating in November 2014:

“in addition to the environmental benefits inherently

associated with running applications in the cloud,

aWs has a long-term commitment to achieve

100% renewable energy usage for our global

infrastructure footprint.”

iCT KoniCa minoLTa 59 konica Minolta is a leading Information Technology products and services company, headquartered in Japan. ICT is a driving force to change how the world does business, yet it’s also vulnerable to high cost climate related weather events, such as the 2011 floods in Thailand, which heavily impact the bottom line of many IT firms. konica Minolta is the only IT company reporting a 2050 reduction target in the CDP 2014 Leaders Index. Its competitors largely set reduction targets only to 2020.

The firm aims to reduce all GhG emissions from the total lifecycle (including consumption) by 80% by 2050 from a 2005 baseline.

“We will continuously reduce greenhouse gas

emissions that derive from our business activities

from the perspective of the life cycle of our

products and services throughout the entire group,

recognizing that global warming is one of the most

important world issues.”

e.on 60

In the most radical announcement from an energy company, German energy giant, E.On announced on 30 November 2014 that it will place it’s ‘conventional’ coal, gas and nuclear generation business into a separate entity which it will spin off in 2016, leaving the company to focus on its renewables business, alongside its wholesale and retail customer assets.

“We are convinced that it’s necessary to respond to

dramatically altered global energy markets, technical

innovation, and more diverse customer expectations

with a bold new beginning. e.on’s existing broad

business model can no longer properly address

these new challenges. Therefore, we want to set up

our business significantly different. e.on will tap the

growth potential created by the transformation of

the energy world. alongside it we’re going to create

a solid, independent company that will safeguard

security of supply for the transformation. These two

missions are so fundamentally different that two

separate, distinctly focused companies offer the best

prospects for the future,” e.on se Ceo Johannes

Teyssen said.

E.On is promoting the decision as one that will make the company more agile, secure jobs, provide transparency to investors and regulators and especially, give it a focus on the future that will benefit its commitment to customer focus.

energY

verBund 61

Austria’s largest electricity supplier, verbund, owns and operates multiple hydroelectric schemes. The company has a stated plan in action that puts it in place to achieve 100% absolute carbon emissions reductions by 2050, to provide a completely carbon neutral energy supply to its customers.

nrg 62

NRG’s chief executive, David Crane, announced the company’s new sustainability goals on 20 November 2014, including radical measures to slash its CO2 by 50% by 2030, and 90% by 2050.

NRG owns and operates of one of the largest fleets of fossil fuel power plants in the United States. A 2014 report from the Natural Resources Defense Council ranked NRG as the seventh-largest coal generation company in the U.S. and the fourth-largest CO2 emitter in the U.S. electric power sector.

Leah seligmann, the company’s chief sustainability

officer told media.

“The goals we are setting today are really nrg’s

attempt to chart the path to the low-carbon future.

We needed to dramatically cut carbon over the course

of the 35-year period if we were going to be in line

with what scientists are calling for in order to deal

with climate change.”

42 ThE BUSINESS CASE FOR ADOPTING ThE LONG-TERM GOAL FOR NET zERO EMISSIONS 43COMPANIES COMMITTING TO NET zERO: ICT

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finanCiaL serviCes

goLdman saChs 67 The global financial services giant with a market capitalization of over $82 billion, is a major employer, operates offices and data centres on 5 continents. The firm set an ambitious goal of reaching zero carbon emissions in all operations by 2020.

“To achieve our aggressive goal of being carbon zero

across all global facilities (offices and data centers)

by 2020 we consistently deploy our global Carbon

reduction framework, which challenges us to design,

construct and operate our facilities and technology

as efficiently as possible, and secondarily, enables us

to purchase high quality certified carbon offsets and

green power that supports the growth of renewable

energy markets where we operate.

in 2013 we further reduced our entire global facilities

footprint another 7 percent utilizing our Carbon

reduction framework. notably, we reversed a

several year trend in data center emissions growth

by achieving a 7 percent reduction across our owned

and co-located data center footprint.

We are committed to furthering the reduction of our

net emissions each year as we approach our final

goal of achieving zero operational carbon emissions

by 2020.”

sWiss re 68

Global re-insurance giant, Swiss Re, is another frontrunner in committing to and achieving carbon neutrality, a goal the company met in 2013.

“Becoming Co2-neutral is an ongoing journey which

we started in 2003. The process involves three steps:

make our operations as energy efficient as possible;

source as much energy as possible from renewable

sources; and buy certificates to offset unavoidable

Co2 emissions. When the programme reached its

official end in 2013, it was considered a resounding

success. We had met the original 15% per employee

reduction target in 2007, and later raised - and met -

higher goals twice in two years. By the end of 2013,

we had achieved a total reduction in Co ₂ emissions

per employee of 56.5% compared to 2003.”

Swiss Re is now going further, making substantial investments in new renewable energy projects in order to become CO2 positive. The company aims to power its energy needs through 100% renewable sources by 2020 . Since the firm is responsible for helping hundreds of communities around the world recover from climate impacts already, this sends a strong signal to business across the board.

Swiss Re supports employees by subsidising their individual low-carbon investments, such as public transport passes, low-emission hybrid cars, and solar panels or heat pumps at employees’ homes.

nissan 66

“a new era is beginning in the global automotive industry. at nissan and renault, we are working together to lead the way to mass-market zero-emission mobility.”

Carlos ghosn, president & Ceo,

nissan motor Corporation

Nissan is one of the leading global corporations in Ev automotive at scale, whilst retaining a strong position in traditional automotive globally. Nissan has bold commitments to meet the long-term goal for net zero emissions:

Reducing 80% of carbon emissions from operations by 2050 (2005 baseline)

And a 90% reduction in CO2 from new vehicles by 2050.

Nissan is investing in a portfolio of “green” technologies, including clean diesels, efficient internal-combustion engines, hybrids and the centerpiece of our product strategy: zero-emission vehicles, such as electric cars and fuel cell vehicles. The key driver of Nissan’s passion is captured in the word “zero” they are preparing a lineup of cars that will be totally neutral to the environment, beginning with the electric car. With zero carbon-dioxide emissions and zero particles, Nissan aims to ensure their electric car will be the most environmentally friendly mass-produced car on the market. Through the Renault-Nissan Alliance, "we are bringing more than just a new car. Creating a zero-emission society will involve mass production, supplying thousands of cars to markets around the world." Collaboration with countries, local governments, electricity providers and many other specialists will be required to help develop the necessary infrastructure and to make the whole system work.

auTomoTive

iKea 63

The retailer renowned for low-cost furnishings and homewares aims to be carbon neutral by 2020, powering itself through 100% clean renewable energy.

The IkEA Group stated mission is, “We want to have

a positive impact on the environment, which is why by

2020 we’re going to be 100% renewable – producing

as much renewable energy as we consume using

renewable sources, such as the wind and sun. We’re

also making our buildings more efficient, so we need

less energy to run them.”

marKs & spenCer 64

Noted for its holistic approach to sustainability and ambitious stance with its launch of Plan A in 2007, Marks & Spencer is the first retailer to become carbon neutral, through a range of carbon cutting measures in its own operations and supply chain. Marks & Spencer also has a rigorous process for evaluating offset investments to ensure each is creating additional 100% renewable energy that would not otherwise be captured.

“from april 2013 we extended carbon neutrality to

include all m&s operated and joint venture stores,

offices, warehouses and delivery fleets worldwide.”

WaLmarT 65

One of the world’s largest listed retail companies is also demonstrating ambition with regard to the energy transformation of its operations across the globe, framing its initiatives in the context of more efficient, predictable operational costs and its commitment to customers: “save people money

so they can live better”. Walmart’s commitments include: “We expect to further de-link ghg emissions

from business growth. These two commitments –

to accelerate efficiency and scale renewables –

allow us to predict that by 2020 we expect to see

an absolute decrease in ghg emissions from

the company’s largest ghg source – energy

to power buildings – compared to our 2010

baseline. Combined, our efficiency and renewables

commitments are expected to cap our use of

non-renewable electricity at 2010 levels, a critical first

step on the path to 100 percent renewable energy.”

reTaiL

Science-based targets aim to avoid these irreversible and catastrophic climate change effects by keeping temperature rise below a 2°C increase. Companies can demonstrate their robust commitments to reduce emissions and help mitigate global warming to investors and clients through the Mind The Gap initiative, which is currently developing a methodology.

Companies using sCienCe Based TargeTs To seT shorT-medium Term ghg reduCTion goaLs 69


“our fair and full phase out of fossil fuel dependence to 100% renewable power has become a no-brainer. There is no doubt that we will achieve this phase out and phase in. The question is: Will we be able to achieve it in time, within the first half of this century, to avoid catastrophic climate impacts?”

The Long-Term goaL for neT zero emissions puTs Companies on The righT side of hisTorY

Wael hmaidan, director, Climate action network-international

Can represents 900 ngos worldwide

The movement to phase out fossil fuels, phase in renewable energy and transition our economic system is here to stay. Business leaders from all sectors have to decide whether their companies are here for the long run. If so, then embracing a net zero transition to a future that’s clean, fair and bright is the right option.

“This isn’t a target that’s been dreamt up in Lima. all over the world, millions of people have backed the call for 100% clean energy, with grassroots campaigns rolling out in towns and cities everywhere to get emissions to zero. The world is waking up to the fact that a renewables revolution isn’t just possible, it’s inevitable.”

iain Keith, Campaigns director, avaaz

Avaaz has in excess of 2 million signatories to its pledge for zero emissions and 100% renewable energy and co-organised the Sept 2014 “People’s Climate March” with 450,000 participants in New york City alone.

Avaaz will continue to mobilise its 40 million members globally during 2015 and beyond in local actions.

Scientists warn us that climate change could accelerate beyond our control, threatening our survival and everything we love. We call on you to keep global temperature rise under the unacceptably dangerous level of 2 degrees C, by phasing out carbon pollution to zero. To achieve this, you must urgently forge realistic global, national and local agreements, to rapidly shift our societies and economies to 100% clean energy by 2050. Do this fairly, with support to the most vulnerable among us. Our world is worth saving and now is our moment to act. But to change everything, we need everyone. Join us.

Campaigning group avaaz has over 2.2 million signatures and counting for its petition a world without carbon, powered by 100% clean energy

FAIRNESS IS A BUSINESS ISSUE

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Youngo, the official Youth ngo Constituency recognised at the unfCCC conducted a briefing and call to leaders ahead of the december 2014 Conference of the parties in Lima, peru. Their call is for leaders to

“exceed our expectations and build a healthy, safe and prosperous world with zero carbon emissions.”

Net zero offers a pathway to brand reputation, consumer preference and competitive advantage

Business has to meet expectations of an expanded role: People think business is as accountable as goverments for improving our lives

Evidence from a consumer study conducted by havas Media Group as a companion to the UN Global Compact-Accenture CEO Survey on Sustainability shows that people globally believe companies are just as responsible as governments for their quality of life.

This metric has increased by 15% since 2010 – previous studies showed people expected more from governments than business.

This global study of 30,000 people, covering 20 countries showed that climate change is a top concern for the world across all countries and all age groups. Safe and reliable energy sources, peace and security and addressing inequality in society were amongst the major issues people specifically thought business should address.

In an era of failing trust, brands and companies that offer people the ability to contribute to society and the environment through their consumption, are rewarded with purchase preference and consumer loyalty. Moreover, consumers will tell your brand stories for you 70.

on 21st september 2014 over 650,000 people globally took to the streets of their cities in a people’s Climate march.

The 400,000 plus crowd in New york City sent a clear message to heads of state, ministers, business leaders and city leaders gathering in the city for the UN Climate Summit. Every person on the street called for a transition to clean power and a healthier society, based on zero emissions.

The 5th assessment report of the ipCC makes it unmistakably clear: unacceptable climate impacts, which are likely to escalate beyond the 2°C guardrail, can only be avoided if further increases in greenhouse-gas concentrations are halted as soon as possible. The WBgu therefore recommends reducing Co2 emissions from fossil fuels to zero by 2070 at the latest. This policy goal is both ambitious and incisive, because ‘the zero target must be reached’ by every country, every municipality, every company and every citizen if the world as a whole is to become climate-neutral.

WBgu is an independent scientific advisory body to the german government

FAIRNESS IS A BUSINESS ISSUE

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zero emissions, zero povertyMany organisations, political leaders and thought-leaders are suggesting a strong link to addressing energy poverty lies in the net zero goal. A forthcoming Track 0 synthesis in 2015 will address the implications and opportunities for businesses who can benefit from a zero-zero strategy.

The Overseas Development Institiute (ODI) is an independent think-tank on international and development and humanitarian issues, based in the Uk. According to ODI research, an end to poverty is unthinkable unless we act decisively on climate change now. The report, “zero Poverty… think again” demonstrates that even a 2ºC temperature rise threatens to undermine 20 years of progress

on poverty eradication 71.

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“The world has to move to zero carbon by 2050 or risk undermining the human rights of people around the world. We need a just transition, where those countries that are still developing can access the technology and finance to leapfrog to clean technologies. fossil fuel based growth has not yielded an equitable and prosperous world for all. a low carbon, climate resilient pathway is more likely to deliver prosperity for developing countries than business as usual. We can and we must aim for zero carbon zero poverty the climate justice way, to make sure that the transition is fair and inclusive.”

mary robinson, un secretary-general'sspecial envoy on Climate Change, former president of irelandand president of the mary robinson foundation-Climate Justice

“While richer countries invest heavily in flood-defence systems, coastal protection and other projects, poorer countries have no choice but to divert scarce resources, potentially reversing the progress made in tackling poverty.”

Kevin Watkins, executive director, odi


This report is intended to showcase momentum already taking root in the global business community for directing investment and strategy decisions in line with the pathway to net zero emissions well before 2100. The aim is to bring together many threads of evidence to demonstrate that this is a directional, unifying aim and is technically feasible, has equity for all at its heart and is economically desirable. The ambition underlying this report is that it will encourage more and more businesses to take the leadership path – one that is grounded in fairness to future generations and this one, supported by science and offers a transformational path for innovation.

Authentic leadership demands companies will not only comply with the clear direction of science, they will go further where possible. Going further means going faster towards the zero goal. The scientific analyses show that timing makes the difference between a likely chance and a high chance of meeting the 2ºC warming limit. Business at its best has always been powerful when it minimises risk and maximises value: getting to zero by 2050 offers the best chance of achieving prosperity and managing risk. Business can make the difference through their investments, actions and by demanding that policy-makers level the playing field through policy and regulation. We applaud leaders who are joining the race for a zero emissions future, publicly stating their intention and opening their companies to come up with the solutions. The more companies that join the leaders like the B Team, BT, Nissan and so many others profiled in this report and beyond, the more likely it seems that our children and theirs face a prosperous, clean, bright future.

A number of respected individuals gave generously of their time and knowledge to review this synthesis report and are listed on the opposite page. Whilst this report does not claim to reflect all of the views of each, or represent the views of their organisations, it has been greatly enriched by the invaluable commentary and insights they provided and for which Track 0 is immensely grateful.

Our thanks also go to the wide community of civil society leaders whose insights on frontline challenges heavily influence the adoption of the goal for net zero.

We hope this report can aid the wider commnity of actors working to unify leaders for a future that is clean, fair and bright.

Sharon JohnsonOperations & Partnerships Director, Track 0

olivier paturet, general manager, zero emissions strategy, nissan

Kevin moss programme director, net good, BT group

steven moore, net good strategy, BT group

precious Lunga, head of health, econet Wireless

Jigar shah Cleantech entrepeneur & Co-founder, generate Capital inc.

sandrine dixson-decleve executive director, The prince of Wales's Corporate Leaders group

Barbara Black World Business Council for sustainable development

peter Lacy managing director, asia pacific, accenture strategy

sam Bickersteth Chief executive, CdKn

heather grady rockefeller philanthropy advisors

niklas höhne founding partner, new Climate institute

peter Boyd special advisor on Climate Change The B Team

robert hayward accenture strategy

anurag Lodha accenture strategy

farhana Yamin Ceo, Track 0

With grateful thanks for the insights offered by these reviewers

AUThORS NOTE / ACkNOWLEDGEMENTS

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aCKnoWLedgemenTs


appendix 1:

CorporaTe signaTories To The TriLLion Tonne CommuniqueDeveloped by the Prince of Wales’s Corporate Leaders Group

APPENDIx

APPEN

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appendix 2:

endnoTes

Introduction

1 Climate Action Tracker: A science based assessment by Ecofys, Climate Analytics and Potsdam Institute for Climate Impact Research (PIk). Bill hare, Michiel Schaeffer, Marie Lindberg, Niklas hohne, hanna Fekete, Louise Jeffery, Johannes Gutschow, Fabio Sferra, Marcia Rocha, June 2014

2 UN Global Compact-Accenture Survey of 1,000 CEOs, September 2013

3 Intergovernmental Panel on Climate Change, Fifth Assessment Report: Climate Change 2014, Synthesis Report, November 2014

Executive summary

4 Climate Action Tracker: A science based assessment by Ecofys, Climate Analytics

and Potsdam Institute for Climate Impact Research (PIk). Bill hare, Michiel Schaeffer, Marie Lindberg, Niklas hohne, hanna Fekete, Louise Jeffery, Johannes Gutschow, Fabio Sferra, Marcia Rocha, June 2014

The Business Case

Net zero aligns with policy direction, guided by science

5 Climate Action Tracker: A science based assessment by Ecofys, Climate Analytics and Potsdam Institute for Climate Impact Research (PIk). Bill hare, Michiel Schaeffer, Marie Lindberg, Niklas hohne, hanna Fekete, Louise Jeffery, Johannes Gutschow, Fabio Sferra, Marcia Rocha, June 2014

6 World Economic Forum Global Risks Report 2014 is available at http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2014.pdf

7 Labour Party media releases and published text of Ed Miliband’s speech http://www.labour.org.uk/pages/news

8 CDP Cities Measurement for Management 2012

9 World health Organisation, Air Pollution Estimates Report, March 2014

10 CDP, The Climate Group, nrg4SD and R20 have collaborated to found the Compact of States and Regions

11 CDP Targets Briefing Report, 8 December 2014

12 Clean Energy States Alliance, State Leadership in Clean Energy Awards, Outstanding Programs 2014 Report

Net zero leads to value growth and offers predictability

13 The cost of delaying action to stem climate change, analysis of available research by White house Economic Advisory Panel, July 2014

14 The Global Commission on Climate and the Economy, New Climate Economy Report, September 2014

15 The Global Commission on Climate and the Economy, New Climate Economy Report, September 2014

16 Nature Journal, Christophe McGlade and Paul Ekins, 8 January 2015

17 IEA, 2012 & 2013, ODI Report, Time to change the game: Fossil fuel subsidies and climate, November 2013

18 Bloomberg New Energy Finance and REN21 Renewables 2014 Global Status Report

19 Lazard, Levelised Cost of Energy Analysis version 8.0, September 2014

20 Climate Action Tracker Policy Brief, 22 September 2014, Bill hare, Michiel Schaeffer, Marie Lindberg, Niklas hohne, hanna Fekete, Louise Jeffery, Johannes Gutschow, Favio Sferra, Marcia Rocha, Cindy Baxter, karlien Wouters

21 United States Environmental Protection Agency (EPA), RE-Powering America’s Land Initiative

22 The Prince of Wales’s Corporate Leaders Group research

23 The Montreal Carbon Pledge and current signatories can be viewed at http://montrealpledge.org

24 Financial Times, 5 January 2015, Climate change groups split on fossil fuel divestment

25 White house Press Release available at: http://www.whitehouse.gov/the-press-office/2014/11/11/fact-sheet-us-china-joint-announcement-climate-change-and-clean-energyc

26 CNBC report 12 January 2015 http://www.cnbc.com/id/102318531#.

27 According to World Bank reports, September 2014 and CDP Survey Data published on 15 September 2014

28 The Prince of Wales’s Corporate Leaders Group Carbon Pricing Communiqué can be viewed at www.climatecommuniques.com

29 International Monetary Fund (IMF), “how Much Carbon Pricing is in Countries’ Own Interests? The Critical Role of Co-Benefits”, 17 September 2014

APPENDIx

APPEN

DIx

The net zero pathway accelerates innovation, reputation and competitive advantage

30 Media article on Geostellar’s progress is at http://www.greenbiz.com/article/cisco-3m-offer-discounted-solar-employee-benefit?mkt_tok=3RkMMJWWfF9wsRoguq7Izkxonjhpfsx86e8sT%2Frn28M3109ad%2BrmPBy63oIEWp8na%2BqWCgseOrQ8kl0Jv86%2FRc0RrkA%3D

31 Citigroup Investment Bank Research report, “Uk Energy Policy – Unwinding the Big 6”, October 2014

32 Sourced from Robin Chase, Peers Incorporated and individual company reports and public announcement available on each company’s websites via media interviews

33 The Guardian Environment, 21 November 2014 http://www.theguardian.com/environment/2014/nov/21/toyota-hopes-to-recreate-prius-success-with-hydrogen-powered-mirai

34 California Energy Commission news release, 22 July 2014

35 Transport for London tfl.gov.uk and Greater London Authority

36 Siemens Annual Report, 2013 and article by Matthew knight, Director of Strategy & Government Affairs, Siemens Energy printed in Business Green on 12 September 2014

37 Department of Energy and Climate Change, Uk Greenhouse Gas Emissions, 2nd Quarter 2014 Provisional Figures

Making zero carbon living a reality 38 UNDESA Population Division 2012

39 New Climate Economy, Better Growth Better Climate, Synthesis Report p17

40 New Climate Economy, Better Growth Better Climate, Synthesis Report p15

41 Architecture 2030, the 2030 Challenge

42 OECD Cities and Climate Change, Policy Perspectives

43 According to Architecture 2030 analysis

Influential business coalitions promote net zero

44 Prince of Wales’s Corporate Leaders Group Trillion Tonne Communique www.climatecommuniques.com/

45 WBCSD report, 2015 climate change agreement: an accelerator for business actions

46 We Mean Business: The Climate has Changed-Why Bold Low Carbon Action Makes Sense

47 The B Team website and video material reflecting public statements: bteam.org

Companies committing to net zero48 These companies have joined the RE100 network initiated by The Climate Group, in partnership with CDP and supported by IRENA.

49 Companies reporting to CDP emissions reduction targets in line with meeting 2ºC limit to global warming

Showcase: Stories from Companies

50 kering Group Sustainability Report

51 Natura Carbon Neutral Programme Report

52 Colgate Sustainability Report

2014, Recent Commitments

53 Mars Sustainable in a

Generation, www.mars.com.

54 kirin holdings 2014

Sustainability Report

55 Unilever media release. Article at http://www.energylivenews. com/2014/05/09/no-sweatunilever-is-sure-about-clean-energy/

56 Apple Sustainability Report 2014, Environmental Responsibility, Climate Change

57 http://aws.amazon.com/aboutaws/sustainable-energy/

58 BT Plc Better Future, Net Good Report

59 konica Minolta Inc. CSR Report 2014

60 E.On press release, http://www. eon.com/en/media/news/pressreleases/

61 verbund company report, www.verbund.com

62 NRG media announcement 21 November 2014; Ny Times http://www.nytimes.com/2014/11/21/business/energy-environment/nrgsets-goals-to-cut-carbon-emissions.html?r=0

63 Ikea People and Planet, Energy & Resources www.ikea.com

64 Marks & Spencer Plan A Report 2014

65 Walmart 2020 Energy Commitments Factsheet

66 Nissan Corporate Sustainability Report 2014, www.nissan-global. com

67 Goldman Sachs Citizenship Report 2014, Environmental Stewardship and Sustainability

68 Swiss Re, Rethinking Sustainable Energy, Taking CO2

neutral to the next level

Companies using science-based targets69 WRI, WWF and CDP, are using Ecofys analysis to develop the Mind the Science, Science based target setting methodology, announced in May 2014 with a goal of getting 100 large corporations to adopt this methodology by 2018.

Fairness is a business issue 70 Source: havas Media Group RE:PURPOSE-Accenture-UN Global Compact Survey, From Marketing to Mattering, June 2014. Authored by Sharon Johnson and Peter Lacy, June 2014.

71 ODI, zero Poverty… Think Again, March 2014 is available at www.odi.org/zero-poverty

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