Climate change is the next high impact, high probability risk that requires urgent action. In this regard, decarbonization is a cornerstone for every organization. Meeting global decarbonization targets will require macro and micro economic transformation, led by fundamental business model changes for public and corporate organizations. Understanding and planning for the likely profound implications of decarbonization on your business is crucial as your response will meet increasing pressure from governments, consumers, employees, investors and lenders. Prior to COVID-19, pressure was already building. Now, the imperative to act is only getting stronger.
Many companies are currently starting to outline or are reviewing their decarbonization strategy to reduce their greenhouse gas (GHG) emissions or achieve their net-zero emission targets. These decarbonization strategies vary significantly across industries but some key success factors apply to every organization:
- Ensure the decarbonization strategy aligns with the business strategy
- Define the reporting strategy for both internal and external stakeholders
- Ensure reliable reports are in place to prove your results, as words and pledges alone are no longer enough
- Embed your achievements in external narratives as climate impact has become an increasingly important component of a brand
- Pursue partnerships and engage supply chain partners in a common decarbonization target
- Demonstrate tangible progress through targeted emissions-reduction initiatives that support broader business goals
- Align executive compensation with environmental performance
While the decarbonization journey starts with delineating the decarbonization strategy, there is a fundamental shift that needs to happen within organizations with respect to people and organizational culture. The decarbonization mindset must live within every part of an organization so that climate risks and opportunities become instinctive parts of business thinking.
How we can help
KPMG is your single point of contact for your decarbonization needs and can provide the following services:
- Assistance in outlining climate ambitions;
- Advice on adopting Science-based Targets (SBT);
- Assistance in setting objectives for Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased energy) and Scope 3 emission (indirect emissions, other than the ones under Scope 2, that occur in the value chain of a company) reductions;
- Assistance in developing a decarbonization strategy, including a decarbonization option analysis and development of a carbon neutrality roadmap;
- Support in transforming your organization by:
- exploring the feasibility of renewable energy sourcing alternatives such as Power Purchase Agreements (PPA’s);
- advising on energy efficiency roadmaps.
- Assistance in Task Force on Climate-related Financial Disclosures (TCFD) and Carbon Disclosure Project (CDP) reporting.