Net zero isn’t enough

Earth Day 2022 begins with a clear call to action: The time to address the climate crisis is “now or never,” as the most recent Intergovernmental Panel on Climate Change (IPCC) report makes plain.

The move to more climate-friendly economies can’t benefit only those at the top of the pyramid. Systemic, real change means being fair and equitable to all people and communities — especially the most vulnerable.

This “just transition” principle was recently explored in a new survey by WE Communications in its latest Brands in Motion report, Making Net Zero Net Positive for Everyone. The report identifies the five key actions that brands must take to move from making lofty climate commitments to creating a measurable, equitable impact. 

1. The phrase “just transition” comes up a lot at conferences such as the U.N. Climate Change Conference (COP) and the World Economic Forum in Davos, but it isn’t widely recognized by the public or even many in the business community. How do you define “just transition” and why do brands need to start engaging on this issue?

Akindele: A just transition is probably one of the most challenging issues to tackle in sustainable development and in the corporate world. The uncomfortable truth is that climate change impacts people in different communities in very different ways. Women, people of color and people in disadvantaged communities often face significantly greater consequences. Just transition puts people and fairness at the heart of the move to net zero and climate neutrality. It relies on our understanding of not only what needs to be done to get to net zero quickly, but also how we do it in an inclusive, equitable and fair way.

Urban: The easiest way to define a just transition is an equitable distribution of impact. And brands that are hesitant to start engaging on this topic need to remember that stakeholders expect businesses to be drivers of social change — more than they expect it from governments. By ignoring this topic or further delaying actions, they are hurting their relationships with stakeholders and effectively losing market share as consumers move on to brands who better reflect their own values. They are missing an opportunity to contribute to global solutions to the climate crisis.

Ho: The underlying question is one of balance. Who benefits and who suffers as a result of this transition is a critical question for the majority of businesses today. We must all take a step forward and jointly establish how to balance sustainability, security and costs with the possibility for new growth sectors to arise while being cognizant of both the opportunities and hazards. We must go from policy to practice to enable success.

2. Have you seen a change in the way brands view their roles and responsibilities in this arena and/or how they talk about that role?

Akindele: There is more of an understanding and awareness from brands of their ever-expanding role in reducing global emissions and the ways they can respond to the challenge of decarbonization (upstream and downstream emissions). This is a critical and important challenge, particularly as some of the biggest consumer goods companies today have the same greenhouse gas footprint as many small-to-medium-sized countries.

Focusing on Scope 1 and 2 emissions — that is, the direct emissions that an organization makes and the indirect emissions from the generation of electricity or energy for heating or cooling buildings — is a good start, but it’s no longer enough. It really comes down to Scope 3 — all other indirect emissions that occur in an organization’s value chain. Brands are looking at how they can tackle this issue in collaboration with customers, partners and suppliers. This also includes examining how they are supporting the local communities in which they operate — those most vulnerable to the impacts of climate change — to benefit from this transition.

Urban: Absolutely. We’re seeing a lot of brands become much more human-centric and frame both their commitments and their impacts in that way. In our global survey, 69% of respondents say they believe brands should invest in projects to protect jobs and livelihoods in communities most affected by climate change. Meanwhile, 64% say they should work to improve sustainability in the most vulnerable communities. It’s really promising that we’re seeing organizations thinking beyond their direct footprint to how their impact has a ripple effect in the world. This is also an incredible opportunity for brands to lean into purpose-driven storytelling and communications that truly capture both a global outlook and impact.

The counsel in this piece is provided by WE leaders (L to R) Akindele, Ho and Urban

3. When you talk to clients about communicating their just transition and net zero plans, what are their biggest concerns?

Urban: We speak to many C-suite executives who are very enthusiastic and are advocating for sustainability and just transition plans in their organizations. But they often confront skepticism, and even fear, when they share these plans with senior and middle management.

This gap was reflected in our survey findings. Sixty-one percent of C-suite and executive-level officers say their company has or soon will have a just transition strategy, but only 40% of senior and middle managers are aware of such a plan.

Our research revealed a significant optimism gap, too: 64% of C-suite and executive-level leaders think we’ll reach net zero by 2050, but only 38% of senior and middle managers agree.

People in the middle tiers of these organizations might support the move to more sustainable operations in theory, but they’re also asking themselves, “What does that mean for my department?” “What if costs go up?” “What if we have to raise prices?” “Will my division, my job, survive this change?” Leaders need to be very mindful of these concerns and ensure that they’re prioritizing internal communications and information-sharing throughout the process.

Ho: Asia isn’t known as a place where mindsets are easily shifted, and not everyone will be successful. But we can break this down simply. CEOs must focus on the process, not just the result.

We've spoken a lot about the outcomes, but the journey is more critical — especially in Asia where the diversity in systems, market maturity, capabilities and understanding is so diverse. We must ask questions such as, "How is the transition vision established?” “Who is responsible for shaping it?” “How do we hire the right people, and how do we train and retrain people?” “How will we shift and evolve financial structuring and infrastructure and when do we invest in engaging the various levels in the organization and bring them in as part of the journey?”

These critical questions require proper communication strategies. The adjustments that C-suite executives may need to make in how they communicate may be profound and transformative. At the same time, we must ensure that the brand isn’t seen to be purpose-washing and suffer the repercussions of a superficial transition, especially when lives and jobs are at stake.

4. What is the biggest myth that leaders face when engaging on climate change mitigation and sustainability strategies? How can their communications help dispel it and other misconceptions?

Urban: That these programs are too expensive or not a justifiable expense. Corporate Social Responsibility (CSR) in its original form was developed as a risk-mitigation tactic — to ensure the long-term viability of a business and its right to operate. There is an incredible opportunity for the communications function to help demonstrate the positive impact that sustainability and social impact programs have on a business. From mitigating operational risk that could cost millions in the future, to bringing in new talent and retaining top talent, to connecting with consumer values and daring not to just meet but exceed their expectations — the value of this work is priceless.

5. In terms of solutions and this growing sense of urgency, where are brands putting their energy and attention first?

Ho: Respondents say investment in emerging economies — including climate-friendly innovation and technology and reskilling initiatives that aid in a fair transition — help brands get ahead of the curve and position themselves for success as they embrace transition across their value chain.

We agree that the focus of attention for businesses should be how to make the right trade-offs between short-term pain and long-term gain. Renewable energy and clean technology have grown and matured tremendously. We believe the time is ripe for public-private partnerships to harness this innovation and create a better world for everyone.

6. What is the role of shareholders and how should brands engage them in conversations about the return on investment (ROI) on sustainability?

Urban: We’ve witnessed the influence of shareholders grow tremendously over the last few years and the investor community has accelerated many businesses’ sustainability journeys with its demands for greater transparency and more data to support claims and determine long-term risk and value. The investor community can help put to bed the idea that sustainability and social impact programs are too expensive or are unjustifiable expenses. They’ve given the business community great resources by providing new reporting frameworks and guidance. My recommendation to any business leader who is struggling to gain greater organizational alignment to prioritize these activities is to lean into their investor partners because the case is easily made. 

7. This is a complicated and difficult subject that many brands are grappling with. Any parting advice?

Akindele: Organizations of all shapes and sizes around the world are feeling the pressure to act, with societal demands and global events like COP26 highlighting how a just transition strategy is no longer a nice-to-have but a must-do for business.

It has been well documented that people want to work for and buy from companies that are tackling climate action. Younger generations are demanding that those of us with power and influence take responsibility for employees, communities and the environment. However, most people don’t know what businesses are doing to tackle climate change. It is up to business leaders to show rather than tell what they are doing to address these issues.

As organizations introduce bold and ambitious targets, we must first make sure they are realistic, responsible and credible. Secondly, communicating clearly and transparently with key stakeholders, particularly nonexperts, is critical. Equally important: We must demonstrate, through actions and outcomes, that a fair and inclusive transition is possible.

Urban: It can certainly feel overwhelming. Historically, business leaders have been focused on addressing their direct impact and prioritizing the issues that are material to their business. The just transition concept is an opportunity to think about sustainability and social impact in a much broader context. But the fact is that we are in an emergency situation, and the solutions aren’t going to be easy.

We need business leaders to be brave, take bold action and be tenacious in following through. Ambitious targets are just one step. Ultimately, we won’t see change until business starts delivering against those targets. Communication to stakeholders — not only about the wins, but about the challenges and the work being done to address them — is critical in every step of the journey.