How to embrace net-zero ambitions

An increasingly prevalent conversation in boardrooms focuses on how organizations can meet their net-zero goals.

While a McKinsey & Company 2022 report mentioned that getting to net zero by 2050 will require spending $9.2 trillion annually on physical assets, the World Economic Forum’s Net-Zero Industry Tracker 2023 said $13.5 trillion needs to be invested cumulatively to fast-track decarbonization of eight key sectors.

The WEF report highlighted that net-zero emissions of these industries, which emit 40% of global greenhouse gas (GHG), pose some of the most technological and capital-intensive decarbonization challenges.

These industries — steel, cement, aluminum, ammonia (excluding other chemicals), oil and gas, aviation, shipping and trucking — depend on fossil fuels for 90% of their energy demand, the WEF report added.

Consequences of the transformation

A profound overhaul of these sectors directly impacts the global economy as substantial alterations disrupt industrial processes, transportation, land and waste management, power generation, forestry and agriculture.

“Interconnected in every way, a disorderly transformation will not help meet critical prerequisites like physical infrastructure, supply chain impacting access and affordability, economic and societal adaptations and governance structures,” says Steffen Lassmann, Solution Director and Head of Sustainability Solutions, IoT WoRKS at HCLTech.

“Bringing in numerous economic and political hurdles, particularly for marginalized communities and regions, disruptions triggered during transitions will reverberate across the economy and society at large.”

Therefore, getting to net zero by 2050 will incur significant costs. Additionally, this fundamental green transformation of the global economy will lead to job losses, said the McKinsey report. The good part is, however, there will be a higher number of new roles created in a low-carbon world, it added.

“For example, industries that dependent on fossil fuels will face economical disruptions with substantial investments required to switch to renewable energy infrastructure, digital transformation that includes smart manufacturing, GHG-neutral transportation systems, green supply chain and energy-efficient technologies,” adds Lassmann.

At a societal level, these transformations are challenges for communities reliant on high-carbon sectors for employment and economic stability.

A gradual change

Committing to achieve the net-zero goals, nearly 100 countries, including the US, China and India, have already started their transition journey and are joined by corporates and experts.

What we see today includes more strategic investments in renewable energy, innovations, collaborations and partnerships to carry out sustainable steps and create a green infrastructure. Circular economy practices, how well and fast strategies and policies are adopted and implemented at governmental, local and enterprise levels and the introduction of regulatory frameworks are facilitating the transition.

It will also require developing a skilled workforce. To support workforce transitions and mitigate job losses, restructuring and retraining programs at government and organization levels will play a key role.

Not only should these programs focus on an existing organizational workforce, but also include people from low-income, vulnerable and marginalized communities through CSR and ESG initiatives, giving rise to new job opportunities.

With a reskilled workforce and having collaborated with stakeholders, a transitioning enterprise is now seeing new opportunities and thereby opening job roles that were earlier not present.

Simultaneously, governments and financial institutions are now providing adequate social safety nets and equity measures, including incentivizing sustainable steps and ideas. For example, funding startups and unicorns.

The way ahead

An increasing number of organizations is now boarding the bus to the green side on a global scale. For example, more than 23,000 companies, accounting for two-thirds of the global market capitalization, disclosed their environmental plans and performance through CDP in 2023. A sharp rise of over 10,000 companies if compared to the 2021 figure by CDP.

Based on business needs, market opportunities and possibilities, a net-zero roadmap aligns a company’s overall strategy and vision with sustainability goals and how to meet them.

An assessment of the overall GHG footprint comes first. Next, how quickly it needs to reduce emissions through science-based targets initiative and the adoption of the right technologies.

The element requires a change to traditional practices that includes use of fossil fuels and switching (of manufacturing and production) raw materials to resources that can be recycled. In short, revamping the business model.

What comes in between the second and the third stages is the development of an effective and transparent emissions-reduction strategy. This includes setting up of ambitious but achievable targets comprising value and supply chain mitigation—for example, switching from supply of granular plastic material to nature-based resources that can be recycled.

The final stage is all about assessing and reporting the new business model stage by stage and offsetting Scope 4 or unavoidable emissions by investing in carbon credits and carbon markets.

Challenges in this transition

“In their journey, companies still face several challenges like cost concerns and access to finance, technological limitations, supply chain complexity, regulatory uncertainty around climate change and stakeholder expectations,” says Lassmann.

“This is where integrating emission-reduction strategies becomes crucial in a systemic approach to sustainability and climate action that impacts core business operations and partnerships across value chain,” he adds.

Solution in silos

HCLTech, with its expertise in next-gen technologies and sustainability, has helped its clients and customers across all industries, and Trends and Insights highlighted several such examples, detailing how technologies helped meet sustainability goals.

Here are some of the articles:

Act, Pact, Impact - HCLTech publishes its 2023 Sustainability Report

Read the report

The role of a tech partner

“Bringing siloed technological solutions under one roof, a technology partner creates a phygital roadmap for a customer, introduces innovation and spots the differences in ways of working. This roadmap saves costs, brings in efficiency, helps get market access and expansion opportunities while working with stakeholders, addresses risk mitigation factors, eliminates greenwashing and brings in resilience in a business.

“The long-term benefits of this are supply chain optimization, enhanced reputation and brand value in the market. This provides access to capital and further investment opportunities based on customer loyalty and sustainable practices to save the planet,” says Lassmann.

For example, Net Zero Intelligent Operations (NIO) by HCLTech is an award-winning enterprise-wide energy and GHG emission management solution that helps enterprises with a technology-powered roadmap to become more sustainable, cost- and energy-efficient in their journey to meet net-zero goals and global sustainability compliance requirements.

“Creating a phygital realm, this cloud agnostic and scalable solution enables monitoring, comparing, normalizing and reduced energy consumption and GHG emissions in real time.

“Enabling calculation, reporting and identification of emission optimization potential for enterprises, NIO connects the OT and IT systems across an organization with a digital thread using digital twin, blockchain, IoT and AI-ML,” adds Lassmann.

Its master data management uses over 100 protocols and integration with third-party systems to collect, analyze and optimize data on sustainability and energy consumption, and addresses emissions and their optimization potential!

The key benefits include 8-10% reduction in carbon footprint per year, 6-10% optimization in annual operational costs and 7-10% annualized energy savings with rapid shift in energy optimization measures which enables business cases for all net zero managers across the globe.