World leaders are gathered this week at COP26 to negotiate a path to achieve a net-zero future for humanity. After two years of a pandemic and a constant stream of climate-related news on forest fires, floods, and extreme temperatures, the stakes are high, and anticipation is great. I am hopeful a deal and real action comes out of the summit.
But regardless of what happens in Glasgow, businesses do not need to (nor should they) wait to act. Seventy percent of global GDP is already covered by a net-zero target. Stakeholder demands from across the business spectrum, from investors to employees, customers to regulators, are only getting louder. And we already know the goal: achieve zero emissions before time runs out.
Inaction is not an option. The stakes—both for humanity and the bottom line—are already too high.
Thankfully, many business leaders have already signed up for bold net-zero targets and commitments—an important first step. But stakeholders want to see more. In the recent KPMG CEO Outlook, 58 percent of the global business leaders interviewed recognized that pressure from stakeholders to report on ESG targets openly and transparently has intensified.
Basically, the ‘what’ is a start, but the ‘how’ makes it real. Stakeholders want both.
I recognize that this may not be an easy ask. KPMG publicly unveiled our own plan this year, and it was demanding to develop. Meeting those commitments are harder still, and requires detailed planning. The net-zero plan for any organization is not going to happen overnight, and it may have wide-ranging ramifications across the organization. It may impact key relationships with suppliers, distributors, logistics providers, retailers, and other business partners.
But if a decarbonization plan is treated just as a company would announce and explain a new business model, product launch or fiscal strategy, it can be incredibly beneficial. We outline just how important decarbonization disclosure is for any business organization in our guide, Net-zero commitments: Where’s the plan?. The positive effects are wide-ranging.
Investors have a better appreciation of the implications of your plan and how it fits into your overall strategy, which can make more and perhaps cheaper funding available. Employees start to believe more in your words, buying into the plan and approaching their work with a greater sense of purpose. Regulators and government officials can start to see measurable progress, deepening the conversation on how public and private action can be more complementary.
But perhaps most importantly, organizations can start to make better business decisions. Boardroom conversations are pointed, measurable goals and continued progress can guide strategy, and because the plan is public, stakeholders can hold companies accountable, ensuring results – which is precisely what we need more of to achieve net-zero.
In summary, transparency creates trust.
Regardless of what happens in Glasgow, businesses can all take a simple step forward by making the commitment to change and sharing their plans. Disclosure jumpstarts a virtuous cycle, where we can work together, learn together, and empower the change necessary to build a more sustainable future.
That way we’re no longer asking what’s politically feasible today; instead, we’re celebrating the results we’ve already achieved together, and committing to do even more and faster, for a more sustainable tomorrow.