Net zero targets don’t affect corporate strategy – so let’s get rid of them

At the core of most corporate ESG strategies, we are used to seeing a number. It’s expected that every major institution and organization should have a grand net zero target at the beating heart of their sustainability strategies; a date in the future when they promise their carbon emissions will reach net zero.

Investors, too, are encouraged to take these standards into account when meeting their ESG requirements for their portfolio, ensuring that the spread of companies is on track for meeting net zero at a determined date. These targets are so expected that discussions of corporate sustainability would seem strange without them. 

However, this ubiquity has also reduced these metrics to a mundane and prosaic level, where executives and investors can simply pay lip service by ‘setting and forgetting’ a new net zero target which they don’t even hold themselves to.

In fact, this laser focus on net zero targets is impeding wider corporate sustainability efforts. Sustainability is a highly complex, multi-faceted issue that impacts systems right across the company structure – ultimately, the considerations for investors are far too varied to be reduced down to a single number. 

Siloed approach

A strict focus on just net zero targets leads to siloed approaches that miss other genuine and tangible sustainability gains that can be made right now, rather than commitments to future net zero efforts. For example, investors might miss the sustainability gains that can be made by analyzing a company’s waste management and water usage by focusing solely on net zero emissions targets in the future.

Furthermore, despite the myriad corporate net zero targets and the constant timelines, we are still no closer to preventing the onset of global warming and its ensuing impacts. If the corporate and financial worlds want to contribute to the solution, it’s time to get rid of net zero emissions targets and undergo a complete overhaul of corporate sustainability strategy.

In place of a narrow and restrictive field of view on emissions, ESG leaders and investors need to be open to a much wider systems-thinking horizon, where a broader notion of sustainability feeds into every aspect of corporate strategy. 

By focusing on the broader systems at play and not succumbing to net zero target tunnel vision, companies will discover a range of benefits – from opportunities to reduce costs and increase revenue, to increasing consumer trust through genuine attempts at organizational change rather than just chasing targets. 

Real change

A focus on more immediate – but less headline-worthy – areas can drive real organizational change now. Investors can look at a company’s water use in their ESG considerations. Implementing advanced water recycling systems and strategies that minimize water consumption contribute to a company’s environmental credentials, but they also actively drive down costs for the business’ bottom line.

This is the same for innovative waste management solutions as well. These circular economy principles – such as finding innovative ways to reuse by-products – are small-scale and often not as flashy as big headline announcements about net zero targets, but are available right now, and for a minimal cost.

Investors need to be prepared to broaden their ESG lens and take into account these alternative initiatives: not only do they contribute to sustainability goals as much as emissions, but they also signal a company that’s using innovative technologies to drive down costs as well.

Another area that investors and executives can strengthen with this strategy is consumer trust. The glut of corporate emission targets has resulted in skepticism regarding their impact: one study highlights how 58 percent of the UK public believe that it is unlikely that net zero will be achieved even by 2050. It’s likely, then, that corporate commitments to net zero are falling on largely deaf ears in the public. 

By redirecting resources and attention to more practical, immediate initiatives, such as water use and waste management, corporate leaders can point to genuine gains that they’re making now, rather than abstract goals in the future. Consumers will be far more likely to buy into a corporate sustainability strategy centered around these tangible successes rather than potential progress in the future.

By refocusing corporate sustainability away from net zero targets, executives and investors can adopt a more dynamic and holistic approach to ESG, taking in the many systems that are impacted by green considerations. It’s not a zero-sum game and there’s no immediate harm in keeping some targets in place. 

I’m calling for a redirection of resources, moving away from these future goals which end up sucking in so much attention and finance. There are plenty of more practical, immediate options that can deliver real, tangible results for companies and build trust with consumers.

Goals twenty years in the future don’t affect decisions today or drive any real value. Instead, they are detached from day-to-day corporate strategy and operations. Corporate strategy and sustainability must be seen as symbiotic: a corporate strategy that doesn't consider sustainability is not sustainable anymore. Likewise, a sustainability strategy that doesn't consider corporate strategy is not a viable strategy.

Scott Lane is the CEO and founder of sustainability reporting and ESG consultancy Speeki