The journey towards decarbonization is a complex and challenging process. Companies and organizations globally are grappling with how to transition to a low-carbon economy while maintaining profitability and competitiveness. This is how we do it.
Harmonize your decarbonization strategy with your overall business plan
Successful decarbonization depends on integrating the decarbonization strategy with the overall business plan. This is crucial for businesses to understand the impact of climate change and its potential effects on market dynamics.
Businesses should aim to build a shared understanding of the complex issues related to climate change and how they can drastically change the market landscape. This understanding should extend beyond mere acknowledgment of these issues, delving into the intricate details and systemic implications.
For example, at 2050, we emphasize knowledge as a cornerstone of our investment strategy. This strategy is not only about making informed investment decisions, but also about understanding the subtleties of our essentials – the key components of our business and market.
Furthermore, we use this knowledge to fuel a cultural shift towards sustainability. This continuous change involves more than adopting new practices; it’s about fundamentally changing our mindset and approach to business. It’s about developing a culture that values sustainability, not only in environmental terms but also for long-term business viability.
Adopt an ecosystem approach for a real and sustainable impact
Achieving a systemic impact, particularly in addressing scope 3 emissions, can indeed be a formidable challenge for many organizations. Scope 3 emissions, which encompass all indirect emissions that occur in the value chain of the reporting company, both upstream and downstream, are often the most difficult to tackle. This is why 2050 adopts an ecosystem approach, rooted in the understanding that to drive significant change, the entire value chain must be considered. We recognize that for some companies, their influence may not directly extend to certain suppliers, making the challenge even more complex.
At 2050, we don’t shy away from these challenges. We fully comprehend the intricacies and obstacles that come with investing in carbon reduction actions or decarbonization activities on a global scale. Currently, these sectors are impeded by several factors, including the absence of standard measures of investment impact and a lack of incentives for investors to target companies that are developing carbon reduction activities.
To address this, we have placed our trust in Climate Dividends. This innovative concept serves as a valuable asset by offering a solution that goes beyond the traditional carbon footprint measurements. It provides a standardized and transparent indicator of the climate-positive contribution of companies, enabling them to be appraised by financial stakeholders in a more meaningful way. This unique metric not only aids investors in identifying those businesses that have a strong positive carbon impact through their activities, but it also encourages companies to develop more sustainable solutions and strategies. Thus, it helps push the entire ecosystem towards a more sustainable future.
Sweep – A trusted way of using carbon credits
Sweep’s white paper* proposes a more effective and sustainable method for using carbon credits. They suggest building a contribution portfolio based on a fixed budget set by an internal carbon tax rather than on a volume of carbon emissions to offset.
This practice, is more advantageous and strategic for each organization than the use and purchase of carbon credits, which can generate three major risks:
- Strategic risk: Companies often set the price of their carbon credits based on their needs, leading to a reduced focus on their carbon emissions at the source.
- Financial risk: Once a company has declared carbon neutrality, it is vulnerable to fluctuations in the carbon credit market prices and their availability.
- Reputational risk: Verifiable data is critical for companies that want to demonstrate progress towards their climate goals, satisfy customers and investors, and get ahead of claims of greenwashing.
By shifting from offsetting to contribution, implementing an internal carbon tax, and investing in holistic ecosystems like 2050, companies can take control of their decarbonization journey, align it with their values and local needs, and secure their reputation in the carbon market.
*Sweep is financed by 2050 since its early days.
