Coming Back Greener: Response to the COVID-19 crisis accelerates global efforts to fight climate change

In 2019, if you asked any top executive to list the most important long-term challenges facing their organization, there was a good chance that climate change would be near the top. For much of 2020, business leaders had other things vying for their attention, like keeping their people safe and their operations running in the midst of an unprecedented health crisis.

Yet despite the urgency of the response to the coronavirus pandemic, environmental sustainability has maintained its place on the agenda. Between March and June last year, at the height of the crisis in Europe and the Americas, 201 companies signed up to the Science Based Targets initiative (SBTi), committing themselves to long-term emissions reductions. By the end of the year, more than 360 organizations had joined the initiative’s most ambitious tier, aiming to cut their emissions at the pace necessary to limit global temperature increases to 1.5 C.

Those pledges will have implications far beyond the participants themselves. Companies committing themselves to the scheme must agree to reductions not only in their direct emissions, but also in those generated by their products in use and by their upstream supply chains. Over time, that will require thousands of suppliers and partner organizations to measure, track and reduce their own environmental impact.

Governments are ramping up their own sustainability commitments too. The EU has linked 30% of its proposed €750 billion coronavirus recovery plan to green initiatives. In September, China’s President Xi Jinping told the U.N. that his country would strive to be carbon neutral by 2060. The following month, Japan made a formal commitment to a 2050 net-zero ambition. And new U.S. President Joe Biden has begun to reverse many of his predecessor’s policies on the environment; one of his first actions was to rejoin the Paris Agreement on climate change.

In their response to the COVID-19 crisis, companies have demonstrated rapid change on a scale that few would have believed possible. The transition to an environmentally sustainable, carbon-neutral business model will occur at a less frenetic pace, but the degree of transformation required will be significantly greater for many players.

Engineering, manufacturing and energy companies will participate in the transition on two separate fronts. First and foremost, they will play a vital facilitating role, developing the technologies and building the infrastructure that will make the net-zero world a reality. At the same time, however, companies will need to adapt their own operations to increase efficiency, consume fewer resources and eliminate waste and pollution.

Each part of that equation will require large-scale innovation and big strategic moves. Manufacturers of heavy trucks and construction equipment will need to find alternative ways to power their products, expanding the capabilities of battery-electric systems, or developing machines that run on hydrogen or biobased fuels. Energy players will need to scale up the production and distribution infrastructure needed to keep those products running.

Energy-intensive manufacturing operations will need to change too. Producers of basic and raw materials such as iron and chemicals will need to switch to low-carbon fuels where they can, and invest in large-scale carbon capture and storage technologies to handle the emissions that remain.

But alongside these radical shifts, the energy transition will also depend on thousands of smaller changes in the way companies manage their businesses and run their operations. Much of that will be gritty, detailed work. Purchasing teams will need to quantify precisely the carbon footprint of the products and services they buy from suppliers. Offices, shops and factories will require low-energy lighting and efficient insulation. Factory managers will have to adjust their processes to maximize yield while minimizing energy consumption. The development of smart electricity grids and dynamic pricing will encourage companies to work more flexibly, matching their energy use to times when excess renewable production makes power cheap, or even free.

This part of the energy transition won’t rely as much on big investments in innovative technologies. But it will require a major mindset shift. Companies will need to train their staff to make informed decisions around energy use and resource consumption. They will have to provide the analytical tools and data necessary to make those decisions. And they will need to adapt their metrics, targets and incentives so that carbon reduction becomes a priority for the whole organization.

Logistics and transportation activities are a significant source of carbon emissions for any company that makes or distributes products, or supports them in the field. And like every other aspect of business, the development of carbon-neutral supply chains will involve a combination of big innovations and detailed operational changes. Shifts in logistics are already under way – for example, with the rapid growth in using electric vehicles for last-mile deliveries in urban areas – but companies can do a lot to improve the sustainability of their supply chains without waiting for the rollout of hydrogen trucks or biofuels in aviation.

Eric Gantier, President, Global Engineering, Manufacturing and Energy Sector, DHL, says that sustainability issues are an increasingly important topic for many of his customers. DHL already produces detailed reports on logistics emissions for some major companies in the sector, he notes.

Understanding the carbon impact of their logistics activities helps companies make informed decisions about transport modes, sourcing locations or inventory distribution. But new technology is also helping DHL customers make the detailed choices that can drive down emissions every day. “In aftersales service and support, engineers might cover large distances traveling between customers’ sites,” says Gantier. “These companies are starting to use carbon-focused route planning tools, such as DHL’s Greenplan, which can dynamically find the most fuel- and time-efficient route between destinations, taking real-time traffic conditions into account.

“Low-carbon supply chains used to be a talking point, something for the future,” concludes Gantier, “but now a growing number of our customers are actively considering these issues when they make decisions about logistics services.” — Jonathan Ward

Published: March 2021

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