Why Maintaining Flat CO2 Emissions Isn’t Enough

More industrial companies are now reducing their carbon emissions than increasing their CO2 output. That’s good news, right? 

Well, don’t pop the champagne just yet. 

Since the ratification of the Paris Climate Accords in 2016, 49% have actually been emitting more every year. 

On the plus side, a little more than a third of industrial companies (35%) have set full net zero targets, meaning they are committed to fully decarbonize their operations and wider value chains by 2050, according to recent Accenture research. However, this leaves two-thirds not planning to fully decarbonize. And not even half (14%) of industrial companies are on track to reach their goal. 

The bottom-line is that, since 2016, industrial companies have reduced their CO2 emissions by exactly 0.0%. 

Some people would argue that flat emissions are already a success, and what companies have already achieved shouldn’t be ignored. Indeed, most have already adopted five foundational reduction levers. Namely, 85% have been increasing their overall energy efficiency, 84% have been reducing waste and adopting circular principles, 82% are using renewable energy sources and 77% are decarbonizing buildings such as factories and warehouses.

Untapped opportunities for industrial emissions reduction

Despite the high levels of action on a number of industrial sustainability fronts, manufacturers are still leaving promising opportunities untapped. Following are the top three areas that deserve greater attention from industry:

Widen the focus: Industry’s focus on the five foundational decarbonization levers has a downside, which is a lack of enthusiasm for taking additional measures. But the more levers a company uses, the faster it decarbonizes. Our research shows that organizations adopting 15 or more levers have cut their emissions by nearly 2% annually since 2016. 

For example, only half of industrial companies (52%) are working toward decarbonizing their fleets. ABB is one of them. As part of its 2030 sustainability strategy to reach net zero by decarbonizing production and production sites, the multinational electrical engineering corporation is also replacing its 10,000+ petrol- or diesel-powered automobiles, vans and trucks with electric vehicles. Its fleet conversion project includes the installation of AC chargers and charging infrastructure at company locations. In many cases, a battery charger is installed at ABB drivers’ homes. 

Packaging disposal is another underutilized lever that also happens to be a low-hanging fruit. A mere 37% of industrial companies are applying it today. This is even more surprising as many organizations have adopted circular principles and waste reduction mechanisms. Ensuring packaging of supplies, parts and machines — both from suppliers and your company’s own — can be reused or recycled should be an easy goal to achieve.

Other levers are even more out of focus, such as green IT (17%) and carbon pricing (25%). A positive example comes from Airbus, which has started to use an internal carbon price of €150 per ton of CO2 to guide investment decisions. The price signals to project leaders the importance of CO2 footprint reduction and supports consistency of investment decision-making with the company’s commitments to decarbonization. 

North American companies have even more room to step up, as more than twice as many of their European peers adopt 15 or more levers.

Seize the AI opportunity: AI has the potential to be a super lever for decarbonization, as Accenture research published with the UNGC shows. It’s also a largely untapped opportunity, as only 17% of industrial companies apply it to reducing emissions. 

There are many use cases for the technology: 

• In product design, AI can simulate material performance, predict resource needs and optimize energy usage, thereby reducing waste and carbon emissions in the production process. 
• In operations, AI can analyze real-time energy use and other data to identify inefficiencies and predict energy demand to optimize resource usage. 
• In transportation, AI can optimize fleet routes, reduce idle times, and improve EV battery management, helping to minimize fuel consumption and emissions. 

Rethink the business model: There is new value to be captured in a decarbonizing world. However, only 21% of companies show evidence of pursuing it. Here are three examples of companies that have adapted their business model to offer products and services that are more sustainable: 

• Cummins’ new power business unit Accelera provides zero-emissions solutions for many industries. Accelera’s 2,000+ team develops electric and hydrogen technologies for commercial transportation and industrial applications. The broad portfolio includes battery systems, fuel cells, e-powertrain systems and electrolyzers. 
• Caterpillar  aims to increase sales and revenues from “remanufacturing offerings” by 25% by 2030. The company defines the offerings as “returning end-of-life product to original quality and performance specifications using a combination of salvaged and new parts in a manufacturing environment.”
• Japanese precision parts manufacturer Matsumoto Precision has implemented SAP sustainability footprint management to track and report carbon emissions at the product level. Matsumoto Precision can now share detailed environmental impact data with its business partners, enhancing transparency and supporting collaborative decarbonization across its supply chain.