In July 2020, Transform to Net Zero launched as a cross-sector initiative to accelerate the transition to a net-zero global economy, and inspire other global leaders to do the same. What does progress looks like one year on, and what happens next in the lead-up to COP 26?
Transform to Net Zero (TONZ) is made up of consumer goods companies that are climate leaders in their industries – Danone, Maersk, Mercedes-Benz, Microsoft, Natura & Co, Nike Inc., Starbucks, Unilever and Wipro — plus Environmental Defense Fund, and BSR as Secretariat. This collective experience, scale and reach across sectors and value chains uniquely positions the coalition to drive large-scale change.
Transform to Net Zero’s vision is to enable an inclusive net-zero economy no later than 2050, which the IPCC has concluded is needed to limit global warming to 1.5°C. The coalition’s focus is not on new commitments — rather, fast action to demonstrate the transformation of their own businesses and inspire that of their peers.
By 2025, TONZ aims for all Fortune Global 1000 companies to have targets backed up by science-based plans to achieve net zero no later than 2050.
The initiative has set itself a finite timescale, announcing from the start that work will sunset after the 2025 UN Climate Conference. This is when governments will set climate targets for 2035 — and the Paris Agreement will be held within reach, or not.
With no time to waste, this first year has seen the start of multiple projects focusing on business transformation, collective net-zero action and systems change.
TONZ’s definition of business transformation is reshaping key business functions, models, products and services to build inclusive, net-zero value chains. Unlike decarbonizing a company’s own greenhouse gas footprint via reducing scope 1 and 2 emissions (which are within the operations of the company), building a net-zero value chain has much broader implications to a company’s growth strategy and operating model.
For example, in net-zero value chains, procurement teams choose lower-carbon suppliers and products; finance departments establish low-carbon, climate-risk-based criteria for the deployment of capital; and marketing campaigns show consumers how to live net-zero lives.
To unlock business transformation by the Fortune 1000, all business functions must be engaged in the service of net zero goals. That’s why in 2021, TONZ defined its position on net-zero goals and their implementation, planned executive-level engagement, and will be demonstrating business transformation to other companies.
Thierry Delaporte, CEO and Managing Director at Wipro Limited, said: “The Transform to Net Zero coalition has enabled businesses like ours to take decisive action on climate change. We recognize that it is our individual contributions that will define how we impact this journey to net zero. That is why Wipro is committing to net-zero GHG emissions across our business by 2040, with an intermediate reduction of 55 percent by 2030. We are using our past experiences, expertise and advanced technological levers to reach these targets, and remain committed to sharing our learnings with others so they can reach their own decarbonization goals.”
Collective net-zero action
Transform to Net Zero aims to unlock collective action to build net-zero value chains by inspiring suppliers to decarbonize their supply chains, and demonstrating how far emissions across entire value chains can be reduced.
Markus Schäfer — Member of the Board of Management of Daimler AG and Mercedes-Benz AG, responsible for Daimler Group Research and Mercedes-Benz Cars COO — said: “When it comes to CO2 neutrality, we’re not only looking at our products, but at our entire value chain. We asked our suppliers to join us in pursuing our goal of a CO2-neutral passenger car fleet by 2039. Our suppliers, accounting more than 85 percent of our annual purchasing value have already signed the ‘Ambition letter’ and have agreed to supply us with CO2-neutral products by 2039 at the latest. This significantly increases the sustainability of our supply chains. We really appreciate that our partners are just as eager to tackle climate change as we are.”
In 2021, TONZ has investigated end-to-end supply chain decarbonization in the dairy and plastics commodity value chains. Work has started to identify barriers, solutions and decarbonization levers to provide TONZ members, and other actors, with a view to collective action across these specific value chains.
Transform to Net Zero also seeks to ensure that company action achieves a just and inclusive net-zero transformation, through its exploration of climate justice issues.
Transform to Net Zero was an advocate in calling for the United States to set ambitious 2030 climate targets in advance of the Leaders’ Climate Summit in April 2021. Because ambitious public policy is needed for businesses to accelerate their transition to net zero, TONZ will advocate for specific policies to enable business transformation.
Further systems change is needed — including adequate regulatory frameworks in some key economies, sharing the costs of zero-carbon innovation across the value chain, and combining efforts of an increasingly complex landscape of initiatives.
BSR president and CEO Aron Cramer said: "Achieving the goal of a net-zero economy relies on collaboration and the power of many. It requires changes not only within businesses, but within the systems in which businesses operate. Transform to Net Zero members have already started dialogues with banking and financial organizations to discuss how they can support and benefit from net-zero business models. As we approach COP 26, we recommend a concerted effort to promote public policy frameworks that enable the achievement of inclusive net-zero goals.”
Transform to Net Zero will be sharing more progress and guidance on how businesses can transform to net zero during Climate Week NYC and COP 26.