Organizational Governance

Net-Zero Goals Have the Right Ambition, But Most Lack a Clear Path to Realization

According to Capgemini research, the CPG and retail industries exemplify some of the most common issues when it comes to turning net-zero goals into measurable action.

Sponsored Content | / This article is sponsored by Capgemini | By Geoff Nudelman | Published 1 year ago | About a 4 minute read

Image: Andrew Neel

According to a 2023 Net Zero Tracker report, less than 5 percent of a group of companies that have publicly stated net-zero goals are actually on track to meet them.

In reality, that 5 percent metric is probably optimistic. A 2022 Capgemini report noted that less than half of a group of executives surveyed had clearly defined, short-term sustainability initiatives.

“The difficulty we’re starting to see emerge is the actuation toward net-zero goals,” Alex Tepper, Global Head of Ventures at creative consultancy frog — part of Capgemini Invent — told Sustainable Brands®.

The CPG and retail industries, specifically, have set out on some lofty goals — typically in alignment with one of several accepted international standards — but these two industries also share the burden of major common emissions-production issues such as freight and raw-material needs.

An upcoming session at SB’23 San Diego entitled Exploring Sustainable Consortiums: How to move from targets to tangible results will examine some of the most pressing gaps in net-zero goal-setting with two leaders in the space: Tepper and Kate Aydin, EVP of consumer products & fashion at Capgemini.

Curbing costs remains a big hurdle

“All of these net-zero goals require investment from the companies who set them. However, there’s often pass-along costs that drive up prices for the end product for the consumer,” Aydin says. “It’s a tough journey.”

Although partially a perception issue, it’s common knowledge that committing to the type of evolved corporate action required to get closer to net-zero goals requires upfront cost (but could actually be cheaper in the long run). Aydin notes that it can be tough to garner the investment because companies and entities are like “big ships,” in that it’s hard to make big turns and changes easily.

“The shift in thinking needs to happen in balance with profit and purpose,” she says, “with help from employees, supply chain practices, vendors and ingredient suppliers.”

Making it work across company functions

Tepper says that frog sees a lot of siloed data across companies that ultimately slows down the ability to create and work towards net-zero goals.

“It takes collaboration between the financial side and the emissions side,” he adds.

Another obstacle is that each company has a different way of facilitating the teams responsible for sustainability-related work. Another 2022 Capgemini report found only 13 percent of organizations have set up a governing body or steering committee to oversee a data strategy and progress on the net-zero journey. Some organizations may have a full team dedicated to tracking emissions, supply chain and the like; while others may only have one or two people managing the entire cause.

“We see the most progress where the groups have real ability to get things done,” Aydin says.

While collaboration between the sustainability functions and other groups is crucial, it’s also important to connect these successes up to the C-suite — where Aydin says those leaders want to show success and create that link that can help net-zero goals get on the broader radar.

Transparency is essential

“If you know something, you have to put it out there,” Aydin says. “It will buy respect from consumers.”

Especially in consumer-facing industries such as CPG and retail, transparency in reporting towards net-zero goals can go a long way in reputation-building and moving the needle on adjacent sustainability initiatives. Although Tepper admits that some companies see reporting a shortfall as a “disincentive,” he adds that companies that are openly sharing data around net-zero goals are the ones that are further ahead in this journey.

There’s also the caveat of upcoming regulations in the European Union and US that’s going to require companies to adhere to some level of reporting towards these types of goals. Companies that choose to buy into this reporting now may find themselves in a “proactive” versus “reactive” space when these new governing rules go into effect over the next few years.

“We can reframe the risk with optimism. This reporting often leads to more innovation and growth opportunities,” Tepper says.

Geoff Nudelman

Geoff is a freelance journalist and copywriter focused on making the world a better place through compelling copy. He covers everything from apparel to travel while helping brands worldwide craft their messaging. In addition to Sustainable Brands, he's currently a contributor at Penta, AskMen.com, Field Mag and many others. You can check out more of his work at geoffnudelman.com.

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