Management Tools
What Is Decarbonization?
Decarbonization is the process of reducing or removing carbon dioxide emissions from Earth’s atmosphere. In response to climate concerns, companies are implementing Decarbonization strategies to systematically reduce their carbon footprint. Many are adopting the accounting and reporting standards developed by the Greenhouse Gas Protocol, classifying carbon emissions into three scopes.
- Scope 1: direct emissions generated by assets owned or operated by the company.
- Scope 2: indirect emissions generated from the purchase of energy (e.g., electricity, heat, and steam).
- Scope 3: indirect emissions that arise from all other value chain activities—both upstream and downstream (including end user purchases).
While the primary goal of decarbonizing is to improve the climate, some companies are also creating strategic and economic value from their initiatives. Organizations that decarbonize can reduce costs, improve corporate reputations, increase consumer demand, and improve profits. It can also spur the development of new products, services, and businesses.
How Is Decarbonization Implemented?
Implementation requires setting an ambition, launching pilots, collaborating with stakeholders, measuring and monitoring the impact, and communicating the results.
Successful companies:
- Set realistic targets that can be achieved by reducing much of the company’s emissions and by offsetting remaining emissions (e.g., planting trees to help absorb carbon dioxide)
- Create a plan to achieve targeted results within realistic time frames
- Make the journey toward net-zero an operationally and economically sustainable process
- Find mutually beneficial ways to succeed in net-zero ambitions by partnering with various stakeholders such as competitors, customers, investors, and regulators
Related Topics
What Are the Common Uses for Decarbonization?
Companies implement Decarbonization strategies and initiatives to:
- Mitigate global warming
- Anticipate climate change regulations
- Improve risk management
- Elevate corporate reputation
- Improve operations
- Enable access to new sources of capital
- Identify new market opportunities
- Attract and retain talent
Management Tools & Trends 2023
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