Pivoting from capital reduction to carbon reduction to meet our NetZero ambitions

Startling headlines from Cop26 show global temperatures are set to hit 2.4% above post industrial levels far exceeding the 1.5% target set by Cop21 in 2015. Progress is slow and sustainability advocates (and even apathetics) fear the implication of this revised global temperature increase. A 2% rise is sufficient to trigger global crop failures, a very real projection for our lifetime without substantial intervention. If you thought this was a challenge for the next generation, the inability for our global leaders to agree change is forcing us all to reflect on our choices.

This is truly the defining issue of our age. Everyone has a part to play not least retailers. Contributing 215 metric tonnes equivalent of Co2 each year compared with the 414 CO2 metric tonne yearly total (Dept for Business Energy GHG March 2021), retail buildings, transport, and associated production represents half of all emissions. Our industry therefore has a lot to offer – and fix – to address the target. Retail market leaders have committed to becoming NetZero by 2030 and here in the UK, our very own BRC is finding pathways for all retailers to achieve similar ambitions.

NetZero by 2030 will reverse the 2.4% increase but political inertia is slowing the process. Russia has pledged to reach NetZero, but its aim is only set for 2060. Instead Russia will increase coal production over the next 10 years and accelerate the use of natural gas as a source for energy transition (MoscowTimes Nov 2021). This is at odds with the 1.5% target.

However since the #UkraineCrisis, the political importance of sustainable energy , and the cost of global supply, forces a new perspective. With oil at a 10 year high in February 2022 (tradingeconomics) and set to go higher,  the global reliance on Russian oil & gas reserves have kept sanctions tempered and demand high allowing Russia to follow its economic not ecologic needs. Traditionally we have built global supply chains based on sourcing global products. This is now not just unsustainable but also unethical.

Thankfully change is on its way. The latest energy sanctions are proving to be a real opportunity to accelerate our move to NetZero ahead of 2030. More local sources of energy unemcumbered by global politics will keep our UK businesses running profitably. The impact of the Ukraine conflict will arguably do more to advance global sustainability targets than many of the previous COP agreements.

For example, already this year the UK government announced its intent to remove reliance on Russian oil by the end of 2022. Representing an 8% (reuters) reduction in our GHG energy usage, there is now an opportunity to switch to a more sustainable model. Germany has pledged to halve its Russian oil imports by this summer and the EU is to ban all coal from Russia immediately. Unsurprisingly, the global demand for fuel is increasing with the cost of crude reaching its 10 year high. Replacing Russian oil with American, Gulf, North Sea or other fossil fuels will not fix the problem.

The opportunity is to lose our reliance on global energy sources and the political implications that follow. Instead opt to “grow it ourselves”. For energy this means accelerating our natural sources to get to the very essence of “being sustainable”. By tracking where we supply our products from, measuring the cost of production, the cost of transport and the cost of selling we can make real sustainable choices, which will inevitably shift to local lower cost options.

For too long we have debated “How do we accelerate to make NetZero energy affordable?” it is time to pivot to “how do we make energy affordable by accelerating NetZero ?”. NetZero is therefore not only the mandate to reverse “climate catastrophe” but emerging as a necessity to make us politically and economically sustainable. With the invasion of Ukraine, the renewables cost benefit analysis has suddenly changed and we can look forward to a shift favouring local supply manufactured from local energy.

This is an immediate challenge, forcing immediate action to look beyond UK scope 1 & 2 and focus on addressing the Scope 3 emissions most impacted by this change in energy availability, specifically:

  • Mapping – identify those supplier to supplier relationships that rely on global fossil fuel energy reserves that will be most at risk to our UK supply
  • Monitoring – moniter the impact on products, consumption and pricing based on supply cost and global legislation. This will be changing faster than ever. The retailers that can monitor their extended supply chains will gain competitive advantage. 
  • Managing – effective reporting and governance to change our working practices to reduce risk and deliver sustainable operations. For now this is focused on risk analytics, but data driven supply insights will underpin our ability to find those supply routes that truly differentiate our retail range and proposition. 

The positive news for our planet’s health is that this new UK mandate requires retailers having to make the change well ahead of 2030, so we can all look forward to change in the next few years. Our commitment to reduce our reliance on Russian carbon will accelerate our NetZero plans – well ahead of #netzero2030. This is surely a one-way-street and at the end we may well have local supply chains, sustainable production and renewable energy consumption. With the by product being  something even better…..a healthier planet. 

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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.