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Accenture sounds the alarm: Only one in five companies is on the path to net-zero emissions

An Accenture study revealed: Less than one in five companies (18%) will reach the net-zero emissions target by 2050 under current conditions. More than a third (38%) cannot make any further investments in decarbonization at this time.

Especially the scissors industry struggles with zero-emission strategies and their implementation. | Photo: Ant Rozetsky/Unsplash
Especially the scissors industry struggles with zero-emission strategies and their implementation. | Photo: Ant Rozetsky/Unsplash
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In the framework of the study "Destination Net Zero," the consulting firm analyzed the net-zero commitments, decarbonization activities, and emissions data of the 2,000 largest companies worldwide. An additional survey includes the study "Powered for Change," for which more than 1,000 executives from 14 industries and 16 countries were surveyed to better understand the short-term priorities and challenges the industry faces in decarbonization.

Growth is possible despite a net-zero strategy

The result was sobering, but there was also a silver lining: With a realignment of their decarbonization strategies, boards can reverse the trend within just three years and set new growth impulses in energy-intensive heavy industries such as steel, metal and mining, cement and chemical industries, and the freight and logistics sector, according to Accenture. Their operations cause around 40 percent of global CO2 emissions. This was the conclusion of the Accenture study "Destination Net Zero," published shortly before the 28th UN Climate Conference.

Almost 50% have seen emissions grow since 2016!

Overall, 37 percent of companies have set climate neutrality targets this year – 3 percent more than in 2022. At the same time, half of the companies (49.6%) that disclose their data have seen an increase in their emissions since 2016. At least nearly a third (32.5%) are reducing emissions, but are not on track to reach net-zero by 2050 according to forecasts.

"It's promising that net-zero commitments are increasing. However, the implementation of decarbonization measures is not happening at the same pace, as some companies still do not master the basics," says Jean-Marc Ollagnier, CEO of Accenture for Europe, Middle East, and Africa, adding:

"Achieving net-zero is a unique opportunity for every company to reinvent itself and its value chain by aligning business growth with the net-zero imperative, despite the many obstacles that need to be overcome. However, this is not only a corporate challenge but also a challenge for the ecosystem because the gap between supply and demand needs to be bridged."

Especially the heavy industry laments poor access to carbon-free power

The "Powered for Change" study also highlights the critical importance of transforming heavy industry to achieve global climate goals and cites the imbalance between industry sectors as a major reason for the slow progress: Access to and availability of affordable, low-carbon energy must be improved. Four out of five (81%) senior representatives of the heavy industry believe it will take more than 20 years before enough carbon-free power is available for their sector's decarbonization.

Confidence in the economic viability of low-carbon products must be strengthened: 95% of senior executives in the heavy industry believe it will take at least 20 years before low-carbon products or services can be offered at a price comparable to carbon-intensive alternatives, and little more than half (54%) state that future purchasing intentions of producers give them enough confidence to invest in decarbonization.

 

For many, decarbonization will not pay off before 2030

Concerns about costs need to be addressed: Two out of five (40%) executives in heavy industry sectors responded that they cannot afford further investments in decarbonization in the current economic climate, with 63% believing that their priority decarbonization measures will not be economically viable before 2030. Alexander Holst, Head of Sustainability Strategy & Consulting at Accenture in Germany, Austria, and Switzerland, explains:

“Rapid yet cost-effective decarbonization of heavy industry requires collective action across the entire value chain and a urgently needed shift. We believe this can break the economic deadlock by spurring new growth and helping to achieve the shift to net-zero in just three years.”

And he cautions:

“If heavy industry is left to bear the full costs of decarbonization and fails to achieve net-zero, all sectors will fail.”

Accenture has identified three necessary steps for this:

  1. Environmental premiums to fund the first phase of industrial decarbonization: The light industry must take the lead here. Compensating for the upfront costs of decarbonization and knowing which green products to focus on are key for savings. In fact, 52% of executives in heavy industries see revenue growth as crucial for their top three decarbonization priorities to be economically viable.

 

  1. Rapid scaling of low-carbon energy and hydrogen: According to Accenture, the costs of solar energy and green hydrogen will decrease by 77 and 74 percent respectively by 2050 if their potentials are optimized. Nearly 64 percent of oil, gas, and energy companies believe in long-term decarbonization partnerships with their industrial and logistics clients.

 

  1. Reducing capital and operating costs as part of a low-carbon infrastructure: According to Accenture's analysis, there is significant cost reduction potential in green steel – 49 percent by 2050. Reducing the costs of construction and materials is a crucial lever here.

Holst further adds:

“To enable net-zero-oriented growth, immediate action is needed – across all sectors and countries. The economic viability of decarbonization requires appropriate frameworks. Only then will heavy industry also be able to realign and target net-zero.”

About the studies
 

For the “Destination net zero” study, Accenture collaborated with The SmartCube to collect data on the G2000 regarding various decarbonization criteria. This research, now in its third year, included a manual review of companies' public filings (e.g., websites, annual reports, and sustainability reports). This allowed Accenture to create a proprietary database with the decarbonization goals and levers of G2000 companies. The emissions data was obtained from S&P Global Market Intelligence, Sustainable1.

For the “Powered for Change” study, Accenture conducted a global survey in April/May 2023 among 1,000 C-level or C-minus-1 executives in the oil, gas, and energy sectors, heavy industry, and consumer goods industries. The survey focused on the short-term challenges and priorities of industrial decarbonization, the expectations for emission scopes 1 to 3, and the key revenue and cost drivers to improve the financial business case for selected decarbonization solutions. In parallel, Accenture conducted a series of qualitative interviews and techno-economic modeling, using Accenture's proprietary S-curve analysis to quantify the cost drivers for selected decarbonization pathways in chosen scenarios.

 

More about the Destination Net Zero study at:

https://www.accenture.com/us-en/insights/sustainability/reaching-net-zero-by-2050?c=acn_glb_netzeroby2050mediarelations_13237252&n=mrl_1022

More about the Power for Change study at:

https://www.accenture.com/us-en/insights/energy/industrial-decarbonization-imperatives?c=acn_glb_energytransitiovanityurl_14012715&n=otc_1123

What does this mean?

The heavy industry, in particular, struggles with decarbonization and even more so with formulating and achieving planned net-zero emissions. Financing the measures remains a significant issue.

Translated automatically from German.
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