International scientists believe that to prevent the worst effects of climate change, carbon dioxide (CO2) emissions must reach Net Zero by 2050. In other words, the amount of CO2 going into the atmosphere must be balanced by the amount being removed from the atmosphere.Disclosure 1
Achieving Net Zero by 2050 is necessary to keep global temperatures from rising more than 1.5 degrees Celsius above preindustrial levels, scientists say. More than 70 countries and 1,200 companies worldwide have put in place Net Zero targets in line with the United Nations campaign called Race to Zero.Disclosure 2
Carbon footprint awareness
Julie Bennett Bunuan, head of ESG Advisory and Intra Industry Coverage, Investment Banking-Truist Securities, says that considering the threats caused by climate change and the subsequent challenge to meet Net Zero, companies today need to be conscious of their carbon footprints and of reducing emissions. “Otherwise, companies could lose customers and investors, and their cost of capital could rise. This is a macro driver that influences both access to capital and its cost for businesses.”
While reaching Net Zero isn’t a formal requirement for U.S. businesses, Bennett Bunuan believes that it’s smart to make lowering carbon emissions a high priority. “Other companies across your value chain are making commitments to reduce their carbon footprint and want to do business with companies that are striving to reduce carbon emissions,” she says. “Stakeholders are focused on this, which makes it an important part of both customer and employee retention.”
The Net Zero challenge can be an opportunity
Many companies tend to think of carbon emissions reduction as a cost. “But it’s time to get away from this kind of thinking,” says Bennett Bunuan. “Instead, companies should reframe decarbonization as an opportunity to increase revenue, lower energy costs, boost energy efficiency, and lead to new growth opportunities.”
For example, the recently passed Inflation Reduction Act includes several tax incentives for companies that invest in clean energy power generation—electrification solutions that reduce the reliance on fossil fuels—as well as the development of technologies or equipment that generate lower emissions. These include: