As the climate crisis intensifies, the urgency to achieve net zero emissions has never been greater. Businesses are leading the charge in this critical transformation, propelled by a heightened awareness of their role in fighting climate change. Societal expectations have evolved and sustainability has become more mainstream: it is recognised as a critical component of long-term risk management and value creation. As a result, companies are not just adhering to regulations - as part of their net zero commitments, they’re leveraging innovative decarbonisation strategies and cutting-edge technologies to unlock growth and create value.

What is decarbonisation?

Decarbonisation means drastically reducing or eliminating greenhouse gas (GHG) emissions to reach a net zero balance, where the amount of GHG emissions produced is offset by equivalent GHG removals. The objective is that this results in a zero net increase in atmospheric GHG levels. Decarbonisation involves two main strategies: reducing GHG emissions and capturing carbon from the atmosphere, known as ‘carbon sequestration’. In this article, we’ll explore some pivotal decarbonisation trends.

Value creation versus. compliance

Around the globe, businesses are seeing decarbonisation as both a compliance issue and a golden opportunity for value creation and growth. A survey (Corporate sustainability: from compliance to value creation - BDO) conducted by BDO in Belgium and Mercuri Urval of 150 European companies, spanning large corporations to SMEs across various sectors, reveals that 75% of participants view their Environmental, Social & Governance (ESG) goals as aimed at value creation rather than mere compliance. This underscores how most large companies are starting to recognise the return on investment that comes with decarbonisation efforts.

Science-Based Targets

The Science Based Targets initiative (SBTi) is one of the key organisations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change – and businesses are increasingly committing to science-based targets (SBTs) to achieve net zero by 2050, or before. These targets offer a roadmap for reducing GHG emissions in line with the latest climate science and the goals of the 2015 Paris Agreement. According to the SBTi, at the end of 2023, 4,205 companies had had their SBTs validated – a 102% increase compared to 2022 and clearly showing a growing commitment to these science-based goals as part of net zero commitment and decarbonisation.

Decarbonisation strategies

Businesses are able to adopt a wide range of decarbonisation strategies, from cutting high-carbon processes to investing in renewable energy and carbon capture. Here are some key trends:

• Renewable energy: Fossil fuels account for 80% of global carbon emissions, according to the United Nations Environmental Program (UNEP). In response, businesses are shifting to renewable energy sources like solar, wind, hydroelectric, biofuels, geothermal and nuclear. According to independent energy thinktank Ember’s July 2024 energy report, 13 EU member states generated more energy from wind and solar than from coal and gas in the first half of 2024. Furthermore, global renewable capacity additions surged by nearly 50% in 2023, the fastest growth rate in two decades (International Energy Agency).
• Greening the supply chain: Scope 3 emissions can account for over 70% of an organisation’s carbon footprint and primarily stem from the supply chain. Tackling supply chain emissions can seem overwhelming, largely because companies struggle with limited visibility and perceive that they have minimal control over reducing their emissions. It’s important that companies request that their suppliers support their decarbonisation goals. In various jurisdictions governments are even stepping up the pressure by mandating that suppliers include their carbon reduction plans in tender applications. This trend is set to grow: organisations that fail to comply may find it increasingly difficult to secure contracts with government bodies and major corporations committed to cutting carbon emissions.
• Transportation mobility: The transportation sector is one of the biggest carbon emitters and is gradually transitioning from fossil fuel to electric vehicles (EVs). Low-emission cars are becoming more common, but heavy-duty vehicles still face challenges. However, the EV charging industry is taking steps to support the electrification of these vehicles. According to the International Council on Clean Transportation (ICCT), battery-electric trucks could cut GHG emissions by up to 63%. Companies are also encouraging employees to use alternative commuting options and reduce carbon intensive business air travel.
• Energy-efficient technologies: Energy inefficiencies, especially in product production and building operations, result in substantial waste. To combat this, businesses are investing in energy-efficient technologies that optimise and reduce electricity use in buildings. By cutting excess supply and saving energy, these technologies help lower their carbon footprint.
• Low carbon materials: Companies are investing in low-carbon-emitting materials to reduce emissions from product lifecycles: one such example is how the construction industry is exploring alternatives to high-emission materials like cement and polystyrene. Innovations such as self-healing concrete, 3D graphene and modular bamboo are being considered, as they both maintain quality and reduce environmental impact.
• Carbon capture and storage (CCS): Some industries, particularly those with high emissions, may not be able to fully eliminate their carbon output. CCS captures CO2 emissions before they enter the atmosphere and stores them underground, creating a ‘closed loop’ where carbon is extracted and returned to the Earth. Investments in CCS technology are increasing: these include solutions tailored for capturing carbon emissions at the emission point for vehicles.
• Green project financing: This is a growing trend and involves loans or investments for environmentally friendly initiatives, such as renewable energy projects. In pursuit of accelerating the journey to net zero, both public and private sectors are using green bonds to fund wind farms, solar parks and hydroelectric power stations.
• Emissions intelligence: Businesses are realising that simply having a decarbonisation plan isn’t enough: increasingly, companies are actively monitoring emissions to ensure they stay on track and responsible AI adoption is helping. AI-driven emissions tracking software is now being used to gather data, provide alerts when targets are exceeded and simulate the impact of business changes on carbon emissions. This proactive approach not only helps businesses mitigate future adverse emissions but be part of shaping a future where AI adoption is synonymous with trust, transparency and responsible practices.

In conclusion, the quest for net zero emissions is more than a critical obligation - it's a transformative opportunity for businesses worldwide. As the climate crisis escalates, there is a growing realisation of the business imperative to address sustainability and its critical role in modern business, so companies are not merely meeting regulatory demands but are boldly innovating and thriving through strategic decarbonisation. The initiatives discussed in this article are more than just trends, they are critical actions that lead to substantial reductions in carbon emissions. They both fuel business growth and support the global goal of reaching net zero by 2050, demonstrating business’ dedication to a sustainable future.
BDO supports organisations embarking on their net zero journey by helping them develop comprehensive decarbonisation plans and offering a range of ESG-related services. Read more on the BDO global website about how BDO can help, specifically around Activating your  Sustainability journey. Please also feel free to reach out to the sustainability experts in your local BDO firm.
 

Author: Charles Tungwarara
Head of Business Process, ESG & Sustainability, BDO UAE