KEY TAKEAWAYS
  • One of the most important technology building blocks that businesses may need are central emissions tracking platforms – more than half (52%) of businesses see this as an essential piece of the foundations of their net zero strategy.
  • Businesses investing in new product development to reduce emissions, such as Italian coffee producer Lavazza recently launching the first range of machine capsules with zero carbon impact.
  • The development of blockchain technology in digital transformation has been on the radar of many organizations, such as Costa Coffee trialing blockchain to reduce waste, by creating a scheme through which customers can use a reusable cup linked to their account and return it.
  • Decarbonization: a critical challenge that could be the difference between survival or failure, that could open opportunities in creating new products and services or driving improved customer loyalty.

The last couple of years have been pivotal for many reasons, but one of the hottest topics has been around businesses making clear commitments to reduce their carbon emissions. 

With increasing pressure on organizations to take action, from banks to manufacturers, strategies are being laid out to achieve carbon neutral or zero carbon status over the next couple of decades.

Many business leaders believe that technology will play a prominent role in delivering on their targets. From understanding current emissions levels to building new services that help the business transition to less energy-intensive activities, there is a clear point of crossover between digital transformation and decarbonization initiatives. 

But how far down the road are European organizations in realizing their decarbonization ambitions and how far do they still have to travel? NTT’s study – based on briefings with senior executives at 200 large European businesses across a mix of industry sectors – aims to cut through the hype to build a clear picture of where they stand today and how they plan to move forward in the coming years. 

Key findings: reducing emissions is a top priority for customers and employees, and technology is pivotal

European business leaders view decarbonization as a matter of life-or-death > 94% of European business leaders believe that it will be critical to the future survival of their business, while 93% state that it will be vital to their future ability to attract the best talent.

Customers are the biggest factor in shaping decarbonization strategies > 84% cite their customers as important drivers in shaping their decarbonization strategy, while 77% also state that regulatory bodies and investment groups are playing a significant role.

But very few companies have a clear view on current emission levels > Just 6% claim to have a “single pane of glass” view on the carbon footprint of their organization, while the majority (94%) rely on manual effort or a patchwork of different technology tools.

Businesses are investing in multiple measures today to reduce emissions > More than three quarters have implemented or are currently rolling out carbon offsetting initiatives, while climate scenario analysis (64%) and “smart” estate infrastructure (63%) are other major focus areas.

The shift to flexible working is viewed as having a positive effect on emissions reduction > Many organizations are still getting to grips with the shift to hybrid or more flexible working models, but the large majority (78%) expect it to have a positive impact on their decarbonization strategy.

Changing employee behavior will be critical to achieving short-term gains > 87% state that changing employee behavior will deliver significant gains to their progress on decarbonization in the next 2-3 years.

Access to talent is expected to be a major challenge to delivering decarbonization > Only one third (33%) believe that they have the talent and skills in-house to drive their strategies, while the remaining 67% acknowledge that they will lean on external partners.

The IT organization is expected to play a pivotal role > Underlining the crossover between digital and decarbonization strategies, 88% of European businesses expect their internal IT function to be a driving force in delivering short-term gains in reducing emissions.

Blockchain is a controversial topic, but the majority see it as a force for good in decarbonization > 71% of organizations believe that blockchain will have a positive impact on their decarbonization strategies, with only 11% stating that it will either have a negative impact or doesn’t fit with their plans.

Strategies and starting points: decarbonization as opportunity

European companies are committing to ambitious targets in achieving net zero status – but some sectors are moving significantly faster than others. 44% of businesses are aiming to become net zero (or reach a similar science-based target) by 2030, while a further 43% are aiming to get there even earlier. 

From a regional perspective, businesses in Germany lead the way with 50% planning to become net zero before 2030, compared to just 35% in the UK. But the most striking differences came at an industry sector level, where 57% of manufacturing businesses are aiming to achieve net zero status before 2030.

“Many businesses see decarbonization as an opportunity, with 97% believing that it will open up new avenues of potential revenue.”

But what is encouraging is that many businesses see decarbonization as an opportunity, with 97% believing that it will open up new avenues of potential revenue. Italian coffee producer Lavazza recently launched the first range of machine capsules with zero carbon impact.

To create and deliver a successful net zero strategy, it is essential to have a clear understanding of the starting point. 

Challenges and solutions

What tactics and investments are European businesses deploying to support decarbonization today and what challenges will they need to overcome? 

Decarbonization strategy leaders are attacking on multiple fronts. Corporate carbon offsetting schemes have substantially increased in availability in the last decade. Another major positive is that decarbonization strategies are being backed by substantial budgets. 

One new challenge posed to decarbonization strategy managers has been the adoption of more flexible and remote working patterns over the course of the pandemic, with most organizations planning to maintain a much more open approach in the future. NTT Group has committed to allowing its 320,000 staff to work remotely, while Germany has become the first country in Europe to make it mandatory for workplaces to offer staff the opportunity to work from home as long as there were “no compelling operational reasons for not doing so”. But the impact on decarbonization is still uncertain. 

Ambition is being backed up by action. European businesses are matching their promises on achieving zero carbon status with investment in a variety of solutions, from carbon offsetting schemes to smart buildings infrastructure. This is being backed up by significant funding, although many organizations still identify getting the full backing of the board as an important blocker to building momentum. 

While concerns over the maturity of decarbonization solutions are a key concern, it is encouraging that the majority of participants acknowledge the need to transform the culture – and to roll with the lasting shift to more flexible working models – to speed their journey. People will ultimately be the biggest catalyst for driving the transition to net zero.

Future plans and innovation

With the IT function expected to play a leading role in the journey to decarbonization, what are the most important technology building blocks that businesses believe they need to put in place? Top of the list are central emissions tracking platforms, which more than half (52%) see as an essential piece of the foundations of their net zero strategy. 

“Remote collaboration platforms are viewed as particularly important by participants from the public and health sector. But one area where the business case for adoption really came into its own during the last couple of years is IoT and digital twin technology.”

The next most highly prized technology solutions are smart building energy management systems (rated as key by 60% of energy and utility businesses) and remote collaboration platforms, which are viewed as particularly important by participants from the public and health sector (60%). But one area where the business case for adoption really came into its own during the disruption of the last couple of years is IoT and digital twin technology to support asset optimization. 

Another area of digital transformation that has been on the radar of many organizations in recent years is blockchain. The most prominent use of blockchain to date has been in enabling the use of cryptocurrency, and recent studies have shown that this can be extremely wasteful in its use of energy. However, the number of interesting use cases to support sustainability are also ramping up. In the retail sector, Costa Coffee is trialing blockchain as a way to reduce waste, by enabling customers to join a scheme through which they can use a reusable cup that is linked to their account and return it to a different store where it can be washed and used again by a different customer. The initiative, called BURT (Borrow, Use, Re-Use, Take Back) is built on blockchain technology.

The call for urgency on tackling emissions has been met with all but a small handful of organizations yet to make a clear commitment on their net zero timeframe. Pressure for change is coming from all sides, and business leaders are responding with significant levels of funding and investment is already being channeled into multiple decarbonization initiatives and solutions. Possibly the biggest positive to take away from the findings is the number of organizations that view the journey to net zero as an opportunity rather than just yet another compliance challenge. Decarbonization is viewed as a critical challenge that could spell the difference between survival or failure, but could also open new possibilities in creating new products and services or driving improved customer loyalty. 

 

This article has been condensed from the original report. Originally published by NTT DATA UK, November 2021.

Read the full report: Europe’s Digital Journey to Net Zero (a PAC Research Study Commissioned by NTT DATA).