What Motivates Companies to Take the Decision to Decarbonise?

Abstract

Already more than 140 countries consider or have pledged to reach net-zero emission targets by 2050 or earlier and the share of global emissions falling into an emission pricing scheme has steeply increased over the past three years. Even where there are no direct implications for industry (yet), there is a series of subtle pressure points driving an increasing number of companies across the globe to work towards climate neutrality and pledging ambitious emission reduction goals. This article sheds light on the pressure points, the subtle triggers, the underlying considerations as well as the hoped-for benefits for industrial companies from achieving net-zero emissions. The observations and ideas presented in this paper are derived from quantitative data obtained via the Energy Efficiency Index of German Industry (EEI) and qualitative data. Not only societal, work force, supply chain and investor expectations play a large role, but also many strategic considerations which have the potential to make the company more resilient and profitable, particularly in time of crisis. Those companies that do not move towards decarbonisation, on the other hand, may face a costly late-mover disadvantage. This piece uncovers subtle interconnections, helping stakeholders from industry and beyond to grasp opportunities and challenges ahead.

The Impact of Deep Decarbonization Policy on the Level of Greenhouse Gas Emissions in the European Union

“…The problem arises when the provisions in the strategies should be implemented; from the strategic level, one has to move to the implementation of technological investments. Additionally, some authors wonder why companies engage in climate change policies (e.g., Amran et al, 2016; Buettner et al, 2022;Finke et al, 2016;Sullivan and Gouldson, 2017) [88][89][90][91] or what motivates them to be active in decarbonization [92], which seems obvious, given the primacy of government policies over business, as well as market motives [91]. Deep decarbonization requires greater corporate social responsibility.…”

The strategic challenges of the decarbonisation of the manufacturing industry

“…In the literature, the topic of the strategic business framework in decarbonisation process is presented in various terms of doing business and internal structure. According to Franca et al (2023) in particular publication such scopes were analyzed: (1) why companies engage in climate change policies (e.g., Amran et al, 2016;Buettner et al, 2022;Finke et al, 2016;Sullivan & Gouldson, 2017) ; (2) what specific corporate actions have been deployed to reduce CO2 (e.g., Goldstein et al, 2019;Hafner et al, 2022), and (3) which business performance outcomes these initiatives have provoked (e.g., Brouwers et al, 2018;Capece et al, 2017;Haque & Ntim, 2022;Russo et al, 2021;Sartal et al, 2020).…”

Adapting corporations to climate change: How decarbonization impacts the business strategy–performance nexus

“…In fact, firms that fail to adapt their resources and capabilities to mitigate climate‐related risks and create new sources of value are at risk of losing their competitive advantage and falling behind their competitors. Hence, the investments in renewable energy sources, developing new products and services that are more environmentally sustainable, improving supply chain efficiency to reduce carbon emissions, or developing new business models that are better aligned with the principles of the circular economy (Buettner et al, 2022; Haque & Ntim, 2022).…”

“…dimensional; thus, new research efforts emerged around three main concerns: (1) why companies engage in climate change policies (e.g., Amran et al, 2016;Buettner et al, 2022;Finke et al, 2016;Sullivan & Gouldson, 2017) ; (2) what specific corporate actions have been deployed to reduce CO 2 (e.g., Goldstein et al, 2019;Hafner et al, 2022), and (3) which business performance outcomes these initiatives have provoked (e.g., Brouwers et al, 2018;Capece et al, 2017;Haque & Ntim, 2022;Russo et al, 2021;Sartal et al, 2020).…”