Net-zero transformation for business

Anna Triponel

October 21, 2022
Our key takeaway: A new report by the University of Cambridge Institute for Sustainability Leadership aptly sums up our current state: "Deeply interrelated social and environmental challenges are further exacerbating the already Herculean challenge of transforming economies to achieve net zero.” The authors suggest that the “whole-system” transformation to net-zero requires companies to think differently and more expansively about how to reach net-zero. They propose a framework for companies to guide this transformation, including setting a transformative agenda giving leaders a forward-looking mandate; understanding the complexities and interlinkages of of social and environmental issues; creating enabling conditions for transformation to occur within companies; taking a “portfolio approach to innovation” by tackling challenges from multiple angles; and aligning the company around new innovations to both “mainstream and secure innovation.”

The University of Cambridge Institute for Sustainability Leadership (CISL) published Net Zero Business Transformation: A Framework for Accelerating Change in an Era of Turbulence and Complexity (October 2022). The report identifies “key leverage points that will most help to advance net zero transformation, promote organisational resilience and drive system change.”

  • “Foundational success factors for transformation”: The report identifies success factors that many companies are lacking, which would help achieve net zero transformation. For one, even the most ambitious companies “have not embedded their purpose effectively through their governance, strategy, culture and innovation. As a result, most are continuing with Business-as-Usual ways of working and are still fuelling the climate crisis.” The large scale of the net zero transformation also requires companies to "equip their leaders with a new suite of competencies to understand and engage their broader ecosystem— including suppliers, governments and competitors— to collaborate for system change.” The authors term this “a mindset shift from ‘ego’ to ‘eco’”. In addition, “organisations should become attuned to their full relationship with the natural and social systems upon which they depend and monitor this on an ongoing basis.”
  • How to “take a whole-system approach to transformation”: The report “propose[s] that companies need to expand their frame of reference in order to take a whole-system approach to transformation.” For one, companies should understand “the deep interdependency between net zero goals and the wider natural and social systems.” They should also embed transformation throughout the business by “identifying and acting on multiple leverage points across four levels of business reach: individual leadership, the company, its value chain, and the wider system.”   
  • A framework to guide net-zero transformation: The authors have established a five-step framework for companies to follow the “whole-system approach to transformation.” These include: “(1) Set a transformative agenda that establishes the vision and gives leaders the mandate to disrupt the status quo; (2) Understand the complexities—including systemic impacts, dependencies, risks and opportunities—in a way that considers and engages the organisation’s extended ecosystem of stakeholders; (3) Create the enabling conditions by building the foundations of transformation (good governance, effective business integration, enabling culture, future-fit capacity and skills, systemic innovation, transformative finance, transformative partnerships, and advocacy including for policy change); (4) Take a portfolio approach to innovation that clusters multiple interventions around strategy objectives spanning the full four levels of transformation; [and] (5) Mainstream and secure innovations, developing pathways for scaling that prevent roll-back by aligning the organisation around the new innovations.” The authors also pose development areas to support companies with this framework: “These include advancing understanding of the organisational levers for sustainability transformation, developing pre-competitive collaborations for systems change, advancing approaches for sustainability data management, and the refinement of a new systems change orientated approach to innovation.”

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