Mark Chadwick has held the reins at ENGIE Impact as managing director since its formation over three years ago, since then, the company has gone on to support a range of businesses, countries, and governments to accelerate their decarbonisation journey as well all move towards a more sustainable future.
Chadwick spoke to Sustainable Future News about a recently published impact report from the company, detailing six steps to ensure business sustainability targets are met.
What is ENGIE impact?
ENGIE impact is the sustainability consulting arm of French-based multinational utility company ENGIE. ENGIE as a whole is dedicated to accelerating the transition towards a carbon-neutral world, through reduced energy consumption and more environmentally friendly solutions. ENGIE Impact specifically partners with corporations, governments, and municipalities worldwide to implement the necessary transformations to reduce their carbon footprint and achieve their goals on the path to net zero. This includes establishing actionable roadmaps to managing on-the-ground execution.
Managing director of Engie Impact, Mark Chadwick shares the division’s origins, “we’re new. around June or July of 2019. It wasn’t from a standing start, there were certain parts of the [ENGIE] group which were already dedicated to decarbonisation and energy transition – they were grouped together really into this focused entity. ”
Now headquartered in the United States, ENGIE impact has grown since its formation, with operations running in North America, Latin America and a number of European countries, as well as Asia and Australia. “We’re really trying to be a global actor to help organisations speed up. There’s a lot to do, and there’s not a lot of time.” continued Chadwick.
Context to the report
In a recently published report, ENGIE Impact suggested the vast majority of firms are making progress with ambitious decarbonisation targets, but mainly by delivering quick wins, such as public target setting and decarbonisation across Scopes 1 and 2 emissions, where they have direct control and influence.
The consultancies 2023 Net Zero Report, which looked to assess current corporate response to climate change, studied more than 500 major businesses, each employing more than 10,000 people. Out of the 505 executives surveyed, almost two-thirds (62%) claimed that they had made a public commitment to ambitiously reduce carbon emissions across the organisation. Almost all (98%) of the companies have made some sort of progress towards these targets.
Commenting on the report, Chadwick says, “we’ve been running this report for a while now, the original genesis was to understand what barriers organisations are facing when trying to decarbonise. We could see very clearly that having a decarbonisation goal and a published target was really common among the larger companies, but there did seem to be a lack of traction in terms of delivering on these targets.”
“We had this idea that in order for companies to be successful, a series of organisational enablers needed to be put in place. The survey really looks to explore some of those enablers to see what is and isn’t present. The question we’re trying to answer is once you know what you’re trying to achieve, and you have an idea of how to do it, what needs to be true about my organisation in order to effectively deliver this programme.”
While there has been an increase compared to ENGIE Impact’s previous report, only 12% of companies rate their ongoing sustainability efforts as “extremely successful,” and three-quarters (75%) say they have already achieved the “quick wins” in their decarbonisation plan.
Quick wins range from publicly announcing a net zero target to implementing operational improvements to help reduce emissions. However, only 12% of surveyed businesses feel they are “on track to meet or exceed their ambitious decarbonisation goals”, with many facing new challenges now that the low-hanging fruit has been picked.
The report states that “organisations may feel they have exhausted many of the easy fixes around carbon reduction and are starting to be confronted with more challenging barriers to implementation and execution.”
It cites the lack of government incentives, the short-term mindset of the corporate investment cycles and a “war for decarbonisation talent within industries” as major challenges now facing businesses, alongside traditional issues such as a lack of internal, external and cross-functional collaboration.
“I think the surprising headline for people is only 12% of the leaders surveyed believe they’re on track to meet or exceed their sustainability goals or decarbonisation targets, that’s not very many,” Chadwick commented. “This is the third year of the report now and when we asked leaders to rate the success of their decarbonisation goal, in 2020 29% of leaders rated their programmes as being successful. There was a pretty good jump between 2020 and 2021, where 46% of leaders said their programmes were successful, the same number as this time around.
“Another interesting finding from this year’s report suggested that 75% of leaders believe they’ve achieved most of the quick wins available to them on their decarbonisation plan. Speaking on this point, Chadwick said “one of the things these quick wins give you as a business is a sense of momentum and a sense this is achievable. What we’re now seeing is the vast majority of organisations are saying that quick wins are no longer available to them. So now they have to start switching their focus to long-term and harder-to-resolve challenges.”
“As those quick wins are being exhausted, organisations are now needing to face the prospect of really needing to resource this project in a different way. Businesses need a vision that is longer than a three or five-year period to start to access the deep decarbonisation that is behind some of these more challenging partner projects. I think this is going to be quite an interesting period, as businesses shift gears and really start to realise the complexity and the challenge inherent in deep decarbonisation, and then start to resource themselves properly to address it.”
Six steps to success
To help many firms that have already picked the low-hanging fruit, the ENGIE impact report outlines six key challenge areas to delivering on net-zero decarbonisation commitments.
Maintain long-term focus and belief
The first is to maintain a long-term focus and belief. The report suggests that organisations should double down on resource allocation for decarbonisation which will create long-term competitive advantages and could negate the short-term volatility caused by things like the energy cost crisis.
“The reality is that now we’re getting into the challenges around more difficult decarbonisation measures and we need to think about resource allocation in the long term, by recognising the short-term volatility in the European energy market. Some of these decarbonisation technologies really do represent an opportunity to provide resilience against some of these energy market fluctuations,” says Chadwick.
Establish governance and accountability
The report found that 28% of corporates have enlisted specific actions on decarbonisation for functional leaders across the organisation. However, just 10% have aligned net zero actions at a facility or site level.
In response, Chadwick says we are “seeing a real need to establish really good governance and accountability programme, inside organisations. So we can see how organisations are empowering local teams in their functions to really start to drive decarbonisation processes.
“Sometimes there is a lack of the right kind of governance and decision frameworks in place in organisations and the default is to fall back to some of the old ways of doing things. What happens then is the decision-making process can potentially be slowed down. By having a clear view of how are you going to make decisions about decarbonisation, who is accountable for making those decisions and who’s going to deliver on those programmes, chances are this process will be sped up.”
The report also notes that there is no silver bullet to building in decarbonisation capabilities, but that some firms are trying to empower decarbonisation actions at local levels. 56% of respondents claimed to have implemented opportunities for front-line staff to be involved in net zero actions. A further 23% will look to introduce these internal collaboration models by 2025.
Close the implementation expectation gap
ENGIE Impact claims there is a “misalignment between the expectations of senior executives and those responsible for implementing decarbonisation initiatives,” which could derail future progress.
The survey highlights this misalignment, with 78% of executive decision-makers believing that a leading sustainability strategy will drive competitive advantage, compared to 62% for those surveyed in operational roles. Additionally, 54% of executive decision-makers rate their organisation as ‘considerably successful’ or ‘extremely successful’ in executing its sustainability plan, compared with just 41% of respondents in operational roles.
The report notes that executives are more driven by meeting the needs of external stakeholders such as consumers and investors, while operational leaders are more focused on regulation and reducing costs for the business.
The report suggests that successful organisations will need to realign executive visions with the realistic expectations and know-how of operational leaders to find a middle ground that catalyses decarbonisation.
“Organisations really need to have a focused effort on aligning these visions and being sure resources are readily available to deliver on the implementation programmes that they’re setting out to do,” says Chadwick.
Increase executive accountability
“This is probably the single most accelerator thing that you can do in your business is giving the responsibility for delivery of decarbonisation targets it as a financial metric to the senior executive team,” says Chadwick
The report mentions the increased risk of greenwashing that can occur if corporates set “empty promises”. The report notes that it is “vital for executives to be held accountable for the success of their organisation’s decarbonisation activities, treating carbon reduction commitments as seriously as financial targets”.
However, around 70% of respondents claimed they lack incentive or ownership of strategies at an executive level in order to drive carbon reduction and actually deliver on targets, with 29% citing this as a “major barrier” to progress.
Almost half say their executives have “clear, personal accountability” for decarbonisation targets and 29% expect a formalised accountability structure for these targets to be introduced by 2025. However, only 36% currently link the remuneration or bonuses paid to executives to decarbonisation targets.
Chadwick explained “it’s vital that the executives are accountable, ideally, with financial metrics for achieving decarbonisation targets because then you have this idea that my sustainability goal is as important as my financial goal and is therefore personally connected to my own remuneration. It’s an amazing accelerant to a decarbonisation programme.”
Activate the right decarbonisation enablers
ENGIE Impact notes that businesses need to use new and evolving tools to help meet targets, namely innovative finance models, carbon pricing, and “investing in decarbonisation data maturity”.
The report finds that 34% of companies have put new financing options in place to drive decarbonisation: these include green bonds or finance-as-a-service models to help ringfence funding for climate action. ENGIE Impact claims that uptake of these models will nearly double in the next three years amongst corporates. Additionally, 32% of the organisations have already implemented carbon budgeting internally.
A common challenge for net zero targets is that of data, with many corporates struggling to improve the quality of the data they have and collect. This is echoed in the report, which found that 37% of companies have a “single source of truth of decarbonisation data” for the entire organisation, meaning that they have to synthesize different data sources and manually extract relevant data to create better oversight. The report notes that this is “both time-consuming and unreliable”.
Collaborate with the supply chains to address Scope 3 emissions
The final point covers the complex issues of supply chains, which can have an emissions footprint more than 11 times greater than direct and operational emissions for corporates.
According to Chadwick most of the companies ENGIE deal with have scope 3 decarbonisation goals, “I would say most are not very advanced in addressing those goals and really driving those programmes forward and now’s really the time to get a bit more serious about this.”
The report found that 40% of companies have made “no or limited progress” to address Scope 3 emissions and just 13% consider themselves a market leader in terms of supply chain decarbonisation.
While 58% have “clearly communicated” their decarbonisation goals to suppliers, only 38% have introduced supplier commitments into formal procurement contracts, although a further 38% plan to do so by 2025.
Chadwick says “if we can find a way to bring these organisations into our decarbonisation programme with us through some sort of shared incentive plans, we can start to harness the creativity in the action of those organisations who are around us and I think that’s really now becoming critical.
The report notes that “successful decarbonisation leaders recognise they cannot achieve long-term carbon reduction on their own”, suggesting that decarbonisation needs to be a shared incentive across the value chain.
“Our advice would be to get started with the supply chain programme, to look for where in your supply chain are the most material emissions and seek opportunities to reduce this. First of all, make sure that they’re on board and understand what you’re trying to achieve, then look for opportunities to work together to achieve those goals. In doing so, you will start to understand how do I better manage and measure the impact of these programmes, which will then allow you to put in place the right data to track it. Lots of organisations are thinking about it and struggling with it, but it really is now time to start to accelerate this collaboration,” concludes Chadwick.
Conclusions moving forward
So how should firms take the six steps to success and move forward? Chadwick believes the first thing is to recognise the key thing which is to know that it’s okay to find decarbonisation programmes difficult to deliver.
“The reality is they’re now reaching the hard part, so don’t lose faith in that need to do it. It’s now a question of working out, what resources I need to put into these programmes. Who are the right people? What are the right investment frameworks and what needs to be done to take on these challenging next steps.”
It’s quite easy as an executive to feel a little bit isolated and as a sustainability profession, we don’t help in this way. We go around conferences, telling everybody how brilliant it is. The whole sustainability profession seems to be a mouthpiece for how brilliant everything is, too often. I think we have to get more realistic about how it’s not always brilliant, actually, it is sometimes quite hard, but these challenges are not insurmountable. With the right planning and the right enablers in place, programmes can absolutely be delivered. That’s the key message for me, just feel that you’re not alone. The solutions are out there if you keep that long-term focus and belief.”
