As 2024 breaks temperature records, Derarca Dennis explores how businesses are advancing net zero strategies and why urgent climate action is essential

In November, the EU climate monitor Copernicus reported that 2024 was "virtually certain" to be the hottest year on record, with warming above 1.5C, highlighting that the world was passing a "new milestone" in temperature records.

These statistics, among countless others, highlight the critical need for immediate and sustained action to reduce emissions and mitigate the impacts of climate change.

As the global climate crisis intensifies, the urgency for businesses to commit to and achieve net zero carbon emissions has never been more critical. The EY State of Sustainability 2024 report sheds light on the progress organisations are making towards sustainability.

However, as events of recent weeks and months have shown us, every business, person and country need to do more.

The global climate crisis is arguably the most pressing challenge of our time. Rising temperatures, extreme weather events and the degradation of natural ecosystems are just a few of the devastating impacts of climate change. A revision of National Defined Contributions (NDCs) is an absolute requirement as we know already that we will surpass 1.5C if we continue on current NDCs.

As major contributors to global emissions, the actions businesses take to reduce their carbon footprint can have a profound impact on the overall trajectory of climate change.

While part of a much bigger and very complex picture, by committing to net zero targets, businesses can help drive the systemic changes needed to transition to a low-carbon economy, protect natural resources and ensure a sustainable future for all.

The EY State of Sustainability report shows that increased focus on sustainability is evident in the high rate of adoption of formal sustainability strategies among businesses.

According to the report, 70 percent of respondents have approved and implemented a sustainability strategy, with the same number reporting alignment between that strategy and the overall business strategy. This alignment is crucial as it ensures that sustainability is integrated into the core operations and decision-making processes of the organisation.

However, 35 percent of respondents feel their organisation is not doing enough, a notable rise from 17 percent in 2022.

While it’s positive to see the overall trajectory of sustainability in business in Ireland moving in the right direction, it’s equally heartening to see that organisations are beginning to understand that there is much more to do.

One of the most encouraging findings from the report is that 55 percent of organisations are aiming for net zero science-based targets, with 40 percent having established a clear roadmap towards achieving net zero.

Leadership plays a crucial role in driving sustainability efforts, with 53 percent of organisations assigning C-suite responsibility for sustainability. In 67 percent of these cases, the CEO or managing director leads the initiative, while in 22 percent, the responsibility falls to the chief sustainability officer or head of sustainability.

The assignment of sustainability responsibilities to senior leaders underscores the high priority businesses place on achieving their net zero targets. This commitment from the top is a clear signal to employees, customers and stakeholders of an organisation’s dedication to sustainability.

And we need more leaders to follow suit to set the tone from the top if we, as a collective business community, are to play our part in halting the climate crisis.

Why business emissions reductions matter

Businesses are significant sources of greenhouse gas emissions, creating emissions through electricity and other energy use, manufacturing, transportation, agriculture and food waste, among others. By reducing their emissions, businesses can:

1. Mitigate climate change: Lowering emissions helps to slow the rate of global warming, reducing the frequency and severity of climate-related disasters such as hurricanes, floods, and wildfires.
2. Protect ecosystems: Reducing emissions can help preserve biodiversity and protect ecosystems that are vital for maintaining the planet's health and resilience.
3. Drive innovation: The pursuit of net zero can spur innovation in clean technologies and sustainable practices, creating new business opportunities and driving economic growth.
4. Enhance reputation: Companies that lead in sustainability can enhance their brand reputation, attract environmentally conscious consumers, and gain a competitive edge.
5. Ensure regulatory compliance: As governments worldwide implement stricter environmental regulations, businesses that proactively reduce their emissions will be better positioned to comply with new laws and avoid penalties.

The adoption of formal sustainability strategies, risk and materiality assessments, clear KPIs, and accountability, along with a strong commitment to science-based targets, are all essential steps towards achieving net zero.

While there is more to do, it is very encouraging to see all the progress made in the past two years and great to see business leaders continuing to commit to building a better future for all.

Derarca Dennis is Assurance Partner and Sustainability Services Lead at EY