What Is Decarbonization?

Decarbonization is the process of reducing or removing carbon dioxide emissions from Earth’s atmosphere. In response to climate concerns, companies are implementing Decarbonization strategies to systematically reduce their carbon footprint. Many are adopting the accounting and reporting standards developed by the Greenhouse Gas Protocol, classifying carbon emissions into three scopes.

• Scope 1: direct emissions generated by assets owned or operated by the company.
• Scope 2: indirect emissions generated from the purchase of energy (e.g., electricity, heat, and steam).
• Scope 3: indirect emissions that arise from all other value chain activities—both upstream and downstream (including end user purchases).

While the primary goal of decarbonizing is to improve the climate, some companies are also creating strategic and economic value from their initiatives. Organizations that decarbonize can reduce costs, improve corporate reputations, increase consumer demand, and improve profits. It can also spur the development of new products, services, and businesses.

How Is Decarbonization Implemented?

Implementation requires setting an ambition, launching pilots, collaborating with stakeholders, measuring and monitoring the impact, and communicating the results.

Successful companies:

• Set realistic targets that can be achieved by reducing much of the company’s emissions and by offsetting remaining emissions (e.g., planting trees to help absorb carbon dioxide)
• Create a plan to achieve targeted results within realistic time frames
• Make the journey toward net-zero an operationally and economically sustainable process
• Find mutually beneficial ways to succeed in net-zero ambitions by partnering with various stakeholders such as competitors, customers, investors, and regulators

Related Topics

• Climate Strategy

• Corporate Social Responsibility

• Environmental, Social, and Governance (ESG) Programs

 

What Are the Common Uses for Decarbonization?

Companies implement Decarbonization strategies and initiatives to:

• Mitigate global warming
• Anticipate climate change regulations
• Improve risk management
• Elevate corporate reputation
• Improve operations
• Enable access to new sources of capital
• Identify new market opportunities
• Attract and retain talent

• Selected references (click to expand)

  Aldy, Joseph E., and Gianfranco Gianfrate. “Future-Proof Your Climate Strategy.” Harvard Business Review, May–June 2019.

  Borland, Helen. Business Strategies for Sustainability. Routledge, 2019.

  Damert, Matthias, Arijit Paul, and Rupert Baumgartner. “Exploring the Determinants and Long-Term Performance Outcomes of Corporate Carbon Strategies.” Journal of Cleaner Production, March 2017.

  Doerr, John. Speed & Scale: An Action Plan for Solving Our Climate Crisis Now. Portfolio, 2021.

  Ezroj, Aaron. Carbon Risk and Green Finance. Routledge, 2021.

  Franchetti, Matthew J., and Defne Apul. Carbon Footprint Analysis: Concepts, Methods, Implementation and Case Studies. CRC Press, 2012.

  Gates, Bill. How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need. Alfred A. Knopf, 2021.

  Hoffman, Andrew J. “Climate Change Strategy: The Business Logic behind Voluntary Greenhouse Gas Reductions.” California Management Review, 47(3), Spring 2005.

  Kaplan, Robert S., and Karthik Ramanna. “Accounting for Climate Change.” Harvard Business Review, November–December 2021.

  McKinnon, Alan. Decarbonizing Logistics: Distributing Goods in a Low Carbon World. Kogan Page, 2018.

  Sitkin, Alan. Absolute Essentials of Green Business. Routledge, 2020.

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