Skinner agrees that public policy is needed to change the direction of travel. But, she adds, “businesses must be allowed to tune in to find a way to make it work and to respond in a meaningful way. It’s obvious that no one organisation, or sector, or group of businesses is going to be able to solve the net zero challenge by itself. This has to be a collaborative effort, involving governments, business and academia to find the best solution, to make the biggest difference, as quickly as possible.”
Denmark’s government, which aims to cut greenhouse gas emissions by 70% by 2030 on a 1990 baseline, offers a glimpse of how such collaborations might work. At the end of last year, it presented 13 “climate partnerships” representing all branches of Danish business, from transport and IT to agriculture and waste. Each public-private partnership has formulated a set of recommendations to reduce emissions in its industry. For example, the energy and utilities partnership, chaired by the chief executive of Ørsted, Denmark’s largest power company, has compiled the “Powering Denmark’s Green Transition” roadmap, detailing how the sector can reduce its emissions by 95% before the 2030 deadline.
The interplay between policy and business can create its own momentum, suggests Dr Rowan Dixon, WSP’s principal specialist in sustainability and resilience for New Zealand. Governments are going to need to “read the market winds very carefully” and work closely with business to co-develop policy and rules that hasten change. By way of example, he points to the market shift towards electric vehicles led by Elon Musk; it’s a trend that governments can support with subsidies and tightened emission standards, making internal combustion vehicles less appealing and more expensive.
“It’s more nuanced than the proverbial carrot or stick approach, but more a jostle and shuffle,” says Dixon. “You have to understand what the constraints are. Is an alternative available? How quickly can supply chains transition? That understanding dictates legislation and transparent low-carbon pathways that business can plan for and adopt.”
This is not really a free-market “moment”, he adds. “If anything, we’re emboldening ourselves that we do have control and we can push in one (low-carbon) direction, using free markets to roll out these big changes at scale. In essence, we’re using capitalism and markets to our collective advantage.”