Arijit Chakraborti, Partner, PwC

According to the definition published by the United Nations (UN),¹ ‘net zero’ means cutting greenhouse gas (GHG) emissions – such as carbon dioxide emissions – as close to zero as possible, with any remaining emissions being re-absorbed from the atmosphere.

Science shows that the global temperature rise must be limited to 1.5°C above pre-industrial levels to sustain Earth as a liveable planet. That’s why the net zero programmes have global significance.

However, there has been continuous debate on how each country should fulfil its part of the net zero responsibility. The first nations to be industrialised started emitting high carbon emissions early on and are responsible for a major proportion of GHG emissions. However, a few countries that underwent industrialisation much later, such as China and Japan, eventually became the top manufacturing nations and are thus responsible for significant GHG emissions. Although countries like Bangladesh are not responsible for a considerable amount of GHG emissions, they bear the risk of being highly vulnerable to climate change.

That’s why it is important to understand how Bangladesh could benefit from the net zero programme. This can be done by focusing on whether it needs its own net zero agenda and how it should monetise its sustainability initiatives. It’s also important to understand the role of the brands in Bangladesh in influencing and driving the national net zero journey.

As per the United Nations Development Programme’s (UNDP) Climate Promise initiatives, Bangladesh has already pledged to work towards the reduction of its GHG emissions. The country presently emits 0.45% of the total GHG emissions globally, and it has undertaken a conditional carbon emissions reduction target of 89.47 MT compared to business as usual by 2030.²

While the current proportion of GHG emissions does not appear to be high, it should be noted that the country is not highly industrialised. Bangladesh is a leading exporter of readymade garments, and the sector emits a considerable amount of GHGs every year. Being a part of the global supply chain of this sector, it will be a business imperative for readymade garment companies in Bangladesh to participate in and comply with some of the global targets undertaken by the large businesses in this sector.

PwC’s Net Zero Economy Index 2022 analysis revealed an interesting trend. In the last couple of years, the net zero goal has been increasingly targeted across economies. However, the decarbonisation effort has slowed down during the last year, according to the survey.³

The collected data reflects a rise in economic activities, resulting in the consequent increase in carbon emissions following the pre-pandemic ways of living.  Although geopolitical uncertainties added more volatility in investments, rising fossil fuel prices have started influencing organisations to lean more towards renewable energy sources to balance the overall energy expenditure.

Moreover, leading organisations are increasingly driving actions to address climate change, which include decarbonisation efforts as well. Also, there has been a gradual shift in regulatory thinking, consumer sentiment and investor recognition regarding the initiatives undertaken to lower carbon emissions. According to an analysis by PwC, more than 3,000 businesses are now committing to the Science Based Targets initiative (SBTi)⁴ to set meaningful goals for themselves on emission reductions and global campaigns. Stakeholders are also more inclined to recognise and reward organisations and their brands when they see sustained outcomes in addressing climate issues.

Some of the large global organisations are setting their own net-zero ambitions and publishing the same. For example, one of the largest retailers in the world has set a target to reduce 1 billion metric tonnes of carbon emissions from its supply chain by 2030 and to become a regenerative company by 2040.⁵

Under such circumstances, businesses and investors in Bangladesh can also take the lead in driving client agendas, particularly at sector levels. The net-zero initiatives undertaken by retail brands in Bangladesh will make their products more sustainable and provide them with the opportunity to benchmark their products with their global peers. With renewable energy becoming more affordable, brands must also plan to upgrade their energy mix with more renewable energy sources. This is likely to reduce their input costs, making their products more affordable and competitive in the market.

Brands that are already a part of the global supply chain – either in the export business or catering to the Bangladesh market exclusively – must consider joining the SBTi and refreshing their brand strategy. This strategy should also be transparently discussed among board members, investors and regulators, as all of them have different roles to play in enabling business growth and sustainability.

Globally, such initiatives have already begun. The UN-backed initiative called ‘Race to Zero’ has already mobilised a coalition of more than 5,000 businesses, 400 large investors, 1,000 cities and regions, and others. Collectively, this coalition covers more than 25% of the global carbon emissions and 50% of the global gross domestic product (GDP).⁶

Thus, brands and businesses in Bangladesh should consider forming localised coalitions and undertake nationally aligned targets for reducing carbon emissions in the coming years. Moreover, brands must foster a culture of innovation locally and across their supply chain to accelerate their progress. Sustained outcomes will be a win on the environmental and economic front for all stakeholders.

The writer is a partner with PwC. The views expressed here are his own.

References:

1. https://www.un.org/en/climatechange/net-zero-coalition.
2. https://climatepromise.undp.org/what-we-do/where-we-work/bangladesh.
3. https://www.pwc.co.uk/services/sustainability-climate-change/insights/net-zero-economy-index.html
4. https://sciencebasedtargets.org/
5. https://www.theguardian.com/environment/2021/sep/13/walmart-climate-change-plan-can-it-work
6. https://unfccc.int/climate-action/race-to-zero-campaign