Net Zero to 2050: Perhaps the Carbon Plan Should Become the Business Plan

For many businesses, 2050 feels a very long way away. Most organisations rarely plan in detail beyond three to five years. Budgets are usually annual, capital plans may stretch to five or ten years, and even strategic business plans often become increasingly vague beyond that point.

So when a business is asked to develop a net zero plan to 2050, the immediate reaction can quite reasonably be: how can we possibly know what the business will look like in 25 years?

That is a fair question. But perhaps the concept should be turned around.

Instead of treating a 25-year net zero plan as an environmental exercise sitting alongside the business strategy, perhaps net zero provides a reason for the business to think much more seriously about its own long-term future.

Before asking, “How will we achieve net zero by 2050?”, the more fundamental question should be, “What do we expect this business to look like in 2050?”

Net zero cannot be planned separately from the business

A meaningful net zero plan cannot exist in isolation from the commercial direction of the organisation.

Over the next 25 years, a business might open new sites, close old ones, move production overseas, expand internationally, develop entirely new products, stop making existing products, acquire competitors or be acquired itself. Its workforce may change significantly, its customers may be in different markets and its supply chain could look completely different.

The organisation might also become much larger or much smaller. It might move away from manufacturing and towards services, automate substantial parts of its operation, change the way it distributes products or completely redesign how customers use what it sells.

Every one of those commercial decisions will have a direct impact on the future carbon footprint of the organisation.

A business planning to double production over the next 15 years will have a very different carbon reduction challenge from one planning to consolidate three existing sites into one. A manufacturer planning to move production overseas will see emissions shift across its Scope 1, Scope 2 and Scope 3 footprint. A company moving from selling physical equipment to providing a service-based solution may fundamentally change where its emissions occur.

This is why a net zero plan that does not understand the future direction of the business can quickly become meaningless.

It may produce a very impressive emissions curve to 2050, but that curve is based on assumptions about a business that may not actually exist.

Start with the business you want to become

A more useful approach would be for senior management to begin by asking where they actually want the business to be in 2050.

Nobody can predict the next 25 years accurately, and that should not be the objective. Long-term planning is about establishing direction rather than pretending that every detail is known.

Businesses already make decisions that last decades. They buy buildings, enter long leases, install major production equipment, develop product platforms and invest in infrastructure that may still be operating in 2040 or 2050. They build supply chains, recruit people, enter new markets and make acquisitions whose consequences can last far beyond the current business planning cycle.

In that sense, businesses already make 20- and 30-year decisions. They simply do not always describe them as a 25-year business plan.

Net zero creates an opportunity to bring those decisions together.

A business could therefore develop a high-level commercial roadmap to 2050. The first five years might be relatively detailed. The following five or ten years might identify major expected changes, investments and commercial ambitions. Beyond that, the plan may be more directional, identifying what sort of organisation the business expects to become.

That is enough to provide a framework for a meaningful net zero plan.

The commercial roadmap should come first

Imagine a manufacturing company looking towards 2050.

Over the next five years it may intend to improve productivity, automate certain processes and strengthen its existing market position. Between 2030 and 2035, it might expect to expand production and potentially open another facility. Between 2035 and 2040, several major production lines may reach the end of their working life and need replacement.

Further ahead, perhaps the business expects to move towards lower-energy manufacturing methods, develop new product ranges and increase international sales. By the 2040s, the organisation may expect its current factory estate to look completely different.

None of that is principally about carbon.

It is simply commercial planning.

Once that direction exists, however, the carbon strategy becomes much easier to understand.

The business can start asking what those changes mean for energy consumption, fuel use, buildings, vehicles, purchased materials, logistics, product design and supplier emissions.

Carbon reduction then follows the business rather than attempting to operate alongside it.

Carbon projects should follow commercial investment

This approach changes the way carbon reduction projects are considered.

Suppose a business knows that a factory is likely to close in 2035. Spending a large amount of money in 2030 installing a heating system with a 20-year payback may make very little commercial sense.

If, however, that same factory is expected to remain the organisation’s principal manufacturing site until 2050 and beyond, the investment case changes completely. Improvements to building fabric, heating electrification, renewable generation, energy storage and production efficiency suddenly have a much longer commercial life.

The same principle applies across the organisation.

If the business expects to outsource logistics within five years, a 20-year fleet decarbonisation programme may be unnecessary. If logistics is expected to become a larger strategic part of the business, then fleet replacement, charging infrastructure and route efficiency become major elements of future investment planning.

The carbon plan must therefore respond to the commercial plan.

That is a much stronger basis for investment than simply deciding that a particular technology is “good for net zero”.

The important date is often the asset replacement date, not 2050

One of the dangers of setting a 2050 target is that it can create the impression that there is plenty of time.

In reality, many businesses may only have one or two major investment cycles between now and 2050.

A boiler installed today could still be operating in the 2040s. A factory roof might only be replaced once before 2050. A production line purchased in the next few years may still be in operation close to the net zero target date. A warehouse leased for 20 years could still form part of the business estate in 2046.

That means decisions being made today are already 2050 decisions.

The business therefore needs to understand its major future investment milestones. Lease renewals, building refurbishments, machinery replacement, fleet replacement, product redesign, acquisitions and site expansions should all appear on the long-term commercial roadmap.

Those milestones then become natural points for carbon reduction.

This is usually where the strongest commercial case for decarbonisation can be found. Rather than replacing a working asset purely to reduce carbon, the business incorporates a lower-carbon solution when that asset was going to be replaced anyway.

The additional cost of carbon reduction may then be far smaller than the headline cost of the entire project.

There should not be a business plan and a separate sustainability plan

Many organisations accidentally create two strategies.

The commercial strategy discusses revenue, growth, customers, products, markets, investment and profitability. Meanwhile, the sustainability strategy talks about electricity, solar panels, electric vehicles, recycling, heat pumps and carbon reduction.

The problem with this structure is that when difficult commercial decisions have to be made, the business plan normally wins.

The better approach is for the two plans to become one.

For example, the business might decide that it intends to increase manufacturing capacity by 30% by 2032. That expansion may increase electricity demand, but at the same time provide an opportunity to remove natural gas from a production process. The new facility could therefore be designed around electric equipment, energy efficiency, onsite renewable generation and future energy storage.

That is simultaneously a commercial decision and a carbon reduction decision.

It should not need to appear in two separate strategies.

Similarly, a business planning to launch a new product range should consider future customer demand, manufacturing cost, raw material availability, energy consumption and product carbon impact together.

Product development and carbon reduction should be part of the same commercial discussion.

Senior management must own the assumptions

This also explains why a serious net zero plan cannot simply be delegated to the sustainability manager.

The sustainability team can calculate the carbon footprint, identify emission hotspots, suggest reduction projects and model possible pathways. What it cannot decide is whether the business intends to acquire another company, close a factory, enter an overseas market or fundamentally change its product range.

Those are senior management decisions.

If the assumptions behind the 2050 net zero plan depend on the future structure of the business, then senior management needs to understand and endorse those assumptions.

The discussion therefore needs to involve the people responsible for finance, operations, property, procurement, production, product development and commercial strategy.

The net zero pathway should then represent the future business that management genuinely expects to build.

Plan the commercial milestones first, then add carbon

A practical way to approach this is to identify the major commercial milestones expected over the next 25 years.

Perhaps a warehouse lease expires in 2029. That immediately raises questions about whether the business should remain in the building, relocate to a more efficient property or perhaps consolidate operations elsewhere.

A major production line may be scheduled for replacement in 2032. That creates an opportunity to investigate alternative technology, electrification, process efficiency and waste reduction several years before the capital decision has to be made.

A vehicle fleet may be replaced progressively between 2028 and 2035. The business can then consider charging infrastructure, grid capacity and operational changes as part of the normal fleet planning process rather than discovering those constraints at the last minute.

A new product generation may be expected around 2030. Product development can therefore include material choice, manufacturing emissions, customer energy consumption, repairability and end-of-life treatment from the beginning.

Once these commercial milestones are mapped, the net zero pathway starts to become much more realistic.

Carbon costs and commercial benefits should appear in the same financial plan

Integrating the strategies also changes the financial conversation.

Carbon reduction projects are often discussed primarily as costs. But many projects deliver commercial benefits that extend well beyond carbon.

An energy efficiency project can reduce operating costs and carbon emissions. A new production line may improve productivity while reducing energy consumption. Better building controls may improve comfort, reduce maintenance and cut energy use. A redesigned product may reduce materials, manufacturing cost and customer emissions simultaneously.

These benefits should be evaluated together.

Equally, some carbon projects may not yet make commercial sense.

That is also useful information.

A long-term plan can identify when the project is likely to become viable. Perhaps the technology needs to mature. Perhaps the existing asset needs to reach the end of its life. Perhaps electricity infrastructure needs upgrading first. Perhaps the project becomes sensible when the site is refurbished in ten years.

The objective should not necessarily be to complete every carbon project immediately.

It should be to understand when each significant transition needs to happen and ensure the business is ready when that point arrives.

Scope 3 makes commercial integration even more important

For many businesses, the majority of emissions are not within their own buildings or vehicles. They sit in Scope 3, across the wider value chain. The GHG Protocol identifies Scope 3 as the other indirect emissions that occur across a company’s value chain, covering areas such as purchased goods and services, capital goods, transport, waste, business travel, sold products, leased assets, franchises and investments.

That makes commercial planning even more important.

Changing a major supplier can change the carbon footprint. Product redesign can alter raw material emissions, manufacturing emissions, customer energy consumption and eventual disposal. Moving manufacturing overseas may reduce direct emissions at one location while increasing supply-chain emissions elsewhere.

The carbon footprint is therefore a reflection of the business model.

That is why the business model has to come first.

Measure performance in a way that reflects business growth

Another difficulty with a long-term net zero plan is that the business itself may grow substantially.

Absolute emissions may increase temporarily even while the organisation becomes much more carbon efficient.

A manufacturer might double production while reducing emissions per product dramatically. A service company may increase employees and turnover while reducing emissions per employee or per pound of revenue.

This makes intensity measures important alongside absolute emissions.

Measures such as emissions per unit of product, per employee, per square metre or per unit of turnover can help management understand whether carbon efficiency is improving as the business evolves. The CO2 Impact methodology already recognises the role of these ratios in tracking progress where operational scale changes over time.

The long-term plan therefore needs to understand both where total emissions are heading and whether the underlying business is becoming more carbon efficient.

The 25-year plan will change — and that is perfectly normal

A 25-year business plan will not remain unchanged for 25 years.

It will probably change significantly.

Markets will change, technology will change, competitors will change and customer expectations will change. Governments will introduce new regulation. New opportunities will emerge. Some expected investments will never happen and other projects that were never imagined will become priorities.

That does not make long-term planning pointless.

It simply means the plan needs regular review.

The first few years can be detailed, while the longer-term sections remain strategic. Each year the organisation can review what has changed and adjust both the commercial roadmap and the carbon pathway.

CO2 Impact’s own reduction planning methodology already reflects this concept by allowing different reduction pathways and adjustments as operational realities evolve.

The important point is that when the commercial plan changes, the net zero plan should change with it.

They should not drift apart.

Perhaps net zero is the reason businesses need to think longer term

Businesses are often criticised for short-term decision-making. Annual budgets, quarterly results and three-year strategies naturally focus management attention on the immediate future.

Yet many of the decisions businesses make have consequences lasting decades.

Buildings, factories, machinery, infrastructure, product platforms and supply-chain relationships do not operate according to quarterly reporting cycles.

Neither does carbon.

Perhaps the requirement to think about net zero to 2050 can therefore become commercially useful.

Instead of asking a business to somehow predict 25 years of carbon reduction projects, the process can encourage senior management to think about the organisation it is trying to create over the same period.

The question becomes much more interesting.

What sort of business do we want to have in 2050?

Where will it operate?

What will it sell?

How will it manufacture?

Who will its customers be?

What major investments will be required along the way?

And how can each of those decisions move the business towards lower emissions rather than lock in emissions for another generation?

Ultimately, the commercial plan and the net zero plan should be the same plan

A credible net zero pathway should therefore start somewhere slightly unexpected.

It should start with the business plan.

Senior management should establish the long-term commercial direction of the organisation, identify the major milestones and understand where the significant investment decisions are likely to occur.

The carbon implications can then be added to that roadmap.

Where will emissions increase as the business grows? Where can future emissions be designed out? Which assets need replacing and when? Which technologies are commercially sensible now and which should form part of the next investment cycle? How will the supply chain need to change? How will products need to evolve? What will those changes cost, and what other commercial benefits could they deliver?

At that point, it stops making sense to describe the organisation as having a business plan and a separate net zero plan.

There should really just be one plan.

If the business genuinely expects to exist and prosper in 2050, then its commercial development, capital investment, product strategy, energy use, supply chain and carbon emissions cannot sensibly be planned independently.

A net zero plan without a credible commercial vision of the business that will exist in 2050 risks becoming little more than a spreadsheet projecting declining emissions.

But combine the two, and net zero becomes much more useful.

It becomes a framework for deciding what the future business should look like, when it should invest, which technologies it should adopt, how its products and operations should develop and how it can remain commercially successful while progressively reducing its carbon footprint.

Perhaps the real challenge of planning for net zero over the next 25 years is not that 2050 is too far away.

Perhaps it is that businesses have become too accustomed to planning only five years ahead.