Companies must prioritize profitability in their transition planning as they integrate net zero targets into the core of their business strategy.

This is the argument that Johan Falk, CEO and Co-founder of the Exponential Roadmap Initiative (ERI), and Annachiara Torciano, ERI Business Transformation Fellow, put forth in an opinion piece published in FT Sustainable Views. 

Falk and Torciano highlight that there can be no question on the need for the global economy to transform: “Climate change already commits us to global annual damages of $38tn and a global income reduction of 19 per cent until 2050. The hotter the planet, the greater the destruction and the smaller any chances of securing prosperity and growth.”

The authors state that leading companies like IKEA and Scania are pioneering efforts by embracing renewables and circular practices, but note that “companies that are radically cutting emissions in their own operations and tackling more complex emissions in their value chains come up against internal barriers” related to cost concerns.

Their proposed solution? A focus on profitability: “Proper transition planning is about finding cost efficiencies, winning market share, expanding into new markets or developing new solutions for customers.” This strategy enables businesses to identify emerging technologies and position themselves as innovators.

Falk and Torciano emphasize this as essential for gaining board-level buy-in: “Few may question whether the transition is necessary, but they will ask what it will cost.”

Read the full article here: FT Sustainable Views