What are greening companies?

What are greening companies?

Greening companies are companies that are not lower carbon today but are serious about getting there. These are companies that have credible plans to transform and become greener. 

Companies that know the world wants and needs to change – that recognize the opportunity and are working to deliver it. Companies like Equinor, Enel and Scottish Power are transforming to meet demand for lower carbon energy. Backing these companies that are transitioning is every bit as important as backing green companies.

After all, many of the world’s low carbon companies didn’t start off that way. Companies like Ørsted have spent years greening themselves, supported by government and society. 

Why should companies go green?

The market in electric vehicles demonstrates why we need green companies and greening companies to be in action. Tesla is a great example of a company doing amazing things. They sold nearly half a million EVs last year. But that’s less than 1% of 73 million cars sold every year.

Toyota, VW and Renault Nissan sell close to 30 million vehicles each year.

So, if we’re going to transition, we need Tesla – but we need more than Tesla, we need other companies to transition. And, thankfully, that’s what’s happening, with more and more companies and countries setting net zero ambitions. 

The world needs a massive, unprecedented and sustained shift in energy demand and supply, away from fossil fuels and towards low carbon, to get to net zero. That is only feasible if we encourage and include companies that wish to become lower carbon, rather than excluding them.

We need as many of them as possible moving in the same direction – making contributions to global decarbonization.

And we need the approach to be inclusive. The Paris Agreement and other greening initiatives are founded on the need to be inclusive, no matter the starting point or stated ambition. Under the Paris Agreement today, major emitters – China, Japan and the US – have all committed to becoming net zero in the future.

Support for greening companies

To facilitate a just transition and to avoid massive disruption to people’s lives, we need to support greening companies. We should use green policies – like carbon pricing – to reward greening efforts and disadvantage companies that don’t work towards lower carbon.  

Investors should consider both the greening potential and sustainable long-term value that greening companies can offer as part of a balanced portfolio. 

Society can also support greening companies by pressing for an accelerated transition. And by understanding that there cannot be a single standard or single pathway to net zero. And as many pathways as there are, there are just as many ways for companies to contribute. 

In return for that support, we should expect greening companies to be transparent and demonstrate their effort and progress towards delivery of their aims and targets.   

• Greening companies need to set an ambition to get to net zero. 
• Provide a timeline with interim aims and targets that sets a realistic path to get there. 
• Disclose a credible business plan that can achieve their targets and aims, while remaining a successful business.
• Contribute where they can to a just transition using their links into communities as employers, suppliers and retailers.

And that is what the world needs – credible, committed greening companies, chasing emissions down.