What do solar businesses need to know about Net Zero and ESG?

Stefanie D — Wed, 27 Apr 2022 11:11:07 +0000

In the last 12 months, the amount of talk around net zero and Environmental, Social and Corporate Governance (usually referred to as ‘ESG’) has been increasing. So what does it all mean – and what you need to know about them for your business?

What does Net Zero mean?

Net zero refers to the state at which global warming stops: when greenhouse gas emissions going into the atmosphere (eg. burning fossil fuels) are balanced by those that go out of the atmosphere (eg. through plants absorbing CO2). For as long as global emissions stay higher than zero, the planet will keep heating.

Why is everyone talking about emissions targets?

In 2021, the IPCC* released a report that described current global emissions as a code red for humanity. The report inspired action from governments and corporations around the world. Many of Australia’s key trading partners and strategic allies have now set net zero emissions targets.

Australia has announced that it aims to reach net zero emissions by 2050, and New Zealand has made a net zero emissions target by 2050 into law.

What is ESG?

Environmental, Social and Corporate Governance (ESG) is like a credit score for non-financial performance around social and environmental factors.

Environmental criteria consider how a business performs as a caretaker of nature.

Social criteria examine how it manages relationships with people and communities.

And corporate governance looks at leadership, executive pay, audits, internal controls and shareholder rights.

Potential investors use ESG to assess non-financial risks in companies they might want to invest in. In light of these ESG trends, organisations that don’t have climate change goals or plans are often considered higher risk.

What does all this have to do with your solar business?

Historically, conversations with prospective solar customers centred around cost-reductions, self-reliance from the grid and affordability.

But increasingly, customer conversations are about organisations considering solar as part of their pathway to net zero.

These customers are also looking for long-term partners that can help with future needs such as onsite storage and other solutions.

5 questions to ask your customers

Here are five questions to get the conversation about net zero started with your customers:

1. Have you ever calculated your business’s carbon emissions? (There are free carbon calculators at Carbon Neutral, Carbon Positive Australia and Australian Greenhouse Calculator.)

2. Does your business have a pathway to net zero?

3. Have you thought about how solar and solar storage can play a part in your goals?

4. Do any of your suppliers or partners have net zero goals? What about the companies that you sell to?

5. Has your industry body started looking at carbon emissions at an industry level?

*Intergovernmental Panel on Climate Change

Sources:

Climate council – what does net zero emissions mean

Climate Council – what does ipcc latest report mean

COP conversations University of Oxford

IPCC Sixth Assessment Report Working Group

Investopedia Environmental Social & Governance ESG Criteria

Climate Action Tracker

Want to know more about these topics and how to talk with your customers about these topics?

Head to our Smart Hub for learning resources for energy businesses.

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