The COP26 Debate About Decarbonization Now Turns Into Action
The full impact of the COP26 global climate talks in Scotland these past two weeks won’t be known for years or potentially decades. The wide-ranging debates, promises, and hopes spanned extraordinarily large numbers down to the smallest scale.
Even as attendees pledged $130 trillion toward sustainable finance, the conference’s signature moment perhaps came from the world’s smallest economy. The recorded speech showed the suit-and-tie-clad Simon Kofe, foreign minister of the island nation of Tuvalu, standing knee-deep in the ocean — a visceral reminder of the risk climate change poses to many.
Debates raged about whether enough was accomplished in Glasgow or the point at which rising global temperatures will finally peak. One of the only areas of agreement was the urgent need to decarbonize. In some cases, that meant a commitment to phasing out fossil fuel production (Denmark and Costa Rica). In other cases, it was plans by 40 countries — including Poland, Vietnam, and Chile — to shift away from coal. Many others promised to end public financing of overseas fossil fuel projects.
If all climate pledges from COP26 are successful, calculations suggest that the worst impacts could be avoided. Dr. Fatih Birol, executive director of the International Energy Agency, said these pledges could limit warming to 1.8 C above preindustrial levels. Signatories to the Paris Climate Agreement pledged to keep warming well below 2 C, with a goal of 1.5 C.
The commitments seem to be in place. But nations now have to execute those plans quickly and will need the support of their industries to cut emissions while meeting other obligations. This places additional pressure on companies to align their carbon emissions goals with those of the Paris Agreement and the global call to reach net-zero greenhouse gas emissions by 2050.
Even with immediate action, this journey is likely to take the next three decades for most developed countries and longer for developing nations. For individual companies, however, this goal is within reach much more quickly. At Infosys, we committed to carbon neutrality in 2011. Last year, we reached that goal with a combination of commitment and innovation. That success has emboldened us, rather than make us complacent; we have pledged in our ESG Vision 2030 to be carbon neutral each year going forward.
We were able to create a collection of strategies, processes, and technologies that could move us to that carbon net-zero goal faster than we had previously imagined. The three pillars to reduce emissions are:
- Energy efficiency. Infosys was able to reduce per capita energy consumption by 55% between 2008 and 2020. In this period, energy consumption at our campuses in India increased by only 20% while the number of employees grew by 166%.
- Renewable energy. About half the electricity used at Infosys’ India campuses was generated by renewable sources in the 2021 fiscal year. That included an investment in 60 MW of solar.
- Carbon offsets. This final piece of the puzzle should be an opportunity rather than a shortcut. Offsets can benefit the community as well as the climate.
The sequence of these operations is important so companies can minimize the costs and maximize the benefits. Investments in analytics, systems thinking, and automation reduce energy use, and, in turn, will determine a building’s actual needs. This is a critical step because the use of buildings (both businesses and homes) accounts for 28% of the world’s emissions.
Once a new baseline is created, a company can then fulfill those needs with renewable energy, whether it’s rooftop solar, power purchase agreements, or other options. In some cases, these might be long-term contracts that invest in the development of new renewable plants or expanded capacity.
For the above, the benefits for the company and environment are clear. The emissions reductions help a country meet its “nationally determined contributions” toward the UN goals. Simultaneously, the reduction in energy use saves money. Historically, companies might give up more of those savings to pay for green energy, but the cost of renewable energy has dropped precipitously in many parts of the world.
The final step is carbon offsets, which are necessary but not sufficient. These should be used judiciously and carefully; there is some risk that carbon offsets don’t always offset carbon. A 2020 Bloomberg investigation found examples of carbon offsets that paid for preservation of forests that were never in danger, even without those payments. Although carbon sinks are important, they have their limits. The NGO Oxfam calculated that planting enough trees to account for planned CO2 reductions would require space the size of India.
Companies must plan carefully to ensure their carbon offset is actually meaningful. When Infosys sought offsets, we developed our own program that eventually created a broad ripple effect. Instead of buying offsets from a market, we invested in India’s rural communities. Our offsets program included electrification projects and replacement of old cookstoves (often wood-fired) with cleaner-burning, efficient biogas stoves. This not only reduced carbon emissions but also improved indoor air quality, which a global study determined is responsible for at least 1.6 million premature deaths annually.
Overall, Infosys’ offset program helped 119,000 families, created more than 2,600 jobs, eliminated the equivalent of more than 1 million tons of CO2, and contributed to 11 of the 17 UN Sustainable Development Goals. None of these efforts dragged down business performance. During this race to net zero, Infosys’ revenue has doubled, and the workforce grew by more than 100,000. These results show a path forward to practical sustainability, a way to subtract what does not work in an industrialized society and replace it with what does.