From Promise to Action on Net Zero is a series of research publications, interviews, and events exploring how companies are translating net zero emissions goals into practice. On September 16th, Mark Lee, Director, the SustainAbility Institute by ERM hosted and facilitated a panel discussion with leaders from Shell, J.P. Morgan Chase (JPMC), and Ford Motor Company, along with the Chief Sustainability Officer of Los Angeles County to discuss organizational net zero commitments through the lens of the systems change required to achieve them.

To open the conversation, each panelist shared what their own organizations are doing to accelerate action. Rama Variankaval, Global Head of Center for Carbon Transition & Global Head of Corporate Finance Advisory at JPMC, provided insights about the Carbon Compass, a tool JPMC designed to help monitor how closely the bank's financing is aligned with the Paris Agreement. Rama also about the importance of JPMC serving as a leader in the financial sector and focusing the Compass and its ambitions on the oil & gas, electric power, and automotive sectors, which are critical for climate change solutions.

Bob Holycross, Vice President, Sustainability, Environment & Safety Engineering, Ford Motor Company shared his perspective about the difference it makes to have financial institutions like JPMC establish targets that apply to the automotive sector. Bob noted that stakeholders want companies to share data that helps them assess how companies are performing and said that JPMC’s Carbon Compass helps companies like Ford share information about their goals, including Ford’s commitment to carbon neutrality by 2050, in the context of the Paris Agreement, suggesting cross-sectoral targets are welcome, useful, and presently well-aligned.

Mallika Ishwaran, Chief Economist, Shell put the system change needed to make net zero possible in a broader context and discussed the potential costs of the transition to a net zero economy. Based on Shell’s scenario analysis, for the US to get to zero emissions by 2050, the overall macro-economic cost is estimated to be small, just a few percentage points in GDP. Mallika emphasized that in this potential pathway for the US to reach net zero there is need for a reduction in capital supporting fossil energy supply and huge growth in investment in renewables. As critical is significant investment in the sectors that use energy so that they can transform to run off low carbon solutions – such as aviation, power and even energy storage. She noted how deeply Shell’s scenario analysis underscored the need for collaboration across the private sector, government policy makers, and consumers to ensure a level playing field that supports the commercialization of low carbon fuels businesses. 

One exciting systems change related to low carbon fuels that is already underway is the electrification of vehicles, which Ford is helping to accelerate with $30 billion in investment through 2025. Bob Holycross explained that some of the factors that have shifted over time to help electrification advance now have been costs to develop EVs coming down and the way new technologies like vehicle connectivity and software services help meet the other functional needs of consumers, making EVs more attractive.

All the panelists agreed that net zero transition depends on collaboration between the private sector and government. Gary Gero, Chief Sustainability Officer, Los Angeles County described some of the realities of a net zero transition for cities and its citizens. He noted that disruption will be an inevitable part of the net zero transition, but stressed that the financial and human cost of inaction is much higher. He views his role as planning for how disruption can be minimized for communities. To do that, LA County has completed a county-wide climate vulnerability assessment to identify the populations most at risk from climate change impacts and is working to address those, for instance by partnering with utilities, vehicle manufacturers, and transportation agencies to create a regional transportation electrification partnership to accelerate zero emission technology. Gary also shared that LA County had just passed regulation. He acknowledged that this key low carbon transition step will deeply impact the workers – his citizens – who drill and maintain wells and who work in the region’s oil refineries. To help, they have created a just transition task force that includes representatives from labor, industry, frontline communities, and environmental justice communities to proactively plan how to support the workers who will be affected.

Audience questions explored the role of carbon offsets in a net zero transition. The panelists acknowledged that offsets can be a fraught issue, but stated there’s increasing recognition that they will be needed, particularly over the next 30 years. Panelists agreed that mitigation actions that bring the system as close as possible to net zero are preferred, but suggested offsets will be appropriate for extremely expensive or extremely hard to abate emissions.

The panelists shared closing thoughts on what action is most critical this decade if the Paris Agreement is to succeed by 2050. Mallika noted the need to ramp up action on renewable and low-carbon electricity in particular, saying we need to invest in low carbon generation and the infrastructure that enables that network to be cost effective and reliable.

Please listen to the full webinar recording to learn more about the systems change required for a net zero transition and explore the full From Promise to Action series on our website.