Net Zero Business Models

JOHN MONTGOMERY is the Founder of the Center for Global Consciousness where he provides strategic advice and executive coaching to CEOs and their executive teams. He practiced corporate law for 37 years in Silicon Valley where he founded a thriving corporate law firm, M&H LLP, and served as outside general counsel for over two dozen public companies and over 1,000 emerging growth companies. John is also the author of Great from the Start: How Conscious Corporations Attract Success. MARK VAN CLIEAF, FRSA, is Managing Director at FutureZero, a leading consultancy advising global institutional investors, boards, and C-Suites on enterprise performance measurement, organization design, C-Suite succession planning, and executive incentive plan design aligned to business strategy and the net zero transition. He has over 35 years’ experience across four continents and a broad range of industry sectors, including global energy, utilities, mining, aluminum, consumer packaged goods, industrial, technology, credit card, advertising and branding, corporate finance, mergers and acquisitions, investment banking, and institutional investors.

• Table of ExhibitsTable of AppendicesProloguePrefaceIntroduction: How to Use This BookPart I: Setting the Context for Net ZeroChapter 1: The Net Zero OpportunityThe Transformational Forces of Net ZeroManaging the Transformational Forces of Net Zero in a VUCA WorldWhat Does “Net Zero” Mean?Going Beyond Net ZeroWhat Does the Transition to a Net Zero Economy Look Like?The Net Zero OpportunitySummary: Where to BeginPart II: The Technical Foundations of Net Zero Business ModelsChapter 2: An Overview of Greenhouse Gas EmissionsWhat Are Scope 1, 2, and 3 Emissions?Developing a GHG Emissions Data StrategyWhat Are Scope 1 Emissions?What Are Scope 2 Emissions?What Are Scope 3 Emissions?Summary: Getting StartedChapter 3: Applying a Carbon Shock TestThe $20 Trillion ProblemSome Context for a Carbon TaxScenario Planning for Carbon TaxesSummary: Have Good ProcessesChapter 4: Science-Based Emissions-Reduction TargetsThe Four Objectives of the Net Zero StandardGenerally Accepted GHG Accounting and Reporting PrinciplesFive Steps to Set Science-Based TargetsScience-Based Targets Unique to the Power SectorScience-Based Targets Unique to the Forest, Land, and Agriculture (FLAG) SectorUpdating and Communicating TargetsThe Validation ProcessSummary: Science-Based Targets Are Not a Transition PlanPart III: The Four Pathways to Net ZeroChapter 5: The Four Pathways to Net Zero: An IntroductionEco-Efficiency Processes and SystemsSummaryChapter 6: Pathway One: Eco-EfficiencyPathway One: Companies with Low Carbon Intensity Business ModelsWeyerhaeuserMicrosoft CorporationCanada Goose Holdings, Inc.JABPathway One: Companies with High Carbon Intensity Business ModelsExxon Mobil CorporationCharacteristics of Pathway OnePathway One Risk FactorsCritical Success Factors for Pathway One CompaniesSummaryChapter 7: Pathway Two, Option One: Incremental Transformation of the Business Model—Zero-Carbon Products and ServicesRe-engineering with a Focus on Zero-Carbon Products and ServicesNet Zero Transformation Strategies and Transition PlansComplete Transformation of the Existing Product and Services Portfolio to Zero CarbonWalmart, Inc.NestléRoll-Royce HoldingsSummaryChapter 8: Pathway Two, Option Two: Complete Transformation of the Business ModelComplete Transformation of the Business ModelØrstedShell plcVattenfallGeneral Motors CompanyCharacteristics of Pathway TwoPathway Two Risk FactorsCritical Success Factors for Pathway Two CompaniesSummaryChapter 9: Pathway Three: Eco-Startups, New Ventures, Spinouts, and Industry DisruptorsClimate Technology and Eco-StartupsInnovation and Industry DisruptorsAbout DisruptionThe Disruption Opportunity MatrixEcolibri SrlNuScale Power CorporationCelsius EnergyCarbonCureUniversal Hydrogen Co. and ZeroAvia, Inc.Incremental Innovation versus Exponential InnovationCharacteristics of Pathway ThreePathway Three Risk FactorsCritical Success Factors for Pathway Three CompaniesSummaryChapter 10: Pathway Four: Industry Ecosystem(s) TransformersThe Four Stages of Industry Ecosystem(s) TransformationThe Transformation of the Automobile IndustryTesla the DisruptorTesla: A Pathway Four Industry Ecosystem(s) Transformation LeaderThe Rise of Electric VehiclesTesla’s Business ModelCharacteristics of Pathway FourPathway Four Risk FactorsCritical Success Factors for Leading an Industry TransformationSummaryPart IV: Implementing a Pathway to Net ZeroChapter 11: A Foundational Framework to Choose a PathwayThe Innovation and Return on Capital Life CycleValue Quadrant 1: The High-Innovation/Early-Growth StageValue Quadrant 2: The High-Performance/Competitive-Fade StageValue Quadrant 3: The Mature/Cash Cow StageValue Quadrant 4: The Failing Business Model StageHow the Innovation and Return on Capital Life Cycle Effects ValuationThe Four Domains of Carbon Intensity, the Innovation and Return on Capital Life Cycle, and ValuationSummary: Have Good Processes to Preserve and Grow Shareholder ValueChapter 12: Preparing to Lead the Transformation: Key Elements of Successful TransformationsThe Three Types of ChangeHearing the CallPreparing to Lead to Net ZeroStartup and StaffCreate the Case for Net ZeroAssess and Build the OrganizationBuild Leadership Capacity to ChangeHave Clear RolesDesignate an Executive SponsorEstablish a Parallel Governance StructureDesignate a Net Zero LeaderAppoint Individual Net Zero Process LeadersUse Experts as NeededAlign Incentive Compensation with Achieving Net ZeroHave Adequate Financial Resources to Get to Net ZeroHave a Flexible PlanMeet People’s Psychological NeedsLaunching the TransformationSummaryChapter 13: The Three Domains of Systems ThinkingThe Operations DomainThe Business Systems DomainThe Global Systems DomainCultivating Systems-Thinking Capacity for the Transition to Net ZeroDomains of Systems Thinking for the Pathways to Net ZeroSystems Thinking Meets Electric Vehicles and Gray ElectronsSystems Thinking and the Electric Power Sector—the Foundation to the Net Zero EconomySystems Thinking and the Development of the Smart GridSystems Thinking and the Double Transformation of the GridSystems Thinking, Smart Grids, and Green HydrogenSummaryChapter 14: Telling the Net Zero StoryCompanies Need Good Data to Tell Their Net Zero StoriesThe Board of Directors’ Role in Telling the Net Zero StoryInvestors Expect Comprehensive and Credible Net Zero StoriesThe Evolution of Voluntary ESG and Climate-Related Disclosure—the Alphabet SoupThe Consolidation of Voluntary Climate-Related Disclosure into Universal StandardsThe Evolution of Mandatory Climate-Related DisclosureTelling the Net Zero Story Before the Implementation of Mandatory Climate-Related DisclosuresOther Key Roles for Disclosure Process DevelopmentSummaryChapter 15: Obstacles to Net ZeroMental ObstaclesGreenwashingHidden ObstaclesFossil Fuels and the Developing WorldFickle Political SupportSummaryPart V: Beyond Net Zero: Systems ChangeChapter 16: Epilogue: Toward a Net Zero CivilizationThe Shift to Stakeholder CapitalismThe Infrastructure of Stakeholder Capitalism and Systems ChangeBenefit Corporation GovernanceMultiCapital AccountingDoughnut EconomicsHeart-Based LeadershipConclusionAcknowledgments