Net Zero Business Models

Future-proof your business with a credible net-zero transition plan for the new economy.

Net Zero Business Models: Winning in the Global Net Zero Economy delivers a breakthrough approach to transition from business models contributing to climate disaster to Net Zero Business Models crucial to sustainability and profitability.

Based on the authors' business advisory expertise and insights from their research with over 200 best-in-class global companies, this book is an indispensable guide for executives, corporate directors, and institutional investors.

Discover how to implement a bona fide net zero transition plan and processes to:

• Identify new Board and Investor expectations for Net Zero Transition Plans (Beyond ESG)
• Ensure the Five eco-efficiency plans, processes and value drivers are in place as the foundation for a credible transition plan
• Select one of Four Pathways to a Net Zero Business Model as strategic options
• Apply the Three Domains for Systems Thinking required by leaders for Net Zero strategic leadership
• Align key metrics, targets, and incentive designs to accelerate business model transition

Metrics and Targets are not a plan, and a commitment to net zero is not a business strategy. Net Zero Business Models has been endorsed by C-Suites, Boards and Institutional Investors representing over $ 80 trillion in assets under management. This is the playbook you need to win in the Net Zero Global Economy.

Table of Exhibits

Table of Appendices

Prologue

Preface

Introduction: How to Use This Book

Part I: Setting the Context for Net Zero

Chapter 1: The Net Zero Opportunity

The Transformational Forces of Net Zero

Managing the Transformational Forces of Net Zero in a VUCA World

What Does “Net Zero” Mean?

Going Beyond Net Zero

What Does the Transition to a Net Zero Economy Look Like?

The Net Zero Opportunity

Summary: Where to Begin

Part II: The Technical Foundations of Net Zero Business Models

Chapter 2: An Overview of Greenhouse Gas Emissions

What Are Scope 1, 2, and 3 Emissions?

Developing a GHG Emissions Data Strategy

What Are Scope 1 Emissions?

What Are Scope 2 Emissions?

What Are Scope 3 Emissions?

Summary: Getting Started

Chapter 3: Applying a Carbon Shock Test

The $20 Trillion Problem

Some Context for a Carbon Tax

Scenario Planning for Carbon Taxes

Summary: Have Good Processes

Chapter 4: Science-Based Emissions-Reduction Targets

The Four Objectives of the Net Zero Standard

Generally Accepted GHG Accounting and Reporting Principles

Five Steps to Set Science-Based Targets

Science-Based Targets Unique to the Power Sector

Science-Based Targets Unique to the Forest, Land, and Agriculture (FLAG) Sector

Updating and Communicating Targets

The Validation Process

Summary: Science-Based Targets Are Not a Transition Plan

Part III: The Four Pathways to Net Zero

Chapter 5: The Four Pathways to Net Zero: An Introduction

Eco-Efficiency Processes and Systems

Summary

Chapter 6: Pathway One: Eco-Efficiency

Pathway One: Companies with Low Carbon Intensity Business Models

Weyerhaeuser

Microsoft Corporation

Canada Goose Holdings, Inc.

JAB

Pathway One: Companies with High Carbon Intensity Business Models

Exxon Mobil Corporation

Characteristics of Pathway One

Pathway One Risk Factors

Critical Success Factors for Pathway One Companies

Summary

Chapter 7: Pathway Two, Option One: Incremental Transformation of the Business Model—Zero-Carbon Products and Services

Re-engineering with a Focus on Zero-Carbon Products and Services

Net Zero Transformation Strategies and Transition Plans

Complete Transformation of the Existing Product and Services Portfolio to Zero Carbon

Walmart, Inc.

Nestlé

Roll-Royce Holdings

Summary

Chapter 8: Pathway Two, Option Two: Complete Transformation of the Business Model

Complete Transformation of the Business Model

Ørsted

Shell plc

Vattenfall

General Motors Company

Characteristics of Pathway Two

Pathway Two Risk Factors

Critical Success Factors for Pathway Two Companies

Summary

Chapter 9: Pathway Three: Eco-Startups, New Ventures, Spinouts, and Industry Disruptors

Climate Technology and Eco-Startups

Innovation and Industry Disruptors

About Disruption

The Disruption Opportunity Matrix

Ecolibri Srl

NuScale Power Corporation

Celsius Energy

CarbonCure

Universal Hydrogen Co. and ZeroAvia, Inc.

Incremental Innovation versus Exponential Innovation

Characteristics of Pathway Three

Pathway Three Risk Factors

Critical Success Factors for Pathway Three Companies

Summary

Chapter 10: Pathway Four: Industry Ecosystem(s) Transformers

The Four Stages of Industry Ecosystem(s) Transformation

The Transformation of the Automobile Industry

Tesla the Disruptor

Tesla: A Pathway Four Industry Ecosystem(s) Transformation Leader

The Rise of Electric Vehicles

Tesla’s Business Model

Characteristics of Pathway Four

Pathway Four Risk Factors

Critical Success Factors for Leading an Industry Transformation

Summary

Part IV: Implementing a Pathway to Net Zero

Chapter 11: A Foundational Framework to Choose a Pathway

The Innovation and Return on Capital Life Cycle

Value Quadrant 1: The High-Innovation/Early-Growth Stage

Value Quadrant 2: The High-Performance/Competitive-Fade Stage

Value Quadrant 3: The Mature/Cash Cow Stage

Value Quadrant 4: The Failing Business Model Stage

How the Innovation and Return on Capital Life Cycle Effects Valuation

The Four Domains of Carbon Intensity, the Innovation and Return on Capital Life Cycle, and Valuation

Summary: Have Good Processes to Preserve and Grow Shareholder Value

Chapter 12: Preparing to Lead the Transformation: Key Elements of Successful Transformations

The Three Types of Change

Hearing the Call

Preparing to Lead to Net Zero

Startup and Staff

Create the Case for Net Zero

Assess and Build the Organization

Build Leadership Capacity to Change

Have Clear Roles

Designate an Executive Sponsor

Establish a Parallel Governance Structure

Designate a Net Zero Leader

Appoint Individual Net Zero Process Leaders

Use Experts as Needed

Align Incentive Compensation with Achieving Net Zero

Have Adequate Financial Resources to Get to Net Zero

Have a Flexible Plan

Meet People’s Psychological Needs

Launching the Transformation

Summary

Chapter 13: The Three Domains of Systems Thinking

The Operations Domain

The Business Systems Domain

The Global Systems Domain

Cultivating Systems-Thinking Capacity for the Transition to Net Zero

Domains of Systems Thinking for the Pathways to Net Zero

Systems Thinking Meets Electric Vehicles and Gray Electrons

Systems Thinking and the Electric Power Sector—the Foundation to the Net Zero Economy

Systems Thinking and the Development of the Smart Grid

Systems Thinking and the Double Transformation of the Grid

Systems Thinking, Smart Grids, and Green Hydrogen

Summary

Chapter 14: Telling the Net Zero Story

Companies Need Good Data to Tell Their Net Zero Stories

The Board of Directors’ Role in Telling the Net Zero Story

Investors Expect Comprehensive and Credible Net Zero Stories

The Evolution of Voluntary ESG and Climate-Related Disclosure—the Alphabet Soup

The Consolidation of Voluntary Climate-Related Disclosure into Universal Standards

The Evolution of Mandatory Climate-Related Disclosure

Telling the Net Zero Story Before the Implementation of Mandatory Climate-Related Disclosures

Other Key Roles for Disclosure Process Development

Summary

Chapter 15: Obstacles to Net Zero

Mental Obstacles

Greenwashing

Hidden Obstacles

Fossil Fuels and the Developing World

Fickle Political Support

Summary

Part V: Beyond Net Zero: Systems Change

Chapter 16: Epilogue: Toward a Net Zero Civilization

The Shift to Stakeholder Capitalism

The Infrastructure of Stakeholder Capitalism and Systems Change

Benefit Corporation Governance

MultiCapital Accounting

Doughnut Economics

Heart-Based Leadership

Conclusion

Acknowledgments

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.

Net zero is more than a buzzword. It is a core driver of innovation, business success, and growth in long-term enterprise value. Net zero business models are now essential for C-Suites, boards and institutional investors. Executives must prioritize the risks and opportunities resulting from climate change and government policies to eliminate greenhouse gas emissions.

All companies must adapt to the new global net zero economy that is now a reality or fall behind.

In Net Zero Business Models: Winning in the Global Net Zero Economy, a pair of veteran advisors to boards of directors and C-Suites deliver a breakthrough approach for transitioning to net zero emission business models that drives long-term profitability, growing shareholder returns, and sustainability.

Readers will explore what net zero really means and how to inventory greenhouse gas emissions, set science-based emissions-reduction targets, and choose, design, and implement a net zero emission business model. This economy-wide transition to net zero will ultimately result in a world of carbon-free energy.

The authors reveal new foundational processes, tools, and enterprise performance benchmarks to address greenhouse gas emissions in a company’s current business model. Net Zero Business Models provides actionable and practical insights distilled from the best practices of over 200 global companies committed to achieving net zero.

Metrics and targets are not a plan and a commitment is not a business strategy. The transition to a net zero business model requires:

• Implementing the FIVE core eco-efficiency processes and systems
• Choosing one of four strategic options and implementation plans – The FOUR Net Zero Pathways
• Applying the THREE domains of systems thinking and leadership capacity across the organization

The outcome is a bona fide and credible transition plan to achieve a viable business model that is net zero.

Net zero business models have been endorsed by C-Suites, boards and institutional investors representing over $80 trillion in assets under management. A roadmap for board members, CEOs, CFOs, Chief Sustainability Officers, Chief Marketing Officers, Chief Human Resources Officers, Heads of Investor Relations and institutional investors, Net Zero Business Models is the playbook you need to win in the global net zero economy.

PRAISE FOR NET ZERO BUSINESS MODELS

“Net Zero Business Models presents an invaluable analytical framework built on in-depth research and insightful contributions from leading business strategy and finance experts along with sustainability practitioners in the real economy. It is the playbook for corporate boards, the C-Suite and investors.”
— Henrik K. Jeppesen, CFA Director, ESG Implementation, Janus Henderson Investors; Co-chair of the Sustainable Investing Group at the CFA Society New York

“A fantastic book – amazing even! I’ve spent the last 25 years immersed in values-based banking and I really wish I had this book at the start of my journey.”
—Ken LaRoe, Founder, CEO and Chairman, Climate First Bank

“Net Zero Business Models is brilliant because it concisely outlines the foundation of the future energy system required for a net zero world: smart power grids powered by 24/7 carbon free energy.”
— Chris Colbert, CFA, Chief Strategy Officer and Chief Financial Officer, NuScale Power Corporation

“Net Zero Business Models lays out the practical steps companies need to take – and boards need to monitor – to ensure a successful transition to the net zero economy. It provides invaluable insights for corporate leaders and investors alike.”
— Chris Librie, Global Director, ESG and Sustainability Strategy, Applied Materials; original contributor to the Green House Gas (GHG) Accounting Protocol Standard

“Adopting a long-term energy strategy that identifies the requisite strategic leadership capacity and innovation required reduces the friction to transition to a net zero economy. Net Zero Business Models provides C-Suites, boards, and regulators with four net-zero navigation pathways and five core eco-efficiency processes, based on best-in-class company research.”
— Aurora Geis, PCC, Founder and CEO, A Go Strategy; former board chair, CPS Energy, America’s largest electric and gas municipal utility

“A unique book that clearly articulates the different forms of systems thinking in leaders required to achieve a net zero economy.”
— Dr. Michael C. Jackson, Order of the British Empire (OBE); Emeritus Professor, University of Hull; former editor-in-chief, Systems Research and Behavioral Science