Keywords

1 Introduction

Limiting global warming to a maximum of 2 ℃ and, if possible, keeping it below 1.5 ℃ is considered a central goal in mitigating the consequences of climate change and is a core component of international climate agreements such as the Paris Climate Agreement [1], which has recently been reaffirmed at COP26 [2]. Manufacturing companies still significantly contribute to climate change through their greenhouse gas emissions [3]. In the industrial sector, in particular, emissions have stagnated over the past twenty years [4].

However, the long-term goal is to achieve climate neutrality. This is more and more reflected in the strategies of companies, which often define sustainability strategies and climate strategies [5]. Both, large companies and SMEs, frequently set themselves the goal of climate neutrality. In addition to ecological motivations, economic incentives such as rising energy costs, a CO2 price and progressive regulation through legal requirements and the demand of customers and investors for sustainably produced goods are incorporated as decisive factors [6].

2 State of the Art

In science, politics and in the context of corporate publications, the term climate neutrality is used with increasing frequency [7]. Companies are aligning goals and strategies accordingly and declaring products, corporate divisions or the entire company to be climate neutral. However, interpretations of the term often differ and are mixed with CO2 neutrality and greenhouse gas neutrality [8]. But not all these terms describe the same impact on the climate:

CO2 neutrality qua term includes only carbon dioxide. In the sense of a complete mitigation of all harmful impacts on the climate system, CO2 neutrality thus represents only a partial goal. Greenhouse gas neutrality includes other greenhouse gases in addition to CO2. The term climate neutrality goes beyond the mere avoidance of greenhouse gas emissions. Anthropogenic activities have no net impact on the climate system in this state. Thus, the state of climate neutrality represents the most ambitious climate protection goal [8, 9].

The path to climate neutrality currently presents itself as an enormous challenge for manufacturing companies [10]. In the literature, there is so far no uniform strategy for achieving climate neutrality. Typical steps that must be taken on the way to climate neutrality are accounting, minimization, substitution, offsetting and communication [11, 12].

Although many companies agree on the basic goal of climate-neutral production, they choose different approaches to achieve this goal. Strategy implementation often depends on offsetting approaches rather than the complete elimination of greenhouse gas emissions during the production process [13]. Companies also differ in their choice of accounting boundaries. For example, only direct emissions of scopes 1 and 2 according to the Greenhouse Gas Protocol (GHG) are considered, while the often even larger, but more difficult to quantify, indirect emissions of scope 3 are not considered [14, 15].

This article takes these differences as an impulse to analyze in more detail, based on empirical data, how companies approach the goal of climate neutrality strategically. The results of the empirical study are described below.

3 Methodology

Based on the state of the art and known research results, the objective of this paper is to enhance these findings with empirical data on the implementation of climate strategies from corporate practice. To this end, a questionnaire was sent electronically to 900 individuals from the management board, production-related management (e.g. production manager) or individuals responsible for the field of sustainability at their respective company. All companies are located in Germany. The empirical data collection follows the mixed methods approach [16] and combines quantitative and qualitative research elements. The questionnaire contains both closed questions for direct quantitative evaluation and open questions where the answers were codified and categorized for quantitative evaluation. The responses to the open questions were also analyzed qualitatively to consider information provided by individual respondents. The questions are derived from evaluating the scientific state of the art. They cover the topics of the company's strategic orientation, the status in the transformation towards climate neutrality by means of a simple maturity model, specific questions on certain measures and associated implementation barriers, and motivators for the company's strategic orientation in the context of climate change. The scope of the questionnaire is limited to seven questions to ensure a high response rate and, at the same time, sufficient substance of the results.

4 Results

The cross-sector survey is used to develop and map the viewpoint of manufacturing companies in the context of climate neutrality strategies. The evaluation includes responses from 55 people from 50 different companies. 21.8% of the participants come from large companies, 56.4% from medium-sized companies and 5.5% from small companies. For 16.4%, no company size was given.

Question 1: Definition of Climate Neutrality.

The free text question for a definition of climate neutrality is met with a diversified response pattern. The inconsistent definition in the literature is reflected in the results. Only 23.6% of the participants refer in their answer to the influence of emissions on the entire climate system and thus follow the definition of the Intergovernmental Panel on Climate Change (IPCC) [9]. In contrast, 18.2% refer to greenhouse gas emissions, and the majority (36.4%) associate the term climate neutrality with the consideration of CO2 emissions (see Fig. 1).

Fig. 1.
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Question 1: Definition of climate neutrality

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Question 2: Importance of Climate Neutrality.

Almost half of the participants state that they have firmly anchored the topic in their corporate strategy. In 56% of the participating companies, there is a working group that explicitly deals with climate neutrality. The consideration of emissions in investment decisions and the provision of a catalog of measures is less widespread but is considered a planned long-term measure by around one-third of the respondents (see Fig. 2).

Fig. 2.
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Question 2: Importance of climate neutrality

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Question 3: Strategies for Climate Neutrality.

Over 70% of respondents indicate that their company has or plans to establish a strategy for carbon neutrality in Scopes 1 & 2. When Scope 3 is included, this proportion is reduced to barely half of the companies, with only 10.9% having already defined such a strategy. None of the surveyed companies currently achieves climate neutrality regarding Scope 3. Also, in relation to Scope 1 and 2, only 3.6% state that they have already achieved this goal (see Fig. 3).

Fig. 3.
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Question 3: Strategies for climate neutrality

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Question 4: Maturity Level for the Transformation Towards Climate Neutrality.

To determine the status of the transformation towards climate neutrality, the survey uses a simple maturity model with the following three maturity levels: Maturity level 1 is characterized by little know-how on the topic of climate neutrality, a missing strategic approach for climate neutrality, no clear responsibilities in the organization and hardly any data on emission values of the company. At maturity level 2 various areas of the company are already climate-neutral or on the way to becoming climate-neutral; there are several people/working groups in the company who are actively working on the issue and there are data on emission values for individual areas of the company. Maturity level 3 expects the company to be working towards climate neutrality, characterized by a low offsetting rate through emission certificates. Scopes 1 & 2 have to be already climate neutral and the company has to be engaged in emission reduction of its value chain (scope 3). 31% of the respondents assign their company to the lowest maturity level 1, 55% maturity level 2 and only 14% see their company at the most advanced maturity level 3.

Question 5: Relevance of Mitigation Measures and Barriers.

To gain an insight into the operationalization of the strategies, the relevance of specific fields of action for the individual companies was surveyed. The survey also asked about barriers to implementation. Figure 4 shows the results for measures that can be classified as minimization measures.

Fig. 4.
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Question 5: Relevance of mitigation measures – minimization

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The application of energy-efficient technologies and increasing energy efficiency through process optimization are of high importance in this context. Material efficiency measures are currently relevant for 56% of the participants. The introduction of a circular economy is currently a relevant measure for reducing emissions by only 40%. 15% do not consider the conversion of the linear value chain to a circular system to be relevant and another 15% cannot assess the relevance. Reducing final demand is only relevant for a total of 26%, either currently or in the longer term. Barriers to implementing minimization measures arise mainly from costs or lack of resources.

Fig. 5.
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Question 5: Relevance of mitigation measures – substitution

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Figure 5 represents the area of substitution. This is characterized by the focus on the switch to renewable energies. For only 5% this is not relevant. Electrification as part of the conversion to renewable energies is clearly more relevant than the use of green hydrogen or biomass as an energy source. Measures with currently low availability are not yet in the focus of the companies, and their application tends to be more difficult to assess. Economic reasons are most frequently cited as a barrier to the switch to renewable energies. Substitution of materials is constricted by a lack of material alternatives, special material requirements and customer requirements.

The area of offsetting is illustrated in Fig. 6. The results for the purchase of emission certificates reflect current debates about its effectiveness as a climate protection measure. The relevance is disputed among the participants. When asked about obstacles to implementation, 19.6% say they consider the measure unsustainable or greenwashing. On the other hand, 53% of the companies want to offset emissions with internal climate protection projects, and another 22% are planning their own long-term internal offset projects. Compared to the purchase of certificates, companies tend to favor internal offsetting projects. For most companies, Carbon Capture and Storage (CCS) and Carbon Capture and Usage (CCU) technologies are not relevant or cannot be evaluated yet.

Fig. 6.
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Question 5: Relevance of mitigation measures – offsetting

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Question 6: Offsetting Strategies.

The complex and controversial societal debate about the actual benefits of emission certificates is addressed in the survey from a company perspective. For 63.6% of the participating companies, offsetting through certificates is only a temporary measure on the way to climate neutrality. 14.5% of the participants consider certificates to be greenwashing. The transparency of the certificate market is also questioned. The actual environmental impact behind an offsetting strategy seems to be an important aspect for most companies (see Fig. 7).

Question 7: Motivation.

Motivational reasons for climate protection measures were asked for in a free text field and then classified. Social responsibility towards society and family (32.2%) and environmental protection (30.4%) were identified as important drivers. These were followed by legal requirements, competitive advantages and customer requirements, each accounting for a similar proportion of around 10%.

Fig. 7.
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Question 6: Offsetting strategies

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5 Discussion

The study gives insights into the transformation of companies towards climate neutrality. Although 50 German companies have been surveyed, the results should not necessarily be considered representative for the German industry, but they provide valuable insights into a sample of companies of various sizes and from various industrial sectors. The surveyed companies have recognized the importance of climate neutrality in many cases. They are driven by various motivators which can be attributed primarily to the area of corporate responsibility. However, it can be assumed that extrinsic factors such as public expectations also exert an influence on the companies. On an abstract level, the majority of companies state that they take the goal of climate neutrality into account strategically. This high priority is somewhat at odds with the results of the question about a definition of climate neutrality. It is assumed from the responses that there is not yet a uniform understanding of the term. However, to ensure the comparability of communicated goals of companies, uniform definitions are necessary. It is observed that hardly any companies have implemented the goal of climate neutrality to date. Even if climate neutrality strategies are specified, the results fall short of the fundamental importance attributed to the topic. This becomes particularly clear when Scope 3 is considered in addition to Scope 1 and 2. Not only does no company currently meet the goal of climate neutrality at Scope 3, but many companies also lack strategies and measures to pursue and achieve this goal in the long term. This is particularly remarkable because a large proportion of a company's emissions frequently falls within Scope 3 [14]. Consequently, only 14% indicate the highest suggested maturity level 3. While topics such as energy efficiency, material efficiency, the shift to renewable energies and electrification are perceived as highly relevant, approaches such as circular economy and material substitution still lack approval. It is notable that, contrary to the public debate, alternative energy sources such as hydrogen and biomass are accorded only minor importance. Reasons for this are assumed to be the lower technical availability and a strong dependence on specific industries. The study indicates that offsetting measures currently account for a significant proportion of companies’ efforts to achieve climate neutrality. However, a large proportion of companies also state that they regard this as a temporary transitional solution. This means that even greater technical efforts will be required in the future. In the opinion of the companies surveyed, however, these measures do not belong to CCS and CCU. It is therefore clear that decarbonization of the production processes themselves will become unavoidable.

6 Conclusion

The empirical study shows that most surveyed companies are conscious of the strategic goal of climate neutrality. But there is still a lack of transfer of the abstract strategic goal into operations. One reason can be seen in the lack of specification of the term climate neutrality for the corporate level. Today, many companies approach the goal with offsetting projects, but even the companies themselves do not consider these to be effective in the long term. There is a need for further research and support for companies on the question of how climate neutrality can be defined for companies and how this goal can be implemented strategically and operationally without offsetting projects. Conducting a subsequent study with a larger sample of companies should be considered to ascertain that the results are representative for the German industry. Another survey with a larger sample could also facilitate research on how factors such as the industrial sector, company size or other qualitative characteristics of a company’s organization are linked to their transformation towards climate neutrality.