What is Net-Zero, and Why is it Important?
By Annalise Durante
Net-zero means balancing the amount of greenhouse gas (GHG) emissions going into the atmosphere with those being removed from the atmosphere. In line with scientific consensus and the Paris Agreement, reducing global emissions to net-zero is a primary way to slow the planet’s warming and reduce destructive impacts of climate change.
Is Net-Zero Even Possible?
Can the world working together really reach the ambitious goal of net-zero emissions by 2050? The International Energy Agency (IEA), in an extensive report on the topic, says Yes. But it also says that country pledges made to date won’t do the trick, and companies small and large must kick in and “up their game.”
The goal is to limit global warming to 1.5 degrees Celsius above pre-industrial levels. Experts claim that doing so will mitigate the likelihood of extreme heat, drought and flooding that otherwise might be expected, with dire implications for food supplies, economies, and biodiversity worldwide.
The IEA report suggests that extensive innovation and concerted action by stakeholders in world economies will be required. But there is the hopeful expectation that technologies will be in place by the end of the current decade to reach the 2050 goal.
But reaching that goal will mean that corporations must each take action and document their progress. Along with the carrot of a more sustainable planet comes the stick of enforcement and economic consequences for failing to keep up.
Investor and stakeholder demands for comprehensive climate action plans are growing. In addition to reputational damage, fines or penalties for inaction may soon be imposed as governmental regulations become more widespread.
With 90% of GDP now covered by countries’ net-zero targets, companies are scurrying to create or revise climate-related targets. These net-zero goals are vital for our planet’s well-being, but they require a feasible plan to get there.
Creating a Roadmap to Net-Zero
The following steps may serve as a preliminary guide for creating a roadmap to net-zero. Utilizing the knowledge of external advisors or consultants may help work through some or all of the steps. Collaboration among framework or initiative partners can be valuable as well.
As a first step, it is important to clearly outline several factors, such as:
Which emission type(s) will be included in the company’s net-zero targets? Scope 1 includes direct emissions, Scope 2 includes emissions from purchased energy, and Scope 3 includes all indirect emissions occurring in the value chain (upstream and downstream). Most emissions are Scope 3, which are the most difficult to quantify.
Will the company adhere to a certain framework(s), such as the Science Based Targets initiative (SBTi)?
How ambitious does the company seek to be? Is the goal to be merely in compliance with regulations, or to be industry leaders in sustainability? This objective should reflect what is realistically attainable, depending on the company’s baseline, how established the company’s climate action plan is, and which resources it has as its disposal.
Who in the company will assume responsibility and oversee progress? Will there be Board and/or C-Suite level governance? Will there be a sustainability department, product or team leads, etc.?
Carbon footprinting is the term for measuring the GHG emissions produced by an organization’s actions. This arduous process is a critical step and will determine a company’s baseline. This data point in turn helps to inform emissions reduction targets. Software and/or specialized consultants may be particularly useful or required in this complex process to quantify emissions accurately .
After a company obtains a clearer picture of its current carbon footprint, it needs to define appropriate emission reduction targets. It’s important for targets to be science-based, aligned with what the latest climate science indicates is needed to meet the goals of the Paris Agreement. The SBTi is considered best practice and has helpful guides and criteria for adequate target-setting. As part of the initiative, SBTi’s partner organizations, such as CDP, can provide independent assessments of a company’s targets. In addition to meeting criteria of initiatives like SBTi, it’s important to be aware of any governmental regulations related to climate goals.
After targets have been set, formulating a comprehensive climate action plan is the next step towards measurable progress. Short-term and longer-term priorities should be set and communicated within the company. The company’s leaders must determine how the business can best limit emissions and run more efficiently. This will likely require research, innovation, and investment. Ideally, further into a company’s climate action plan, sustainability will be fully integrated into a company’s daily operations and decision-making. For example, if there are company-level emission reduction targets, this information must be communicated to product- or department-level operations.
Although the goal should be to reduce emissions to zero, the reality is that some level of emissions will still occur. This is where carbon offsets come in as part of the strategy to reach net-zero targets. The scientific community has prioritized offsets that focus on carbon sequestration and removal.
The best practice is for a company to report annually on progress toward net-zero. A company should develop a reporting framework that facilitates measurement of progress, and holds itself accountable to stakeholders. If a company joins one or more frameworks or initiatives, such as SBTi or CDP, reporting will be mandatory.
Creating a roadmap to net-zero can seem daunting at first, but time is of the essence and much is at stake. You‘re not alone: all over the world, nations and corporations are cooperating with public interest organizations to reduce carbon emissions and improve planetary sustainability. Luckily, there are ample resources available to help streamline and expedite the process. Don’t be shy about asking for help zeroing in. .