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Net Zero
Net-zero carbon is defined as the point when human-caused emissions of greenhouse gasses are balanced by removals, or sequestration, of greenhouse gasses from the atmosphere.
The number of companies addressing their environmental and social impacts has been rising fast. Amidst numerous climate pledges and emission reduction targets, it is important to ensure commitments convert into real action and align with what science tells us is required to avoid the worst outcomes of climate change.
The enormity of the climate challenge calls for coordinated efforts at local, regional, national and global levels. The net-zero targets framework provided by Science Based Targets initiative (SBTi) is an important tool for companies to understand what net zero means and work to achieve climate goals in a systematic fashion. We have a long way to go, but aggressive action on climate will create more resilient and profitable companies and build a healthier, more equitable, and secure world -- in short, a net positive future.
Co-Chair and Co-Founder at IMAGINE
Master of Environmental Management 2003, Yale School of Environment
Why is emission reduction the current narrative?
The perils of human-induced climate change have been known for many decades. But today, it’s no longer a model to debate – we are now experiencing effects at an unprecedented scale. Climate change increases the frequency and intensity of catastrophic weather events. In just the summer of 2022, record floods covered one-third of Pakistan, heat waves blanketed Europe, and local communities in the U.S. experienced devastating impacts of tornadoes in Minneapolis, wildfires in California and Oregon, and major floods in Jackson, Mississippi and rural parts of Montana, Idaho, and Wyoming. Hence businesses and governments are now facing pressure from the public to invest in mitigation of and adaptation to climate change. Business leaders are under scrutiny from multiple stakeholders – employees, customers, governments, regulators, investors and more. As a result, companies are actively making pledges to reduce their emission footprint and do their part to accelerate climate action.
Emission reduction Lingo and Pathways
Currently, organizations have referenced their emission reduction goals using terms such as net-zero, carbon neutral, climate neutral, climate positive, etc. to demonstrate their commitment. Confusingly these terms can mean the same thing, but there are substantial differences in how companies set and act on these goals.
Net-zero commitments require companies to reduce emissions by changing how they operate and reducing emissions in their own operations (so-called scope 1 and 2 emissions) and in their value chain (scope 3 emissions). Companies may need to adopt clean energy, energy efficiency, electrification measures, etc. to reduce their emission footprint.
Approach 1 - Abatement
Approach 2 - Offsets
Offsets allow organizations to claim a reduction in their net emissions by removing emissions outside their value chain through compensation or neutralization (i.e., removal). When a company aspires for carbon neutrality, it is committing to reduce carbon emissions as much as possible while removing or offsetting the balance by financing projects externally. Currently, most companies use compensation to claim neutrality, but over time the ultimate goal will need to be neutralization. True climate neutrality will emphasize emission removal approaches and also go beyond carbon emissions to encompass reduction of all greenhouse gas emissions responsible for climate change (e.g., methane).
Different approaches to emission reduction and their relative importance
By adopting net-zero targets, companies are compelled to take ownership of their contribution to climate change. They are also empowered to innovate and fundamentally reflect on ways to inherently operate sustainably in the long run. While the journey towards net zero commitments may currently include offsets, the true mitigation of climate change will require businesses to make the use of carbon abatement technologies a central part of their climate strategy. The world has to fully decarbonize to truly tackle climate change.
A standardized framework for emission reduction
To achieve net-zero, the SBTi standard tells us, it is critical that corporations adhere to time bound goals, maintain transparency around disclosure of emissions, take ownership for emission reduction and take responsibility for emissions that have yet to be reduced, or that remain unfeasible to be eliminated.
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Status quo and desired state of net-zero (Source: Foundations of SBTi )
Thus, the foundations of net-zero goals as defined by SBTi rest on boundaries for emission measurement, transparency and disclosure, timeframe for goal commitment, accountability for emission reduction action and maintaining environmental and social safeguards.
Key dimensions of SBTi Net-zero targets
To maximize the synergetic impact of net-zero goals adopted across various industries in the corporate sector, it is crucial to adhere to a consistent and standardized framework for goal setting aligned with the Paris Agreement and, further, in line with what science tells us is required. The Science Based Targets initiative (SBTi) developed a Net-Zero Standard, the first global science-based standard for companies to set net-zero targets aimed at limiting temperature rise to 1.5°C enabling a global transition to net-zero . According to the Intergovernmental Panel on Climate Change (IPCC), to achieve this global transition, the world needs to halve CO2 emissions by 2030 (from 2018 levels) and reach net-zero CO2 emissions by mid-century. Net-zero is defined as the point when anthropogenic emissions of greenhouse gasses to the atmosphere are balanced by anthropogenic removals over a specified period .
Beyond reducing Greenhouse Gas Emissions
Planetary Boundaries (Source: Stephen et. al 2015 )
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Although net-zero goals are adopted in reference to greenhouse gas emissions, the language of net zero and net positive will also cut across multiple dimensions of company impacts on the natural environment. For example, as the Stockholm Resilience Center has defined it, climate change is one of the 9 planetary boundaries that allows for and stabilizes life on earth. Other boundaries include biodiversity loss and species extinction, ocean acidification, freshwater use, land-system change, depletion of ozone, biogeochemical flows, atmospheric aerosol loading, and introduction of novel entities in the environment. Breaching these planetary boundaries undermines the natural environment and moves us further away from the safe operating space for humanity.
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Towards Net Positive
When thinking about impacts of human and business activities, the considerations also go beyond the natural environment. Every corporation must understand the thresholds shaping the world, both biophysical and societal, and assess how they fare in a world that lives within those limits. Companies increasingly are setting aggressive goals on issues of human welfare including human rights, equity, health and wellbeing, food security and nutrition, and education.
Given the scale of the challenges, and the need to repair and regenerate the world so we can thrive, the real change we need is to go beyond zero. Net positive is the idea of going beyond minimizing harm to create more good. By this logic, net zero is not a point of culmination but a crossing point towards positive territory. Hence, net positive focuses on improving well-being for everyone a company impacts, be it products or operations, and for every stakeholder (employees, customers, suppliers, communities, and even future generations and the planet itself).
"Why is Net Positive important?" explained by Andrew Winston and Paul Polman
This means businesses need to take ownership of all its impacts on the world, both environmental and social, and work to flip them. To address these externalities and shift gears to be net positive, businesses will need to change the internal operating system and adopt a new, cooperative mindset towards external stakeholders, especially government, nonprofits, and even competitors. Viewing these stakeholders as partners as opposed to adversaries opens up doors to challenge industry standards, shape new ‘net positive’ best practices and address systemic issues at scale.
Footnotes
[1] Ambitious corporate climate action - science based targets (2021) Resources. Science Based Targets. Available at: https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf .
[2] Net zero emissions. Annex I: Glossary IPCC, 2018 In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 541-562, doi:10.1017/9781009157940.008.
[3] Foundations of SBT setting - science based targets (2019) Resources. Science Based Targets. Available at: https://sciencebasedtargets.org/resources/files/foundations-of-SBT-setting.pdf.
[4] Steffen, W. et al. (2015) “Planetary boundaries: Guiding human development on a changing planet,” Science, 347(6223). Available at: https://doi.org/10.1126/science.1259855.