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Net Zero

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.

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 individual actions align with global climate change targets. 

The humongousness of the climate challenge calls for coordinated efforts at local, regional, national and global level. The net-zero targets framework provided by Science Based Targets initiative (SBTi) is the first step towards enabling companies to achieve climate goals in a systematic fashion. Recognizing that we have a long way to go, the next steps should lead to a low carbon, healthy, equitable, and secure world, in short, a net positive future.           

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Andrew Winston

​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 more than 20 years. It is now that we are experiencing these effects at an unprecedented scale. Throughout 2022, catastrophic weather events not only intensified but also became more frequent. In addition to heat waves felt across the globe, the local communities in the U.S. experienced devastating impacts of hurricanes 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 governments, regulators and investors. As a result, companies are actively making pledges to reduce their emission footprint and do their part to accelerate climate action. 

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Emission reduction Lingo and Pathways 

Currently, organizations have referenced their emission reduction goals using terms such as net-zero, carbon neutral, climate neutral, etc. to demonstrate their commitment to these goals. Not only can there be substantial difference in call for action depending on the choice of goals but also inconsistency in targets for the same type of goal. 

Net-zero commitments require companies to reduce emissions through abatement by changing how they operate and reducing emissions in their value chain. Companies may need to adopt clean energy, energy efficiency, electrification measures, etc. to reduce their emission footprint. Thus, abatement requires organizations to reduce their own contribution emissions.

Approach 1 - Abatement
Approach 2 - Offsets

Offsets allow organizations to reduce their net emissions by removing emissions outside their value chain through compensation or neutralization. Carbon neutrality refers to carbon related emission reduction through 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. Similarly, climate neutrality emphasizes on emission removal approaches but goes beyond carbon emissions to encompass reduction of greenhouse gas emissions responsible for climate change

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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 start with offsets, the real sustainable mitigation of climate change would require businesses to treat carbon abatement technologies as a central strategy to their .

A standardized framework for emission reduction

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. 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 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. 

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Status quo and desired state of net-zero  (Source: Foundations of SBTi)

To achieve net-zero, 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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Beyond reducing Greenhouse Gas Emissions

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Planetary Boundaries (Source: Stockholm Resilience Center)

Although net-zero goals are adopted in reference to greenhouse gas emissions, net-zero goals can cut across various dimensions of our natural environment. Climate change is one of the 9 planetary boundaries that 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. 

Towards Net Positive

When thinking about impacts of human 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. consequences pertaining to issues of human welfare including human rights, equity, health and wellbeing, food security and nutrition, and education. 


The real change, thus, is Net Positive. Net positive is the idea of going beyond minimizing harm and creating more good instead. By this logic, net zero is not a point of culmination but a crossing point towards a positive territory. Hence, net positive focuses on improving well-being for everyone in every dimension be it product or operation for every stakeholder be it employees, customers, suppliers, communities or even the future generation and the planet.

"Why is Net Positive important?" explained by Andrew Winston and Paul Polman

This means businesses need to take ownership of all externalities, not just environmental impact, and flip them. To address these externalities and shift gears to create a net positive impact, businesses require a change in the internal operating system and adopting a 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. 

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

Further readings and resources 

The Net Positive Manifesto
by Harvard Business Review

Net Zero
by Science Based Targets Initiative

CEO's guide to Net Zero
by BCG and World Economic Forum

Protecting planetary boundaries
by SDG Action