What is net-zero?
Net-zero is more than just a buzzword, with an increasing number of countries and organisations across the globe now regularly declaring new net-zero targets. But what does net-zero actually mean? Essentially, net-zero is a state where no incremental greenhouse gasses are added into the atmosphere. In order for this to happen, it is essential that a balance is achieved between the gasses emitted into the atmosphere and those that are removed, through a significant reduction in carbon emissions and increase in carbon sinks. Carbon sinks can be natural (forests and the ocean) or artificial (chemical or technological). They absorb and capture carbon from the atmosphere.
Why does net-zero matter?
We need to limit global temperature increase to 1.5oC in line with the Paris Agreement, yet a 2.7 degree temperature increase against pre-industrial levels is expected based on current climate policies around the world. An increase greater than 1.5oC will result in catastrophic events, including 36% of land being exposed to extreme rainfall and habitat loss doubling. With only 8 years left to align to the Intergovernmental Panel on Climate Change’s (IPCC) recommendations of halving global net emissions by 2030, the need for action to achieve net-zero is greater than ever.
In addition to the risks facing society as a whole, a changing climate poses significant risks to many businesses. Without bold action to achieve net-zero and meet stakeholder needs, businesses could be at risk of non-compliance, supply chain instability, and being exposed to extreme weather events. There are however many opportunities within this changing landscape, and it is in the interest of businesses to become net-zero.
How to become a net-zero business
Following the launch of the new Net-Zero Standard by the Science Based Targets initiative (SBTi) in October 2021, businesses* now have a clear blueprint for setting credible and science-based net-zero targets to guide net-zero strategies. Prior to this standard, businesses were lacking universal guidelines and an internationally recognised definition of net-zero, making the transformation even more challenging.
If you still have questions on how to become a net-zero business, there are several key steps that need to be undertaken.
1. Start with an emissions inventory and analysis
To become a net-zero business, the first step is to undertake an emissions inventory and define the emissions within the entire value chain of your organisation – Scopes 1, 2 and 3. Scope 3 emissions can be the most difficult to define, however are often the biggest source of emissions for most businesses. From this baseline of emissions within your organisation you can then establish near and long-term science-based net-zero targets and a net-zero strategy.
2. Set net-zero targets
Following the publication of the new Net-Zero Standard, well defined near- and long-term targets for reaching net-zero are required. Near-term targets should cover emissions reductions for the next 5-10 years, roughly halving emissions by 2030. Long-term net-zero targets should see a reduction of 90-95% of emissions by 2050, with some variations between sectors.
3. Reduce your emissions
Following the creation of valid net-zero targets to guide your net-zero strategy, the most crucial stage of becoming a net-zero business is reducing emissions within your value chain. A reduction in emissions across your value chain can be achieved through efficiency measures, increased stakeholder collaboration, renewable energy and investments in business transformation.
4. Offset residual emissions
To be able to claim net-zero you will need to achieve the full emissions reductions (90-95%) and then offset the remaining 5-10% of emissions via projects that remove (sequester) carbon from the atmosphere. However, given the urgency of the climate crisis and our need to protect existing carbon sinks and support sustainable development internationally today, it is recommended to begin offsetting in parallel with emissions reductions. As a project developer, EcoAct supports many carbon offsetting projects around the globe – take a look at some of our projects.
Benefits of becoming a net-zero business
Transitioning to net-zero is no doubt a challenging journey but nonetheless has many benefits for both your organisation and the planet. Although your net-zero target may be far in the future, changes need to be brought in each year and not left to the end. Acting now means effective action your organisation can improve efficiencies, reduce costs and drive innovation. Having science-based targets that are verified by the SBTi shows to key stakeholders that your net-zero targets are credible and align with the latest science. With effective communication of your net-zero strategy, you can build reputational and competitive advantage.
- The SBTi Net-Zero Standard is intended for corporations with more than 500 employees.
- The SBTi also proposes a simplified path for SMEs to set net-zero targets, see SME FAQ for more information.
- The Net-Zero Standard does not cover net-zero targets for financial institutions. See the SBTi’s financial sector project for its specific net-zero framework for financial institutions.