Net Zero means collectively cutting net CO2 emissions to zero by 2050. This is the goal deemed essential in the latest IPCC report if we are to avoid a dramatic increase in adverse climate impacts and unpredictable feedback loops in the climate system. Incremental change is not enough, with each year increasing the challenge that we face.
Delivering Net Zero demands transformation across the whole of society, and companies play a pivotal role. Their actions, resources, and ability to innovate, are critical to rapidly decarbonizing our economy.
For a company, setting a Net Zero goal means the activities across its value chain create no net impact on the climate from greenhouse gas emissions. To deliver transformative change such as this, long-term target setting, and careful strategic planning across every part of the organization and value chain are essential.
We have seen an unprecedented number of Net Zero commitments made by companies in the last 18 months, with over 3,000 companies now part of the Race To Zero Campaign.
Despite this progress, the definition of Net Zero and the path to get there varies and is often inconsistent. Business leaders need a common, robust, science-based understanding of Net Zero. To support companies on their Net Zero journeys, a number of organizations have made it their mission to standardise, clarify, and facilitate the delivery of such targets. Here we set out just a few.
The Global Standard for Net Zero Target setting
The Science Based Targets initiative (SBTi) is the predominant standard setting body for company carbon targets. There are already over 2000 companies taking action under the standard. It recently released its Net Zero standard; a peer reviewed set of requirements for what a company must do to reach Net Zero. It is applicable for companies with more than 500 employees across all sectors (except oil and gas).
The process for Net Zero target setting
What is needed to set a SBTi Net Zero target? The first step is selecting a base year (the financial year that will act as the starting point for the target). This means identifying and quantifying emission sources within the business, and also across its supply chain, and its customers.
Second, companies can set their targets using the SBTi methodologies. This requires companies to set both medium-term targets (5-10 years) to align their business to 1.5℃ climate scenarios, and long-term targets that set a path to Net Zero by 2050.
Delivering Net Zero targets; Offset only what you cannot reduce
Delivering Net Zero should follow the defined mitigation hierarchy. First and foremost, companies are required to plan, strategize, and execute radical emission reductions across both the company's operations and value chain. SBTs must count down from the most recent emissions inventory—meaning no credit for prior reductions. They also cannot count carbon offsets as reductions for operational or value chain emissions.
This means investing in energy efficiency, procuring renewable power and heat, and reducing waste. Tackling supply chain emissions means engaging with suppliers on joint abatement and circularity projects, and opting for sustainable sourcing options, as well as optimising distribution and storage. Finally, engagement with customers is key, by providing products that are intended for re-use, and engaging in sustainable consumption.
The top priority is to reduce emissions first. For emissions that cannot feasibly be cut, the Net Zero Standard requires companies to commit to funding carbon offsets of whatever carbon emissions remain in their target year. This means both investment in activities that avoid, reduce or capture and store greenhouse gas emissions and that fall outside a company’s value chain, and in projects that remove carbon from the atmosphere and permanently store it.
Setting and delivering targets – companies supporting the journey
Setting the targets across a company's business and value chain that make sense and that align with Net Zero is no mean feat. Right Based on Science is one company pushing progress in development of methodologies and software tools to set Net Zero targets. The software used by Right. analyses a company’s current and ongoing temperature alignment in degrees celsius to different business and climate scenarios, and maps the companies path to delivering temperature aligned trajectories. This includes setting the temperature alignment needed to deliver Net Zero in a certain year.
Emissions measured in tCO2e are often hard to grasp and to visualise. The actual impact they will have on climate change is not immediately clear. Translating CO2 emissions to temperature alignment helps to contextualize a companies impact, and relate it to the tangible, common and understandable goal set by global leaders to limit global warming to 1.5℃. Companies use this software to identify the parts of their carbon footprint that are not aligned to their goals, empowering and enabling management decisions to be made.
Setting and delivering Net Zero poses challenges at every step of the journey. Setting the targets means having a complete and comprehensive understanding of emissions across the company's business and value chain. Delivering Net Zero targets in most cases demands radical enterprise transformation, spanning from setting the right strategy, restructuring governance and operations, to innovation across supply chains and products. Cozero's software platform is geared towards the challenges around this process, with the goal to support and enable this companies on this journey with its 3 core modules Log, Act, Share.
Cozero Log supports companies to accurately calculate and set their carbon baseline (the starting point for any target). Cozero Act enables companies to assess and prioritise management options on the journey to zero emissions. Cozero Share collates reporting of this progress.
The way forward
Not only does the corporate Net Zero standard by the SBTi clear the mist of what a credible corporate Net Zero target entails, it also raises the ambition of what a transformative Net Zero target looks like. Delivering this is hard, and that’s where organizations such as Cozero and Right Based on Science come in. They provide the tools for business to understand what this means for business, and translate these targets into action. Net Zero companies look beyond the areas they directly control and accelerate decarbonization for everyone: by engaging with suppliers and deploying carbon removal. If every company achieved Net Zero, the world would too.
The challenge is now in the hands of each and every company if we are to deliver the deep decarbonisation that we need.
Text by Mary Davies, Carbon Action and Intelligence Expert at Cozero
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