April 14, 2021
The scientific community continues to stress the urgent need to reach net-zero global carbon dioxide (CO2) emissions by 2050 in order to limit global warming to 1.5 degrees Celsius. They expect these actions will reduce the destructive impact of climate change on human society and nature.
As public awareness regarding net-zero emissions has spread globally, the number of companies committing to reach a net-zero future has increased rapidly in recent years. However, this shift in mindset calls for the pressing need for a common understanding of what net-zero means for organizations and how to achieve this. Translating the momentum behind net-zero targets into consistent action within all markets and industries requires a unified definition of the term.
The UNFCCC revealed that, as of August 2020, more than 1,000 companies are setting science-based greenhouse gas emissions (GHG) reduction targets through the Science Based Targets initiative (SBTi).
Science-based targets are clearly-defined pathways for companies to reduce GHG emissions in an attempt to prevent the further impact of climate change and redefine sustainable, future-proof business growth. Targets are considered “science-based” if they coincide with what the scientific community deems necessary to meet the goals of the Paris Climate Agreement—limiting global warming to below 2 degrees above pre-industrial levels and pursuing efforts to limit warming to 1.5 degrees Celsius.
To secure the future of all life on Earth, the global economy needs to reach a state in which human activity no longer causes the accumulation of greenhouse gases in the atmosphere. To get there, ambitions must be tackled on two fronts: deep and thorough elimination of emissions around the globe, and neutralization of their impact by withdrawing carbon from the atmosphere.
Groundworks for Net-Zero
Investments in zero-carbon solutions are rising, while increased awareness of risk and impact is leading investors away from high threat, high carbon activities. For the first time on record, global coal power generation is decreasing while the cost for renewable technologies continues to decline, driving advances in wind and solar technologies.
As governments work to recover from the shattering economic impacts of COVID-19, they are also faced with the rare opportunity to rebuild an environmentally focused, zero-carbon economy that consciously tackles future threats, creates greener jobs, and promotes the overall ambition of sustainable development.
Corporations are establishing net-zero targets through various strategies, focusing on three distinct dimensions:
- The variety of emission sources and activities.
- The projected timeline for emission reduction targets.
- Methods and frameworks to achieve their targets.
These strategies are useful in allowing organizations to measure their carbon footprint impact and assess which areas need restructuring. Yet further, more active approaches are helping advance net-zero ambitions. The three most common approaches for corporate net-zero, science-based targets are:
- Eliminating the sources of emissions within the value chain of the organization (Scope 1, 2 & 3 emissions).
- Removing CO2 from the atmosphere and neutralizing the impact of GHG that continue to be released into the atmosphere elsewhere.
- Compensating for value chain emissions by helping to reduce emissions outside the value chain.
Companies are using both neutralization and compensation measures to offset emissions.
Furthermore, the United Nations is requesting that companies involved in land-use intensive business models eliminate deforestation activities from their supply chains by 2030. As part of this transformation, companies are also required to protect, restore and enhance ecosystems with the ambition to help withdraw CO2 from the atmosphere.
With widespread acknowledgment of the urgent need to reach net-zero emissions worldwide, the number of countries and non-state actors committing to reach net-zero emissions has grown rapidly. The UNFCCC announced in June 2020 that the number of state and non-state actors devoted to reaching net-zero carbon emissions by 2050 already represented a quarter of global CO2 emissions and almost half of global GDP.
As the movement gains momentum, more and more corporations, governments, and individuals are committing to this global endeavor, in order to safeguard the livelihood and well-being of human societies and natural ecosystems.
Business Benefits of Science-Based Targets
There are various benefits for businesses that employ a net-zero strategy in their business operations. Aside from helping accelerate the transition into a low-carbon economy and helping reduce the rate of global warming, here are four benefits a company can expect to see from setting science-based targets:
- Improved Brand Identity and Reputation - Consumers worldwide have become increasingly environmentally conscious. Ethical business consumption is developing from niche to norm across all markets. Brands that operate sustainably are strengthening customer loyalty and enhancing brand identity and influence.
- Accelerate Innovation - Companies that commit to a low-carbon economy are redefining their business operations. Setting science-based targets drives innovation through the development of new products, establishment of new manufacturing processes or increased use of recycled materials. These innovative, benchmark solutions are transforming industries.
- Investor Interest - Investors, like consumers, are increasingly interested in ethical and environmentally-focused businesses. Companies tackling climate change prove to shareholders and stakeholders that they are forward-thinkers and are more likely to thrive in the future. Showcasing a long-term vision of future market developments attracts a new generation of ethical investors.
The steps to get started
If you’re looking to move toward net-zero, here are the steps you need to get started:
- Assess the underlying climate science.
- Evaluate your current activities regarding corporate net-zero target-setting.
- Construct frameworks that allow for the implementation of ambitious climate targets.
- Assess your success based on a set of robust criteria and validation protocols.
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