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A simple guide to climate neutral, net zero and climate positive
27 October 2021

A simple guide to climate neutral, net zero and climate positive

3 minute read
Corporate climate action Climate risks & opportunities
Denis Jorisch Associate Director, Practice Lead Corporate Climate Target

What is net zero? How is it different from 'climate positive' or 'carbon negative'? Does climate neutrality still matter? Read on to get answers and direction on some of the big questions that many companies are asking today.

We've seen an avalanche of corporate climate commitments in the past few years,with domestic and multinational companies pledging climate action – and even governments stepping up to the plate.

But pledges alone are not enough....

This blog post will be updated shortly

The climate action space is dynamic and rapidly evolving. For South Pole's latest position on corporate claims please check our claims report or learn about our new funding climate action claim.

...Public and private sector leaders must show that they are serious about walking the talk. According to our latest research, there is still work to be done: more companies have set net zero targets with science-based reduction targets as milestones, but over 60% have either set their targets far into the future, or have no clear target date.

Now is the time for companies to underpin commitments with credible actions and clear, time-bound targets – something that many still struggle with despite having advanced sustainability strategies and experienced teams.

For example, if you are already certified climate neutral, how does that contribute to your net zero ambition? And should you set a climate positive target rather than a net zero target? Or both?

The devil is in the detail, and a good place to start is by understanding the definition of each claim. The differences are material and yes, they matter – for the planet, for our communities, and for your company's reputation.

In a nutshell:

  1. The starting line is climate neutrality.
  2. The journey is to achieve net zero by mid-century.
  3. But the journey does not end at 'zero' – the ultimate destination is to become 'climate positive' or 'carbon negative.' In other words, to absorb more emissions than we emit once we've reduced as much as is needed – which would be by an average of 90% depending on the sector – in order to limit global warming to 1.5°C.

Go climate neutral today

This is the new business as usual. Customers are voting with their wallets, shareholders are voting with their investment, and regulators are paying attention to climate change-related business risks. Climate neutrality is no longer partisan. Nor is it the realm of “feel good", niche businesses. It is a serious commitment, a material investment, and a statement of prioritizing climate action.

Climate neutrality combines an organisation's need to account for their greenhouse gas (GHG) footprint and to establish a clear reduction strategy, ideally before offsetting unavoidable emissions. For companies, climate neutrality is a "point in time" statement, where historical carbon emissions are measured and offset. Compared to carbon neutrality, climate neutrality places more of an emphasis on covering all GHGs beyond carbon, and includes climate impacts beyond GHG emissions, such as radiative forcing from aircrafts – often used to calculate emissions from business travel.

Certifying your climate neutral status is crucial before making any public claims. In some countries, government-administered schemes can certify climate neutrality, such as Climate Active in Australia. If your country doesn't have a scheme or you operate across borders, expert independent verification is a great option. South Pole's Climate Neutral labels are closely aligned with international standards and are highly regarded as a robust certification.

So your company decides to go climate neutral by measuring and offsetting your 2021 emissions and committing to ongoing science-based reductions - congratulations! Don't keep your achievement a secret. Because the journey doesn't end there...

The net zero journey

In the past 100 years, human civilization has done few things consistently year on year. But one thing that we have done very well is to consistently increase our emissions. Today, we must urgently stop AND reverse that trend. We have to start reducing emissions this year and every year until 2050 to achieve net zero, and to avoid the catastrophic consequences of climate change.

However, we still have a massive ambition gap, and the current suite of global climate policies are not enough to drive down emissions – far from it.

Given this growing urgency to address global emissions, the new corporate net zero standard by the Science-Based Targets initiative (SBTi) encourages businesses to invest in projects and activities that further avoid and remove emissions beyond their value chain – in parallel with reducing emissions in line with science directly across all of their direct and indirect operations. While corporate decarbonization will play a critical role in reaching net zero, a significant amount of emissions occur beyond the reach of corporate supply chains. The private sector can play a monumental role in bridging this emissions gap, supporting the Paris Agreement, and getting ahead of impending regulation.

Net zero is a nuanced and complex topic, but in straightforward terms, it means a world in which GHGs have been reduced to a minimum - and remaining emissions removed from the atmosphere.

To achieve this, an organisation must:

  • Reduce: plan a trajectory to reduce emissions across your entire value chain. Set a net zero target year based on science1, with interim milestones on how to get there, all consistent with a 1.5ºC mitigation pathway. This means that, in addition to your longer term target to reach net zero emissions, you must also have a short-term target to reduce emissions in the next 5-10 years, in line with science.
  • Compensate: become climate neutral by financing projects beyond direct corporate value chains to further avoid and remove emissions
  • Neutralize: once emissions have reduced to close to zero levels, eradicate unavoidable residual emissions with carbon removals to achieve and claim net zero

By investing in smart climate solutions, companies can achieve the interim milestone of climate neutrality while transitioning towards net zero.

The first step on any net zero journey is understanding the organisation's impact on the planet by calculating its carbon footprint – an assessment of the annual greenhouse gases along its entire value chain. The next step is to develop a strategy to reduce this footprint. This can be done through a wide range of measures, including energy and resource efficiency; switching to renewable energy; targeted supply chain interventions; and product or service delivery model innovation.

In addition to continuous decarbonization, organisations must simultaneously make the most of critical climate solutions at their disposal today, whilst proactively financing and planning to adopt new innovations, such technological carbon removal technologies, based on the estimated timelines of when they will become commercially available.

Carbon removals – approaches and technologies that help neutralise emissions – is another piece of the puzzle and an area that continues to develop rapidly. Carbon removals can be achieved in a range of ways, for example through nature-based solutions – such as reforestation, ecosystem restoration, and soil carbon sequestration – or using technological solutions, such as Direct Air Carbon Capture and Storage (DACCS) with carbon dioxide mineralisation or geological storage...or even a cross between the two! Carbon removals lead us nicely into the next stage on the journey which is climate positive (or carbon negative).

Climate Positive destination

Climate positive (or sometimes referred to as "carbon negative") is the end goal. Net zero is but one (big) milestone. From the year 2050 onward, we need to remove more greenhouse gases from the atmosphere than we emit in order to ensure a safe climate for generations to come.

While there are currently no official accounting frameworks that would underpin a corporate climate positive or carbon negative claim, they both describe a state of removing more GHGs than one emits after one has reduced its emissions across all scopes to a minimum level that is aligned with science. Claims should be made with great care. First and foremost companies need to rapidly decarbonize. South Pole is involved in several working groups to help make this clearer for companies.

So can a business be climate positive or carbon negative? Microsoft certainly believes so, and made this commitment in early 2020: "By 2030 Microsoft will be carbon negative, and by 2050 Microsoft, will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975."

Where next?

Turn ambition into action and join the transition with other businesses that are taking REAL action to reverse climate change. No matter where you are on your journey, South Pole can help you take the next step, today.

1 The Science-based Targets Initiative defines the net zero state has been achieved when emissions have reduced by an average of 90% to the base year, with residual emissions being neutralised through removals credits.

Contact us to get started on your climate journey.
Contact us to get started on your climate journey.
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