Since the publication of the special report by the Intergovernmental Panel on Climate Change (IPCC), limiting global warming to 1.5 degrees celsius and achieving "net zero" have become synonymous with real and ambitious action on climate change – the ultimate goal for a greener future. We need substantial transformation within the next decade to prevent irreversible damage from climate change.
The world’s leading climate scientists at the Intergovernmental Panel on Climate Change (IPCC) define net zero as a state where there are no incremental additions of greenhouse gases into the atmosphere. This means that all avoidable emissions have been reduced and residual emissions have also been removed from the atmosphere.
To achieve this, an organisation must:
Specifically, companies should set near-term science-based reduction targets (SBTs) aligned with a 1.5°C warming scenario. Most of these reductions are accessible and achievable today.
Along the journey to decarbonising up to 90% of their emissions by 2050, companies should use all of the solutions available today – and develop the necessary technological solutions to reach that last 10% of required emission reductions.
South Pole’s recommendations align with the Science-based Targets initiative (SBTi), which will soon launch an updated version of its guiding principles for science-based net zero targets. In the meantime, you can find more detail in their 2020 report, Foundations For Science-based Net-zero Target Setting In The Corporate Sector.
Ambitious efforts to reduce emissions across a company's value chain represent the backbone of a credible net zero journey. Companies must aim to reduce emissions within their value chains at a pace and scale consistent with mitigation pathways that limit global warming to 1.5°C - as laid out by the IPCC.
Compensation and neutralisation measures can supplement and enhance net zero strategies but are not considered a substitute for science-based emission reduction pathways.
Reductions can be achieved by improving energy and resource efficiency, switching to renewable energy, designing targeted supply chain interventions, and by developing new innovations in product or service delivery models.
Carbon avoidance entails financing a project that avoids the emission of greenhouse gases. Such projects could include the recovery and utilisation of biogas, the replacement of inefficient cookstoves with less polluting ones, efforts to manage and recycle waste, or investments in energy efficiency.
Carbon removals can be achieved in different ways, for example through nature-based solutions, such as reforestation and soil carbon sequestration, or using technological solutions, such as direct carbon capture and storage. For carbon removals outside a company's value chain, South Pole recommends an extension of existing carbon credit standards to enable a transparent attribution to a specific company.
Climate neutrality companies are those who transparently show they are taking every action to reduce all material emissions within their operations and value chains, and compensating for all unavoidable emissions on the way to net zero.
The cost of tackling climate change increases with every year of delay, and organisations can make this cost more tangible and evident in their business by creating an internal price on carbon. This would ideally drive further emission reductions. For example, compensating for emissions by purchasing carbon credits not only enables a company to take immediate climate action (by funnelling financing into a project that is reducing emissions today), it also creates an internal cost for their actual emissions, which can be used to encourage teams to reduce emissions across the value-chain and to factor emissions – and, importantly, the expected price hike in future carbon credits – into their long-term investment decisions. The higher the carbon credit price, the more incentive there is to reduce the organisation’s own emissions.
Avoided or removed emissions through the purchase of carbon credits also enable companies to contribute to climate change mitigation beyond their value chains, while actively supporting other important goals, such as climate change adaptation, climate finance and the SDGs. For example, supporting forest conservation projects is key to protecting our declining ecosystems and to avoid biodiversity loss.
Climate finance flows to developing countries play a key role in reversing a future rise in emissions linked to growing populations and economic development, while unlocking multiple sustainable development benefits.
A net zero strategy should not be viewed as an additional requirement but rather as a process – one that is unique to each company. Working towards net zero should help companies unify ongoing efforts under a single initiative and reevaluate the ambition of existing targets.
What is important in South Pole's view is that net zero targets are transparent and ambitious, anchored in science, and support the sustainable development agenda.
Check out what the experts had to say about Net Zero in our Climate Chatter - Making Sense of Net Zero and Climate Positive.
The first movers to pursue corporate net zero targets will be the leaders and advocates for changing the way we do better business. This will also hedge against the risk of evertightening government policies and investor scrutiny, and create business opportunities in zero emission solutions.
The business benefits of pursuing a net zero strategy are many:
South Pole believes that a net zero target is a part of every organisation's Climate Journey. Our experts have tools and techniques to help you formulate your net zero strategy, set science-based targets and develop and implement ambitious reduction strategies, wherever you are on your Climate Journey.