Seven steps is all you need
Net Zero Carbon means balancing the carbon emissions produced and taken out of the atmosphere.
To enable organisations to align their climate actions to a global warming increase of 1.5°C, in October 2021 the Science Based Targets Initiative (SBTi) launched the Net Zero Corporate Standard. This provides a credible and independent approach to organisational progress that has been adopted by a range of leading organisations including AstraZeneca, CVS Health, Dentsu International, Holcim, JLL, Ørsted, and Wipro. For many, it has become the de-facto definition of what Net Zero Carbon entails.
SBTi’s standard requires a 50% greenhouse gas emissions reduction before 2030 and 90 to 95% before 2050, to achieve the 1.5°C limit. By 2050, the remaining 5 to 10% of hard-to-decarbonise emissions must be removed from the atmosphere. This means that carbon offsetting is limited to 5 to 10% of baseline emissions.
Scope 1, 2 and 3
Greenhouse gas emissions come from three sources, as defined by the Greenhouse Gas Protocol in 2001, which are the basis for greenhouse gas (GHG) reporting:
- Scope 1 emissions are produced (mostly from the burning of fossil fuels) by owned or operated assets including on-site boilers and fleet vehicles
- Scope 2 emissions are generated from purchased energy
- Scope 3 emissions are from everything else upstream and downstream in the value chain, including purchased products
Figure 1: Scope 1, 2 and 3 greenhouse gas emissions and the gases causing global warming (1)
Scope 1 and 2 are mostly within an organisation’s control and direct decision-making.
According to the GHG protocol, the majority of corporate emissions come from scope 3 sources and are outside the direct control of the company, such as:
- emissions associated with products purchased from suppliers
- emissions created from the disposal of products at the end of their lives
- business travel
- employee commuting
These are included in an organisation’s carbon footprint and therefore must be reduced as part of a Net Zero Carbon commitment. This means that for an organisation to achieve Net Zero, its entire supply chain, and its suppliers’ supply chains, and its suppliers’ suppliers’ chains, will all have to also move to Net Zero.
Creating a Net Zero Transition Plan
From best practices across a range of industries and sectors, there are seven clear stages to creating a Net Zero Transition Plan, which, unsurprisingly, are well aligned with good practice in change management:
Set explicit targets of halving carbon emissions by 2030 and reducing by 90% by 2050, ensuring all key stakeholders, from senior management to suppliers, are aligned. Note that if an organisation has committed to Net Zero Carbon, then these targets must be met anyway according to SBTi’s standard, so this should not be controversial. Strong engagement from staff and suppliers is needed to achieve the system changes required.
For an agreed base year, calculate the contributions of different sources of carbon emissions and rank them from biggest to smallest.
There are many calculation tools available to help with this. For example, the WWF report Emission-Possible has a list of tools available across sectors. For SMEs, the SME Climate Hub provides a free carbon calculator tool, along with training and resources focused on how to cut emissions. The GHG protocol scope 3 standard enables companies to assess their entire value chain emissions breaking down scope 3 emissions into 15 categories.
Research and collate solutions, their impact on carbon emissions, costs and difficulty to implement. For example, installing rooftop solar panels is expensive and creates modest carbon reductions compared to selecting Circular Economy office products, which create substantial emissions reductions, save money immediately and should involve no compromise on quality.
According to Business for Social Responsibility, a strategic partner in the formation of the SME Climate Hub, this search for solutions should involve discussions with suppliers, including SMEs with innovative Circular Economy and energy efficient alternatives, as well as organisations dedicated to assisting organisations to reduce their emissions, including the Carbon Trust, the Energy Saving Trust and ReLondon.
This research should include conducting trials to demonstrate performance and overcome organisational resistance to new ideas.
For difficult-to-influence scope 3 emissions, organisations are increasingly adopting Net Zero carbon procurement specifications and supplier selection criteria, using suppliers whose Net Zero plans are aligned.
Formulate a strategy to reduce emissions across the whole value chain by prioritising and budgeting for the most attractive carbon reduction initiatives and set both organisational and departmental interim targets with measurable KPIs. Carbon reduction targets should be in line with SBTi’s standard and are increasingly included in staff and executive bonuses to align behaviours.
Publicly share your intentions, either through a statement on the organisation’s website or in the annual report or by signing up to organisations such as https://sciencebasedtargets.org/companies-taking-action or 1.5°C Supply Chain Leaders – SME Climate hub. Many organisations are publishing their carbon reduction plans, reassuring investors and customers of the organisation’s dedication to carbon emissions reductions. Examples include: Grosvenor, John Lewis Partnership , Lloyds Banking Group and Ikea.
Measure the performance and the impact of each reduction initiative. Annually assess and transparently report progress internally and externally against the targets.
Offset residual carbon emissions with certified offsets that remove greenhouse gas emissions from the atmosphere. Offsetting can only be used in addition to drastic reductions in emissions, not instead of reductions. For offsets, the SME climate hub recommends Gold Standard, South Pole, and Go Climate
Of course this is an iterative process, with annual reporting, reviews and action-setting for the next year.
Example: Planning to Reduce Carbon Emissions in Buildings
While some companies have buildings as their main business, such as property investors, most other organisations inhabit buildings and therefore need to include the emissions from buildings in their Net Zero Transition Plan.
Figure 2 shows the sources of emissions over the lifetime of a commercial building; 30% are Operational and 70% are Embodied.
Operational emissions are those created using energy for heating, cooling, and powering a building (scope 1 and 2).
Embodied emissions are those associated with building materials and the items within a building (scope 3), including raw material extraction, manufacture, and transport during their production.
Figure 2: Greenhouse Gas Emissions over the 40 Year Life of a Commercial Building (2)
Solutions to reduce Operational emissions include choosing renewable energy for power, eliminating gas- and oil-fired boilers, fitting more energy-efficient lighting and machinery, and better energy management.
Embodied emissions are reduced by the Circular Economy, which keeps items in their highest value state while substantially reducing carbon emissions through multiple lives by avoiding the emissions required to manufacture items from virgin materials. This also reduces waste, raw material extraction and associated biodiversity loss – creating additional environmental benefits. Circular Economy solutions also save money compared with using virgin resources, and generate social value.
As Figure 2 demonstrates, furniture is the biggest source of both overall emissions and embodied emissions in buildings, driven by fit-out churn; the average lifetime of a piece of office furniture is around 6 years, after which it is mostly replaced by furniture made from virgin resources.
Circular Economy solutions for reducing the footprint of furniture include reusing, repairing, remanufacturing and recycling. Of these, Remanufacturing is proving increasingly popular, because it returns items to as-new condition with no difference in appearance or performance compared to the same items made from virgin materials. This avoids the emissions involved in producing new furniture and also creates substantial cost savings.
Strategically, when creating a Net Zero Transition Plan related to buildings, it makes sense to focus first on the largest source, Embodied emissions, where the biggest savings can be made while also saving money.
This contrasts with the historical focus of many in the property sector which has been on Operational emissions which are the minority of lifetime emissions and for which solutions can be very expensive to purchase, install and manage. The recognition of this error, as organisations develop robustly researched transition plans, is increasing focus on the Circular Economy.
Consider Your Beyond-Value-Chain Mitigation
Many organisations influence emissions beyond their own operations and that of their supply chain, such as financial services organisations investing in or providing finance to other companies.
The term for this is Beyond Value Chain Mitigation (BVCM), which encompasses all investments and actions an organisation takes beyond its emission reduction targets to mitigate emissions outside of its value chain. The SBTi explains BVCM further in this article: Going Above and Beyond to Contribute to Societal Net-Zero – Science Based Targets
Large quantities of emissions fall outside value chains; organisations setting Net Zero targets will not be enough to achieve limiting global warming to 1.5°C above preindustrial levels. BVCM activities will help close the gap to achieve societal Net Zero. Some examples of BVCM activities include: sustainable forest management, conservation projects, methane destruction, direct air capture and storage developments.
Organisations should therefore also include BVCM actions in their Net Zero Transition Plans.
Time To Act
With organisations and governments increasingly being held to account by shareholders, customers and the general public, action is needed now to achieve the 50 percent reduction in carbon emissions required by 2030.
For example, in the corporate world, the Shell Board of Directors is being sued by activist shareholders, in a first-of-its-kind action. The lawsuit claims that Shell’s directors are personally liable for failing to devise a strategy in line with the Paris Agreement and puts them in breach of their duties under the UK’s Companies Act.
In the public sector, the UK Government’s landmark Net Zero strategy, first published ahead of COP26, has been ruled inadequate and unlawful by the High Court. The judgement ruled that the strategy is too vague and there were no assurances that the targets, aiming for the UK economy to achieve Net Zero by 2050, could be met.
They need a Net Zero Transition Plan.
(1) http://www.ghgprotocol.org/node/469 viewed 14/10/22
(2) Treloar, GJ. Et al, 1999, Embodied energy analysis of fixtures, fittings and furniture in office buildings, Facilities, Volume 17, Number 11, pp. 403-409 (Accessed on 14 June 2019 at https://www.academia.edu/18481731/Embodied_energy_analysis_of_fixtures_fittings_and_furniture_in_office_buildings)