At the COP 26 Climate Change Conference in Glasgow, Scotland, later this year, countries will take stock of progress made and consider new commitments to restrict global temperature rises to below 2°C. In the run-up to the event, businesses are realising the profound impact this will have on their operations.
Governments in the UK and the US have announced targets to cut greenhouse emissions by 68% and 50% respectively by 2030, and the UK government has a target of eliminating its contribution to climate change by 2050. Canada has raised its target from 30% to 40-50% by 2030. And EU member states are individually bound to a target of at least 55% reduction of emissions by 2030.
If an initiative to map and commit to net zero is to succeed, it has to be led by the board
While the dates when businesses will be legally compelled to be net zero may seem distant, the pace of progress is moving fast. As a result, within a short period of time, any business of any size will find that unless they can demonstrate their own path to net zero, they will find it increasingly hard to find investment, customers and even potential employees.
So, if your business hasn’t done so already, how can you go about transitioning to net zero?
Start with standards
As an initiative that will have an impact across the business, mapping and committing to net zero has to be led by the board.
The terminology around net-zero can be confusing, so the starting point must be to establish a common understanding of the language used and the government-set deadlines you need to meet by law.
The important thing to be aware of here is that net-zero targets apply to the full range of greenhouse emissions, including methane, water vapour and chlorofluorocarbons – not just carbon dioxide.
While the ultimate goal is for every business to avoid and eliminate emissions as far as possible, an integral part of a net-zero plan is to identify what the organisation must do for operations that cannot be reduced completely.
Set your ambition
The next step is to agree your level of ambition. This is an area where you want to be either a stand-out leader or in the middle of the pack, alongside peers. This will help with setting the kinds of targets you want to go for.
Target-setting starts with establishing a baseline and measuring your greenhouse gas emissions from that year. Companies will need to decide if they want to measure and focus on scope one and two emissions or to include scope three:
Scope one covers all direct emissions under your control, such as fuel burned on site for heating, fleet vehicles and air-conditioning
Scope two covers indirect emissions such as electricity
Scope three, the largest part, is all other indirect emissions through your upward supply chain down to the products used by your customers.
For every organisation, the task of setting a net-zero target for scope one and two emissions should be straightforward. This can be done by looking through your records, such as utility bills, to establish the emissions in your base year.
Although business travel is officially part of scope three, there is a strong argument to include it in your initial plans, as it is easy to measure and is under your direct control to reduce.
Save the date
From there, you need to set a target date for net zero and develop a plan for how you are going to get there. If this is scope one and two only in first instance, steps will include switching to renewable energy, cutting flights and minimising other business travel, and switching to zero-emissions vehicle fleets.
It may also include offsetting any remaining emissions – once you have reduced as far as feasibly possible – by investing in a credible offsetting scheme. Care is needed in choosing a scheme whose activities genuinely counterbalance your own.
If you can include scope three emissions in your initial target, it is good to do so. Equally, it is accepted that the reengineering of supply chains, operations and products will require more time, as will introducing new technologies and processes that aren’t commercially viable today. For these, you should set a target that may be further out – say, 10 years ahead of the target date – and, as far as possible, outline the steps you will take each year and how progress will be monitored.
Stay on track
For any business starting on its path to net zero, it pays to keep certain principles in mind.
The first is that, in setting targets for emissions cuts, most organisations need to recognise that whatever the final landing date for net zero in your country, you will need to set dates much earlier than this to cut most or all of your greenhouse gas emissions.
The second is that cutting emissions doesn’t necessarily mean you are going to increase your costs. Solar panels, electric vehicles and switching renewable energy can all save you money.
The final point is that you shouldn’t see net zero as a punishment but as an opportunity. As new supply chains emerge with demand based on net-zero emissions, those who move earliest to claim their place will get the greatest competitive advantage.