What is Net-Zero and Why Companies Commit To It

Reaching net-zero is seen as the primary goal of climate change mitigation at a global level. 

Emerging regulations, policies, and laws mean businesses are adapting to avoid regulatory fines or face needing to retire their assets early. In addition to this, they are reducing their emissions while purchasing carbon credits to offset their CO2 emissions. 

With a clear pivot in supply and demand for sustainable services and products, responding to trends early gives businesses a competitive advantage as customers look to support firms that can clearly articulate their positive impact on climate change. From retail and utilities to the transportation sector, we are witnessing a step-change in climate change innovation as companies map out their net-zero pathways. Establishing an internal carbon strategy ensures that your firm meets investor and stakeholder expectations while protecting against the risk of future, unknown carbon prices.

The scientific community agrees that ensuring no net emissions in the atmosphere by 2050 is essential for securing a sustainable planet. The firms that commit to and pursue corporate net-zero targets with ambitious climate action are becoming leaders in changing how we all do business. These companies recognize that sustainability is not just a wise investment but also a strategic differentiator that delivers impressive financial performance while increasing resilience to global events.

Source: Environmental Defence Fund 


This article provides a definitive guide to net-zero, its advantages, and the ways your firm can achieve it.

What is net-zero? 

Net-zero means different things to different people. It can be a significant challenge to wade through the jargon to determine a meaningful definition of net-zero for your firm and, most importantly, how to get there.

The Intergovernmental Panel on Climate Change (IPCC)一the United Nations organization that assesses the science related to climate change 一defines net-zero as:

“When anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specified period.”

In other words, we need to balance the amount of emissions we put into the atmosphere with the amount we take out, at a global level.

Scope 1, 2, and 3 emissions: Which should you include in your firm’s net-zero target?

Source: GHG Protocol

  

As Scope 3 emissions, or value chain carbon emissions as they are also known, represent the most significant portion of many firms’ GHG emissions inventories, we recommend focusing on reducing carbon emissions in this area of your business to help prevent the worst impacts of climate change. 

Developing an emissions inventory that engages your suppliers and value-chain contributors to input data easily is the best way to ensure you have credible information that can contribute to identifying your firm’s deep decarbonization opportunities.

In other words, including Scope 3 emissions, in addition to Scopes 1 and 2, will ensure your firm achieves net-zero emissions as quickly as possible.

What does a credible emissions reduction pathway look like?

A robust emission reduction pathway allows your company to easily communicate:

  • where you are currently in terms of GHG emissions and energy consumption
  • where you plan to be by introducing reduction measures that are cost-effective and feasible over time, and 
  • where your firm would be without any measures to reduce your carbon emissions.

Pathways commonly start with a selected baseline year and end at some point in the future, usually by 2030, or when proposed and agreed upon targets are met.


The first step in building a credible emissions reduction pathway for your firm is setting a meaningful emissions reduction target


In addition to having a meaningful emissions reduction target, your company should have a widely understood and agreed upon strategy for reaching net-zero emissions in place that’s based on science.

How carbon offsetting can form part of your firm’s net-zero strategy

Companies that commit to net-zero and are serious about reaching net-zero as quickly as possible tend to incorporate carbon offsetting within their internal carbon strategy. 


So what exactly is carbon offsetting, and how does it work? 


Put simply; firms purchase carbon offset units for the emissions they put into the atmosphere, with the ultimate goal of canceling out said harmful emissions. 


Depending on where your company is located and where it operates, you may participate in a compliance-based or voluntary carbon offsetting market. 


A platform that makes reaching net-zero simple 


An ambitious net-zero target is only as good as the data and evidence that sits behind it. SINAI has built software that makes it easy for your firm to analyze complex GHG emissions data necessary for achieving net-zero carbon emissions.  


From streamlined carbon accounting to dynamic scenario modeling, we can help your firm commit to a credible emissions reduction target and clearly show investors and stakeholders how you intend to get there. 


Contact us for a demo of our software solution today and see how SINAI’s platform can transform your company’s journey towards deep decarbonization and assist in reaching your net-zero goal as swiftly as possible.


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