Introduction to Net Zero

What is net zero and how can it be achieved?

Net zero is a commitment made by global nations as well as over a 5th of the world’s largest companies to halve carbon emissions by 50% by 2030, and reach a net-balance between the amount of greenhouse gases (GHGs) emitted and greenhouse gases removed, i.e. net zero, by 2050. 

For corporations, greenhouse gas emission happens via three routes

1. Direct scope 1 emissions from business operations
2. Scope 2 emissions accrued from energy consumption
3. Scope 3 emissions released in the supply chain of its product. 

Companies will have to take ambitious steps to neutralise these emissions through reduction. In cases when emissions are unavoidable, businesses can neutralise their emissions through investment in emissions avoidance and carbon removal projects that ensure that company’s activities result in no net impact on the environment.

Why is setting targets important for companies to successfully reach net zero?

The most effective way for companies to reach net zero is by setting a plan with tangible targets. The Science-based Targets (SBTi) net zero standard is a helpful guide. The guide details ways in which companies can reduce their emissions, increase their resilience by managing transition risks, and support emission reductions and removal elsewhere. 

The standard lays out four principles: 

1. Take rapid and ambitious action to reduce emissions first.

2. Set interim targets (every 5-10 years) to ensure you are consistent with keeping global warming below 1.5 and net zero by 2050.

3. Remove residual emissions before making net zero claims, as some sectors may only be able to cut 90-95% of their emissions by 2050. 

4. Go beyond the value chain. 

Why is offsetting an important part of transitioning to a net zero economy?

Offsetting will have a crucial role to play in our net zero trajectory supporting much needed adaptation, reduction & mitigation initiatives. Carbon offsets can include buying carbon credits from projects that avoid and reduce emissions, as well as from those that remove emissions from the atmosphere. 

Offsets can provide the opportunity to neutralise residual emissions and invest in nature. We can’t get to net zero without offsetting, however it is critical to first follow the mitigation hierarchy and then invest in high integrity offsets based on the best scientific evidence available.