More and more companies are announcing their goal of achieving net zero. When a company is net zero it removes as much carbon from the atmosphere as it emits. Since many end customers now attach importance to sustainability, it is important for companies to address this issue. This article explains the net zero journey for companies in five steps.
Net zero means that the amount of CO2 emitted is balanced by CO2 removal. In practical terms, this means that the company reduces its CO2 emissions to a minimum and offsets what cannot be further reduced.
Why is this important?
Greenhouse gasses cause the earth's temperature to warm. The exact influence of carbon on the climate has already been discussed in a previous article. Global warming causes great damage. The damage caused by climate change could be up to 1.8 trillion US dollars for developing countries by 2050.
The effects worsen with each degree of warming. That is why the Paris Agreement stipulated that greenhouse gas emissions must be reduced to bring the temperature increase down to 1.5°C to 2°C.
Why should a company care about becoming net zero?
More and more customers are attaching importance to the fact that the companies from which they buy products act sustainably. According to a study, 66% of all Americans and even 80% of American young adults are willing to spend more on a product if it has been produced sustainably. For B2C companies, net zero can therefore be a great differentiator from competitors. But it can also be important to B2B companies because their customers, in turn, are driven by the end user to decarbonize the entire supply chain.
For all companies not covered by the mandatory carbon market, net zero targets are currently voluntary (see Mandatory vs. Voluntary Carbon Market). However, the EU's goal of being climate neutral by 2050 will only work if all individuals and companies participate. Current efforts are not yet sufficient. Therefore, in the future, further measures (for example, emission caps or carbon taxes) could be introduced by the government to enable the achievement of the Paris Agreement. It is therefore advisable for companies to prepare for this now.
In the commercial environment, cutting emissions often means changing processes and investing money in new, CO2-saving technologies. In times of rising energy prices, however, these investments can also mean savings in operating costs in addition to carbon savings. This can mean a decisive price advantage over competitors, which means that the investments pay off twice over.
In the medium term, our entire lives must be decarbonized. As a company, not starting now means that the changeover will have to be completed all the more quickly in the near future. On the other hand, it also means that companies that start now to become CO2-neutral are attractive employers for potential employees. So in addition to making it easier to attract new customers, the net zero journey can also act as a recruitment booster, as the company is seen as forward-thinking.
How can a company reach net zero?
A company that wants to achieve net zero can do it in 5 steps:
Set a target
In order for a company to get its emissions to zero, it must first understand how high they are and where they are generated. At the top level, this means understanding how many emissions are in Scope 1, 2 or 3. But even within a scope, it is important to know which processes and operations generate the emissions. For private individuals, there are good online calculators that can calculate carbon emissions. Small companies may also be able to use such a tool to get a rough sense of the magnitude of their emissions. However, for more precise values or for companies whose emissions go beyond the heating of the office and the occasional company trip, these calculators are not sufficient. Here, it is advisable to contact a consulting firm.
Set a target
If a company knows what its emissions are and where they come from, it can set a goal for the net zero journey. Such a goal could be, for example, “We want to reach net zero in all 3 scopes within 3 years", or "This year we want to reach net zero for scope 1". It is also common to set staged targets over several years.
This is the most important part of achieving net zero. Every ton of CO2 saved brings the company closer to its goal. In private households, the most common saving tips are widely known and used: Replace old light bulbs with a new LED bulb, lower room temperature, replace inefficient appliances with new, more economical ones, and avoid unnecessary trips or travel.
These tips also work for companies, but the emission sources of companies are often much more diverse, which is why the savings potentials are completely different. Can a gas-fired stove possibly also be powered by renewable energy? Does a meeting necessarily have to be held at a supplier on another continent or is a video call sufficient? Is it possible for employees to work at least partially in a home office? A study shows that just one more home office day in Germany would result in CO2 savings of almost 3 million tons of CO2e per year.
After reducing all emissions, you will find that you can never reduce them to zero. Some air travel simply cannot be avoided. Switching from an internal combustion vehicle to an electric car can reduce emissions by about 90% over the lifetime of the vehicle, but even if it is powered by renewable electricity, it is not zero.
To offset these emissions and still achieve net zero, companies resort to offsetting. CO2 certificates are purchased for this purpose. These certificates confirm that a certain amount of carbon has been removed from the atmosphere. This can happen, for example, through a reforestation project. However, it is important to pay attention to the quality of the certificates, because there are many projects that do not save any emissions. Furthermore, when buying carbon certificates, you can make sure that there are additional benefits for nature or people besides the sequestration of CO2.
If you're a company taking the net zero journey, you should tell your customers about it. More and more customers care that companies value the environment. Therefore, you should take the chance and see the decarbonization of your company as PR.
However, when you take the net zero effort to the public, it is important to make the switch with your own conviction and take it seriously. Half-hearted offsetting attempts with poor quality credits can also lead to greenwashing accusations.
It is not enough to work through these steps once. You have to repeat them regularly. With each repetition, the processes become more efficient and technical advances result in new savings potential. It is therefore advisable to carry out the 5 steps annually.
Many companies are now addressing the issue of sustainability and setting themselves the goal of achieving net zero carbon. This makes sense for companies in many ways. To achieve net zero, the company should follow a cycle of measuring emissions, setting targets, reducing emissions and offsetting emissions. At the same time, however, it should not forget to communicate the measures taken to its customers. This way, in addition to a good initiative for the environment, there is also an economic benefit.