The need for a gold standard approach to net zero

As many of us know from advising our clients on climate-related issues, there’s an unfortunate void when it comes to having clear industry standards on setting net zero and other “green” targets.

This is a problem for many reasons, not least the risk that companies will either inadvertently or knowingly make bold claims that fall short of what scientists and global authorities deem sufficient, without people necessarily knowing what they’re based on.

It doesn’t help that terms like “net zero” and “carbon neutral” are frequently misused and hard to police, as this adds to the confusion and can be off-putting for those trying to engage.

Decisions, decisions

Businesses have an incredible amount of choice when it comes to setting emissions reduction targets and how to achieve them – do it alone or with external verification? Net zero by 2050 or sooner? Reduce emissions or offset them? 1.5°C global warming or 2°C?...

Flexibility can be helpful if it allows organisations to start their journey sooner and in a way that works for them, but the problem starts when they make claims using terminology that’s misleading and that overstates their position in the market.

I see clients and job seekers starting to interrogate this more as they become more familiar with the ins and outs of target-setting. The result? Your net zero strategy says a lot about you as a firm.

Alone or with experts?

Despite a lack of industry standards, there’s a sizeable market available to help organisations with everything from internal engagement and data analysis to reporting and setting roadmaps.

Setting credible targets and putting a plan in place to achieve them takes time, so external support can help organisations achieve their ambitions and gain competitive advantage sooner. It also frees up the in-house team to make strategic decisions and keep the wider strategy moving forwards.

External advisers can also play “devil’s advocate” and provide a useful sounding board to ensure the targets are ambitious but also achievable.

Net zero 2050 or sooner?

The UK has committed to achieving net zero by 2050 and all organisations have a role to play in that. But 2050 isn’t a rule – if anything, it should be the exception to the rule of being as ambitious as you can and setting a long-term target that’s as far ahead of 2050 as possible. Why wait?

A word of caution though: net zero is incredibly hard to achieve – at least in a way that’s aligned with the latest climate science – so people should learn to be sceptical of targets that sound too good to be true. With a better understanding of how this all works, more people will start to interrogate what decisions have led to a particular target and whether some of the variables fall short.

Reduce emissions, or offset?

The climate industry is evolving all the time, and just over a year ago the Science-Based Targets initiative (SBTi) announced its Net-Zero Standard – the world’s first science-based standard for setting corporate net-zero targets. This moved the goalposts in terms of what companies should be aiming for and made it very clear what is and is not acceptable in their view.

For example, some companies have historically planned to achieve net zero simply by offsetting, meaning they don’t reduce the emissions they’re releasing into the atmosphere, they just do something like plant trees which is intended to help take emissions out of the atmosphere. This is more accurately referred to as “carbon neutral” and shouldn’t be confused with net zero.

In another example of needing to keep up with the times, the message has shifted to limiting global warming to well below 2°C – but preferably 1.5°C – compared to pre-industrial levels, highlighting another scale on which organisations can choose how ambitious they want to be.

Scopes 1, 2 and 3

Finally, emissions are split into three categories and it’s the third of these – which covers the supply chain – that tends to be the largest “scope” and the hardest to control. As such, it’s often missing from an organisation’s net zero target and reporting.

Having published the most ambitious climate targets in our industry, we recommend making sustainability a key pillar of an organisation’s growth strategy and appointing an executive board member responsible for sustainability and the net zero approach – supported by in-house experts, as well as external consultants as needed. Only then can sustainability withstand other competing priorities and inform board-level decisions on everything from HR to offices and suppliers. 

This kind of prioritisation also makes it easier for organisations to focus on the long-term benefits of sustainability, as opposed to the short-term costs. Crucially, the sustainability strategy needs to be supported by an ongoing employee engagement campaign that makes it as easy as possible for people to understand the challenge, contribute ideas and change their behaviour.

This article first appeared on Law.com International on 7 November 2022.