Why does this matter?
In recent years, ‘net-zero’ has become a nebulous concept. That’s because not all net-zero pledges are created equal. Different targets abound. They cover different ‘boundaries’ (what’s included and excluded), involve different definitions, relate to different timeframes and can be met in different ways. That’s a lot of ‘different’ – far too much when the future of the planet and its people is at stake.
At last! A definition of ‘net-zero’
The new Net-Zero Standard (launched 28 October 2021) introduces the world’s first net-zero framework (consistent, robust, science-based!) It provides the guidance and tools businesses need to understand what (and how much) they need to do to become truly net-zero, and gives them confidence that the targets they’re working to are backed by climate science.
The challenge stays the same
The Standard keeps some things the same. These include the goal (keep global warming to 1.5°C), how we meet it (by halving CO2 emissions by 2030 and reaching net-zero by 2050), and the steps involved in setting an SBT (below).
What’s new: targets, timeframes, calculations, ways of tackling emissions
The Standard introduces new targets and timeframes, and new ways of calculating targets and tackling emissions to reach the 1.5°C goal.
The top seven things you need to know
1. The ambition’s higher
The reductions included in a net-zero target must be in line with keeping global warming to 1.5°C for Scope 1 and 2 and well below 2°C for Scope 3. (SBTi will introduce this new ambition for all targets from July 2022, not just net-zero.) (** Our footnote includes a handy recap of Scopes 1, 2 and 3.)
2. Things need to happen sooner
Companies must set a near-term target of 5 to 10 years. This replaces the current SBT’s timeframe of 5 to 15 years. (This earlier timeframe applies to all targets from July 2022, not just net-zero.)
3. There’s a new long-term reduction target
Companies must achieve a long-term target before 2050. For most businesses, this means reducing emissions by 90%.
4. The scope’s wider (more Scope 3)
As before, the near-term target must include 67% of Scope 3 emissions (if they make up 40%+ of total emissions). The long-term target must cover 95% of Scope 3 emissions.
5. Reduce before neutralise!
Reduction’s the priority. Only when a company has reduced emissions by 90% (for the mixed-sector approach) can they neutralise the remaining 10%.
6. Legacy SBTs must be updated
If a company with a legacy SBT wants to set a net-zero target, it must update its SBT to meet the new criteria.
7. 100% offsetting is no longer an option for reaching net-zero
The Standard eliminates 100% offsetting as an option. To become net-zero, companies must put their effort into reducing emissions in line with science.
More about the targets
Two SBTs, not one
Businesses must now set two targets: a near-term target and a long-term one.
The near-term target
- Target: 1.5°C (Scopes 1, 2 and 3); well below 2°C (Scope 3)
- Term: 5 to 10 years
- Base year: 2015+
- Boundaries (Scopes 1 and 2): 95% of Scope 1 and 2 emissions
- Boundaries (Scope 3): if these emissions account for 40%+ of emissions, the target must include 67% of Scope 3 emissions
The long-term target
A business cannot claim to be ‘net-zero’ until it meets this target.
- Target: 1.5°C (Scopes 1, 2 and 3); well below 2°C (Scope 3)
- Term: net-zero must be reached before 2050
- Base year: 2015+, and matching the near-term target
- Boundaries (Scopes 1 and 2): 95% of Scope 1 and 2 emissions
- Boundaries (Scope 3): the target must cover 95% of Scope 3 emissions and all relevant Scope 3 categories (e.g. employee travel).
Scope 3 emissions feature prominently in both targets. In other words, companies that are serious about being truly net-zero must tackle their supply chains.
Neutralising remaining emissions
Once they have reduced emissions by 90%, businesses may neutralise the remaining 10%. The Oxford Dictionary defines ‘neutralising’ as ‘stopping something from having any effect’ and that’s what’s involved here: companies must remove carbon from the atmosphere permanently.
There are two ways to do this. Land-based options include permanent forestry plantings. Geological options involve capturing carbon and storing it underground. If the carbon could be released (e.g. a forest cut down), the business must develop a contingency.
If these neutralising activities benefit people and nature (e.g. provide employment or habitat for wildlife), so much the better.
What does this mean for offsetting?
At present, companies offsetting 100% of their carbon footprint can claim to reach ‘net zero’ without reducing emissions. However, even the highest quality offsets fail to deliver a science-based target. Plus, they let organisations avoid the hard work needed to meet the 1.5°C ambition.
The Standard eliminates 100% offsetting as an option for reaching net-zero. However, there is still a role for offsetting – in the near term. As they transition to net-zero, companies may offset emissions in areas unrelated to their value chain. For example, a business outside the energy sector may invest in offsets that promote new, low-carbon energy sources.
How to set and reach a net-zero SBT
1. Choose your base year
2. Calculate your emissions
3. Set your boundaries
4. Choose your target year
5. Calculate your target emissions
Then reduce, disclose your progress annually, keep reducing (and neutralise what’s left).
It’s good to see the launch of the Net-Zero Standard. We’re big supporters of the role SBTs play in avoiding disastrous climate breakdown. In fact, we have an SBT ourselves.
More information
**Scope 1 emissions are generated from sources that the business controls or owns (e.g. emissions from plant and equipment). Scope 2 emissions are indirect emissions, generated from purchased energy (e.g. electricity). Scope 3 emissions are all other indirect emissions in a company’s supply chain (e.g. employee travel).