Climate Week NYC 2020 happened last month and this year’s edition was certainly one to remember. The event was held entirely online. Additionally, the week of events included ambitious commitments from some of the biggest names. Most notably, the University of Cambridge announced a Net-Zero target by 2038 and Facebook committed to a Net-Zero target by 2030. Walmart, the world’s largest company, outlined plans to be 100% carbon neutral by 2040 (without using carbon offsets).
With a noticeable increase in corporate targets and commitments, comes a barrage of terms and definitions that are often used interchangeably. To help you understand key terms and definitions related to science-based and Net-Zero targets, the team at Cority has prepared some answers to some of the most frequently asked questions.
What does Net Zero mean?
The IPCC describes Net Zero as “that point when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period”. This means a company’s emissions output must be balanced with the removal of carbon (to equal Net Zero).
Practically, if a business emits a certain amount of tCO2e/per year, to become ‘Net Zero’ it will first need to reduce its value-chain emissions through initiatives. That includes switching to renewable energy, limiting business travel, or considering cleaner technologies. Then, for the unavoidable emissions, the business can look to carbon removal initiatives or offsets. That includes offsetting the residual emissions in order to reach Net Zero.
Is there a difference between Net Zero and carbon neutrality?
Often, carbon neutrality is used as a synonym for Net Zero. However, there is a slight difference between the two terms.
Carbon neutrality refers to the act of offsetting residual emissions or compensating current emissions. A market has developed around carbon neutrality as businesses can buy “carbon credits”. This includes investing in projects that will avoid, reduce, or capture carbon (e.g. renewable energies and forest protection).
Net Zero is henceforth the wider goal, where no GHG emissions are added to the atmosphere. Either through the maximum reduction of emissions or the offsetting of residual emissions.
What are science-based targets (SBTs)?
SBTs are born out of a partnership between CDP, the UN Global Compact, The World Resources Institute, WWF, and We Mean Business. The aim is to establish a method for organizations and businesses to set reduction targets for their carbon emissions. While being in line with the Paris Agreement. They are backed by current scientific knowledge and provide reduction pathways aligned to limit global warming to well below 2 degrees. In addition to being as close to 1.5 degrees as possible. In other words, we can think of them as the National Determined Contributions but at a corporate level. These are emissions reduction goals that countries had to commit to as a result of the Paris Agreement.
What does science tell us?
According to the IPCC Special Report on the impacts of global warming of 1.5 degrees (2018), “limiting warming to 1.5 degrees implies reaching Net-Zero CO2 emissions globally around 2050”. The IEA also demonstrates in its Sustainable Development Scenario that if we reach Net-Zero emissions in 2070, we will have a 66% chance of limiting the global temperature average rise to 1.8 degrees. Needless to say, the stakes are high.
How do science-based targets differ or relate to Net-Zero targets?
First of all, SBTs and NZTs are not mutually exclusive but complementary. Indeed, in order to reach Net Zero organizations need to use SBTs emissions reduction targets. In other words, NZTs are the goal and SBTs are the method (in combination with carbon offsetting, compensation, or capture). Below are some comparisons:
Validation:
- SBTs are much stricter than any other target setting. The SBT Initiative must validate them within 2 years of commitment. In addition, they entail a validation price. They are regulated by a rigorous process in order to ensure their correct deliverance.
- NZTs are not part of a wider framework and are therefore not regulated nor verified.
Timeframe:
- SBTs are shorter-term targets (5-15 years). One explanation is notably the fact that setting short and constraining targets can lead to greater results and faster action.
- NZTs are much longer-term targets (15+ years) as part of a global sustainability strategy.
Scopes:
- As a consequence of their rigorous framework, SBTs must include reductions for Scopes 1 & 2, which are within the organization’s boundary. However, they also include Scope 3 emissions, which are often the source of major emissions. Scope 3 emissions are within an entity’s value chain.
- Net-Zero emissions do not require an organization to include scope 3 emissions within the scope of their reductions.
Why should a business set a science-based target?
- Climate leadership. With the ever-increasing sustainability demand and expectations from stakeholders, setting an SBT will improve brand reputation and attract employees, consumers, and investors.
- Emissions analysis. By calculating and analyzing emissions during the target-setting process, organizations will be able to identify hotspots and implement reduction initiatives.
- Supply chain visibility. SBTi requires the assessment and improvement of Scope 3 emissions. This provides organizations with greater insights into their entire value chain impact.
- Performance transparency. Reporting on progress against an approved SBT will widen the scope of sustainability disclosures, increasing investor and general stakeholder transparency.
- Sustainability reporting. SBTs are expected to become the recognized industry best practice. Setting an approved target will ensure that businesses keep ahead of a constantly evolving sustainability reporting and regulatory landscape.
Tracking Targets with Cority’s Sustainability Performance Management Software
Cority’s latest sustainability reporting software release included a new and enhanced Targets functionality in the Sustainability Performance Management Software. Aligned with the requirements of SBTi, organizations can set and track performance against flexible and long-term environmental consumption and GHG targets. Discover how Cority’s award-winning sustainability reporting software can help you achieve your sustainability goals.
Key documents and references
“Foundations for science-based Net-Zero target setting in the corporate sector” Publication by The Science Based Targets Initiative and CDP
“Financial sector science-based targets guidance” Publication by The Science Based Targets Initiative and CDP
