Greenhouse gases are the most significant drivers of climate change and carbon dioxide levels are at their highest point in the last 800,000 years. In order to meet global climate goals and meet sustainable consumer demands, companies around the globe are pledging to go net zero or carbon neutral. Reducing carbon emissions must be an essential part of everyday life for families, individuals and businesses around the globe. When it comes to sustainability terminology, there are dozens of buzzwords used to describe organizations or buildings that are reducing or eliminating emissions, the most popular term being Net Zero Emissions. The phrase net zero emissions has become widely popularized due to the Paris Agreement in 2015, where many governments formalized their sustainability commitments by pledging to achieve net zero emission by 2050. Now, there are many other terms related to net zero being used but many of them mean something entirely different. These terms are mostly being integrated for mainstream marketing purposes. Grasping what is carbon neutral vs net zero can be difficult. These terms have led to much confusion for those not familiar with specific emissions reduction concepts. The purpose of this article is to help clear up these different concepts and understand the initiatives companies are taking to reduce their environmental footprint.
This article will cover:
- What are the global climate reduction goals as set out by the Paris Agreement?
- How are companies reducing their carbon footprint?
- Understanding the Terms: Carbon Neutral vs Net Zero vs Carbon Negative
- Company Commitments
What are the global climate reduction goals as set out by the Paris Agreement?
In 2015, the United Nations Climate Change Conference, otherwise known as COP21 was held in Paris, France. COP21 resulted in the creation of the Paris Agreement which has dramatically reshaped business operations relating to emissions and sustainability. The Paris Agreement set out a global framework for avoiding the dangerous impacts of climate change by limiting global warming to below 2°C. In order to meet this goal, attendees agreed that we must achieve carbon neutrality by 2050. According to targets set by the Paris agreement, only 20 years are remaining to reach global net-zero emissions before climate change is ultimately irreversible. This formal commitment to carbon neutrality kickstarted the use of terms like carbon neutral and net zero emissions. In response to the Paris Agreement, the EU presented the Green Deal, a commitment to becoming the first climate neutral continent by 2050. In 2021, The United Nations Climate Change Conference was held again, this time referred to as COP26, and held in Glasgow, Scotland. COP26 was the first meeting since the 2015 Paris Agreement that expanded on increased commitments toward mitigating climate change. The result of COP26 was the Glasgow Climate Pact. This agreement was the first climate deal to explicitly commit to reducing global use of coal, pledging to phase down coal especially in India, China, and other coal-reliant countries. The agreement also encouraged more urgent GHG emissions cuts and promised to increase climate finance for developing countries adapting to climate impacts. At Cop26, the number of countries pleading to reach net zero emissions passed 140 nations, which include 90% of current global greenhouse gas emissions. The United Nations Conferences have set out global climate goals and have been a necessary and driving force of increasing sustainable governance and business operations.
How are companies reducing their carbon footprint?
Companies are finally taking their environmental responsibility more seriously due to increasing consumer demand. Reducing and tracking carbon emissions has now become essential for any business. To start this journey, businesses must first monitor and report their emissions to define their carbon footprint. This first step should analyze and account for all emissions, scopes I, II, and III. Scope I emissions are the direct emissions that come from a company's owned and controlled resources, facilities, and vehicles. Examples of Scope I emissions include on-site fuel combustion and fleet vehicles. Scope II emissions are indirect emissions resulting from purchased electricity, steam, heating, and cooling. Scope III emissions are even more indirect, used to describe investments, end-of-life treatment, transportation, operation waste, and even employee commute. Scope III emissions are understandably the least tracked and most difficult to account for. Tracking and disclosure of scope III emissions need to improve because it offers a huge opportunity for carbon reduction. Once a company tracks and analyzes their carbon footprint, they move to increase energy efficiency and renewable energy sources. Most companies will generate a new plan for renewable energy for on-site and off-site operations. As a final step, companies then turn to use the offsetting programs. Carbon offsetting is used to counteract essential emissions that still remain. This involves financing an action or activity such as planting trees or carbon sequestration that compensates for the emissions that still remain. Offsetting is also referred to as carbon credits. Companies purchase carbon credits or offsets to remove or avoid carbon emissions. Offsetting is an efficient, immediate, and effective way to take action on climate change, without having to change internal business structures.
Understanding the Terms: Carbon Neutral vs Net Zero vs Carbon Negative
Understanding the differences between climate terms is critical. They may appear seemingly interchangeable but they are not the same thing. Let’s review some essential terminology.
For an entity to be carbon neutral, it must have a policy of not increasing carbon emissions and of achieving carbon reduction through offsets. Essentially, carbon emissions are balanced out by the funding of equivalent carbon savings elsewhere. Any CO2 released into the atmosphere from a company's activities should be balanced by an equivalent amount being removed. There is still ambiguity around how much carbon a company needs to offset in order to be carbon neutral. Offsets are key to carbon neutrality.
Net Zero Carbon Emissions
Net Zero carbon emissions takes carbon neutrality a step further by requiring an overall balance of carbon emissions produced and emissions taken out of the atmosphere. With net zero, companies make changes to reduce their carbon emissions to the lowest amount like integrating renewable energy sources, only using offsetting as a last resort. Net zero carbon emissions also refers to operations where no carbon was emitted from the get-go. Think of net zero as an overall balancing act.
Net Zero Emissions
Net zero emissions is extremely similar to net zero carbon emissions, but this term includes every type of greenhouse gas. All greenhouse gas emissions must decline to zero as opposed to just carbon emissions. It is crucial to specify the difference between net zero carbon or net zero emissions since they are often confused. With net zero emissions, there is an overall balance of greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere. With net zero, companies are not adding to the heating of the planet.
Carbon negative goes even beyond net zero emissions to describe creating an environmental benefit by removing additional emissions from the environment. In other words, companies that are carbon negative remove or capture more CO2 from the atmosphere than they even emit. This negative amount of carbon emissions, achieved through offsets and energy efficiency, positively impacts the planet. Carbon negative is also referred to as climate positive or net negative. These terms can be used interchangeably to describe entities that remove more emissions than they emit.
To ensure companies are honest about their emissions status and to market sustainability efforts to consumers, new emissions-related certifications have been increasing in popularity. Let’s take a look at the most common emissions certifications to understand what they mean.
Carbon Trust Carbon Neutral
Carbon Trust created PAS 2060 Carbon Neutral certification to be an internationally recognized specification for carbon neutrality. In fact, their website claims this is the only recognized international standard for carbon neutrality. Carbon trust certifies organizations, products, and events that demonstrate a commitment to decarbonizing and neutralizing remaining emissions through offsets. The certification involves requirements for qualification, reduction, and offsetting of emissions. Carbon trust requires only scope I and II emissions to be reported and offset with scope III only being encouraged. The certification has no requirements for a company to reduce its emissions on a certain trajectory to be carbon neutral.
The US Green Building Council recently developed a line of certifications called LEED zero to verify achievements of net zero goals. LEED standards for leadership in Energy and Environmental Design and their basic certification is the most widely used green building rating system. One of the new certifications is LEED zero carbon which recognizes net zero carbon emissions from energy consumption through carbon emissions avoided or offset over a period of 12 months. Other certifications include LEED Zero Energy which recognizes source energy using a balance of zero, LEED Zero Water which recognizes water use balance of zero and LEED zero waste which recognizes buildings that achieve platinum levels on waste management criteria.
Carbon Neutral certification is run through the organization National Capital Partners and offers a transparent framework for carbon neutrality. Their website proclaims they are the first organization to set clear guidelines for businesses trying to achieve carbon neutrality. These guidelines combine carbon offsetting and internal reduction efforts, following a 5 step process of defining, measuring, targeting, reducing, and communicating. The certification process involves measuring and establishing scopes I, II and III emissions and then purchasing verified carbon offsets. This certification works with over 300 countries including Microsoft.
Zero Carbon Certification
The International Living Future Institute’s Zero Carbon certification claims to be the first zero carbon third-party certified standard requiring projects to fully decarbonize. This certification is mainly for buildings. The certification requires that 100% of energy needs be supplied by onsite renewable energy. Buildings must demonstrate net zero carbon operations based on a one-year performance period.
To be certified Climate Neutral, a company must measure all greenhouse gas emissions and then offset remaining emissions through reduction and removal projects. Climate Neutral certification ensures a company is taking responsibility for both their direct and indirect emissions and implementing a plan to further reduce emissions in the future.
More than ever before, businesses are taking action to mitigate climate change. A recent study at NYU Stern’s Center for Sustainable Business found that sales of sustainable productions were nearly $118 billion in 2018, a 29% increase from 2013. The study also found that between 2013 and 2018, sales of sustainable products grew 5.6 times faster than products not marketed as sustainable. As global climate goals and consumer demand for sustainable products increase, companies are finally taking environmental responsibility more seriously and implementing emissions reduction targets. Big businesses have a great platform and opportunity to create global change and to set new sustainability-related expectations for business operations. We will now take a brief look at how five major companies are integrating plans for emissions reductions.
Google was one of the first entities to achieve carbon neutrality back in 2007. They are now focusing on eliminating their entire carbon footprint to become net zero through purchasing high-quality carbon offsets. Google is also committed to operating on entirely carbon-free, renewable energy by 2030.
Apple is already carbon neutral when it comes to their direct corporate emissions and they are working on including manufacturing, supply chain, and product lifestyle into the equation. They hope to become completely carbon neutral by 2030. Apple aims to reduce its emissions by 75 percent by 2030 and to develop carbon renewal solutions like offsets for the remaining 25% of emissions.
Coca-Cola has pledged to reduce its greenhouse gas emissions by 25% across its entire value chain by 2030. They have also pledged to achieve net zero carbon emissions by 2050.
Microsoft is already carbon neutral and is taking measures a step further by pledging to achieve carbon negative status by 2030. By 2050, Microsoft aims to remove all direct and indirect atmospheric carbon it has ever produced since its founding in 1975. Microsoft has also doubled its internal carbon fee, a way of companies taxing themselves. Their carbon tax now sits at 15$ for every metric ton of carbon dioxide their operations produce. This money is invested back into sustainability efforts like carbon sequestration.
IKEA is the world’s largest furniture retailer and is often dismissed by environment activists as a sort of fast-fashion for furniture. But, IKEA is actually taking notable steps to become more sustainable. In 2018, the company announced they would be carbon negative by 2030. Their plan involves switching to 100% renewable energy, introducing more plant-based options in cafeterias, and using more recyclable materials in products. IKEA also aims to replace its entire delivery fleet with electric vehicles by 2025.