Navigating a world of targets, commitments, and pledges: what are the options for your business?
Since the UK government became the first major economy to legislate a Net Zero emissions target, the shift and momentum towards target setting has been rapid, for both governments and businesses.
Considering the term ‘Net Zero’ was not even mentioned when the Paris Agreement was agreed in 2015, the landscape has changed considerably in recent years. The acceptance that the world needs to meet Net Zero no later than 2050 has become widespread, and the realisation that we remain far off that pathway, despite the current pledges and targets in place, has led to a flurry of interest in taking the necessary action to get us there.
Following last year’s COP26 summit in Glasgow, 90% of global GDP is now covered by actual or intended net-zero targets. The image below demonstrates the increase in country commitments within just 6 years. There is now even a Net Zero tracker available which includes detail on the Net Zero targets of countries, regions, cities, and companies, click here to access.
The momentum for Net Zero target setting, whilst welcomed widely, does not come without it’s problems. Concerns have been raised that setting targets far into the future has the potential to deter companies from taking immediate action and increase reliance on technologies which do not yet exist on a viable scale. However, the purpose of setting a Net Zero target is that reductions must be made first (best practice suggests by 90-95%), before anyone can claim to be Net Zero. There is now extensive guidance and commitment criteria available for companies to ensure they are setting robust, science-based targets.
So, what are the options available to businesses, and what is involved?
The United Nation’s Race to Zero campaign is the largest ever global alliance committed to achieving Net Zero carbon emissions by 2050. Signatories must commit to Net Zero emissions by 2050, and a 50% emissions reduction (or their fair share of this) by 2030 via an approved partner. Scope 1 and scope 2 emissions must be included, and scope 3 emissions where material.
The Science-based target initiative (SBTi) defines and promotes best practice in science-based target setting. Science-based targets (SBT) are set in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement. That is to limit global warming to well-below 2 (WB2) degrees above pre-industrial levels and to purse efforts to limit warming to 1.5 degrees. SBTi’s must cover scope 1 and 2 emissions, and relevant scope 3 emissions if these are 40% or more of total emissions. The SBTi can assess and approve companies’ targets.
There is a streamlined target validation route exclusive to SMEs (less than 500 employees), meaning they can bypass the usual process for setting up a Science-based target, and set a scope 1 and 2 emissions target by choosing from predefined options. Unlike the standard validation route, there is no requirement to set a scope 3 target, although there is a commitment to monitoring and reducing scope 3 emissions.
Please note the SBTi announced in July 2021 the phasing out of well below 2 degree targets in favour of more ambitious 1.5 degree targets from July 2022.
This commitment is an extension of the SBTi commitments, and signing up automatically includes your company in the Race to Zero initiative. Companies have to set a Net Zero target in line with a 1.5 degree future, and must follow the SBTi criteria for setting a target aligned with the 1.5 degree pathway. SMEs may use the SME science-based target route.
Another partner of the Race to Zero initiative, the Climate Pledge requires companies set a Net Zero target by 2040, measure and report emissions on a regular basis, implement decarbonization strategies in line with the Paris Agreement, and neutralize any remaining emissions with credible offsets.
This requires companies to halve their own and their value chain greenhouse gas emissions by 2030, and achieve Net Zero by 2050. Signatories must integrate climate into their business strategy, influence climate action in society, and disclose progress publicly on an annual basis. It is another route via which to join the Race to Zero network.
The SME Climate Hub commitment (also officially recognised by the Race to Zero campaign) is for any companies with up to 500 employees, who commit to halving greenhouse gas emissions by 2030, and achieve Net Zero emissions before 2050, disclosing progress on a yearly basis. Both scope 1 and 2 emissions, and emissions related to business travel, are required to be cut in half this decade.
A more ambitious commitment requiring signatories to commit to Net Zero by 2030 for scope 1, 2, and most relevant scope 3 emissions. Companies must outline and share with stakeholders steps they will take in the short and medium term and self report progress against their plan and targets annually. B Corp status is not a requirement.
This also requires companies to set a Net Zero by 2030 target, covering scope 1 and 2 emissions, and to consider and discuss material scope 3 impacts. Requirements also include declaring a Climate and Ecological Emergency, and creating and implementing a climate action plan.
Companies should bear in mind when mapping out their Net Zero pathways that changes in the wider world, such as the banning on the sale of new petrol and diesel cars in the UK by 2030, and the commitment to a fully renewable UK electricity supply in 2035, will cause incremental changes to emissions as and when specific initiatives and legislation are introduced.
Not sure where to start? Comply Direct can help you begin your Net Zero journey!
Alternatively, register on our upcoming webinar..
Your Environmental Solutions: Carbon Management, Packaging and Resource Efficiency
Tuesday 15 Feb at 2.00pm