Article: Net Zero Targets: The New Frontier of Climate Ambition

This article was first published in Orient magazine, June 2020

There has been a surge in popularity of ‘net zero’ targets. In recent months, leaders from prominent global firms have stepped up and made announcements, committing their companies to net zero emissions. The term has also become a common part of political and academic discourse, with target dates for achieving net zero becoming the new proxy for climate ambition. With the increased interest in net zero targets, what exactly does it mean for your business?

Two main global initiatives have driven the uptake of net zero targets. In September last year, the UN Climate Action Summit in New York saw the launch of the Climate Ambition Alliance, with 65 countries, 10 regions, 102 cities, 87 businesses and 12 investors announcing a 2050 net zero commitment.  Similarly, a joint initiative from the UN Global Compact, the We Mean Business Coalition and the Science Based Targets initiative was also announced at the Summit. Companies pledged to align their businesses with a 1.5°C world, either by setting a 1.5°C science-based target, or by setting a net zero target. Among those companies is Singtel, the first Southeast Asian firm to have made the commitment.

What does net zero mean?

In 2019, the Science Based Targets initiative (SBTi) described net zero for a company as ‘achieving a state in which the activities within the value-chain of a company result in no net impact on the climate from greenhouse gas emissions’. However, there is still uncertainty in the market around the definition of net zero. Unlike other terms, such as carbon neutral, there is no commonly agreed definition or accompanying standard for what constitutes net zero emissions, although the SBTi is working on a definition.

The Carbon Trust suggests that there are three key elements to the definition of a net zero emissions company:

1. The company will set and pursue an ambitious 1.5C aligned science-based target for its full value chain emissions
2.  The boundary must be Scopes 1, 2 and 3
3. Any remaining hard-to-decarbonise emissions can be compensated with certified greenhouse gas removal (GGR). These should be restricted to only certified methods of GGR, to increase confidence that the carbon is permanently sequestered. Importantly, the company or organisation should make sure that only truly ‘hard-to-decarbonise’ emissions may be compensated.

Key considerations for net zero

Any company that is considering setting a net zero emissions target should think about the following key points, to ensure that the commitment is robust and truly climate aligned.

1. Trajectory pathway: How will you reach your net zero targets?

Setting a target date for net zero emissions is an important step for a company. However, the route the company takes to net zero is important as well. The company should ensure that its path to net zero is ambitious, by aligning to a 1.5°C pathway. Beyond just reaching net zero, the company needs to minimise the cumulative GHG emissions it will produce from the present day to its net zero target date. To do so, companies should aim for a pathway aligned to science-based targets.

2. Business model pathway: Will your business model need to change?

To adapt to a changing world, companies have to consider shifts in their business model. There is a need to innovate to meet challenging climate change targets. For instance, transport companies can consider shifting towards electrification and new technology for low emissions transport, instead of continuing to produce internal combustion engines. Climate change brings with it both risks and opportunities, which companies must factor into their strategic decisions in order to succeed.

3. What actions will you need to take outside your own operations? How will Greenhouse Gas Removal (GGR) methods feature in the plan?

Some companies, particularly those in ‘hard-to-decarbonise’ sectors, will have to look to GGR to reach their net zero ambitions. There is still much discussion around appropriate GGR methods, as some methods are more reliable than others, and the markets for GGRs require significant development in terms of volume, market mechanisms, and certification protocols. Possible GGR options include large-scale forestation, biochar, and bioenergy with carbon capture and storage. However, the methods vary in terms of how permanent the removal is. It is important to consider such factors of GGR methods, when the company chooses GGR options to compensate emissions.  

Net-zero is a viable and desirable goal for businesses, provided it demands a reduction target aligned to a 1.5ᵒC science-based target and is limited to specified GGRs. One of the reasons for the popularity of net zero targets is that the term carries a promise of ambition, sending a clear signal to the market. This presents an opportunity to further push and develop the climate ambitions of corporates in Asia.

- END - 

About the Author

Chris has 15 years’ experience of supporting low carbon development in the energy and land use sectors of developing countries. He leads the Carbon Trust's activities in Asia overseeing the offices in Beijing and Singapore. Chris also coordinates engagement with various international climate funds, including the Green Climate Fund (GCF) and Global Environment Facility (GEF).

Before joining the Carbon Trust, Chris lived in Jakarta where he helped establish the Global Green Growth Institute (GGGI)'s Indonesia programme. He also directed international parliamentary commissions on global environmental challenges and developed a risk analysis tool and rating methodology for emission reduction projects.

About the Organisation

Carbon Trust is an expert partner for businesses, governments and organisations around the world – supporting them in realising ambitious plans for a sustainable, low carbon future.  We believe that environmental sustainability and economic prosperity can go hand-in-hand as we address the climate crisis. Find out more at www.carbontrust.com.