Net Zero Targets
The race to zero
Net Zero has come into focus in 2020 as the key sustainability objective for businesses even with the backdrop of COVID-19 and related economic uncertainties.
The reason is clear, with the UK’s commitment to Net Zero by 2050, we have 30 years to ensure this target is achieved. The sweeping changes required for the transition to a zero carbon economy will create leaders and laggards, so developing a plan has become a priority for many.
As an industry, we have a collective opportunity to lead the drive to net zero, and therefore a responsibility to do so. Every company now needs a strategy to reach net zero by 2050, and responsible businesses need to get there sooner. Businesses will be committing to only working with companies that have a credible net zero strategy, and consumers will be choosing products that do not contribute to the climate crisis. If you do not prepare your business for these new requirements, you will lose out to your competitors.
Our working definition of net zero
To reduce company wide and value-chain greenhouse gas emissions inline with limiting warming to 1.5 degrees, and to balance any remaining emissions by enhancing carbon sinks which remove carbon dioxide from the atmosphere.
There are valid concerns that net zero targets are being set without a consistent and credible definition, or a transparent strategy. In order for a net zero target to be credible it should be science-based and be aligned to reducing emissions in line limiting global warming to 1.5C.
Understanding your emissions
In order for your net zero target to be credible you should have a strategy to reduce company-wide Scope 1, 2 and 3 greenhouse gas emissions, as defined by the GHG Protocol Corporate Standard. The GHG Protocol defines three ‘scopes’ of emissions caused by your company’s operations.
SCOPE 1: Direct emissions by your organisation, e.g. from burning fuels such as natural gas for heating or petrol to fuel cars.
SCOPE 2: Indirect emissions from purchased electricity, cooling, heat or steam.
SCOPE 3: Other indirect emissions along your value chain from your suppliers or customers, such as business travel, purchased goods & services and waste.
For many retail and manufacturing companies, Scope 3 emissions (supply chain) will make up over 95% of their footprint so engagement with suppliers is important.
Customers will request information on the emissions associated with your organisation before wanting to collaborate and work with you to identify ways of reducing the environmental impact over time. It is recommended all organisations have a clear understanding of their GHG emissions footprint with identified projects to reduce impact.
Business case to develop a net zero pathway
- Customer demand: As customers become increasingly aware and concerned with environmental issues, failing to address these can cause reputation damage.
- Understanding and adapting to climate risk: Climate change is affecting the food supply chain and these impacts are likely to increase over time. Understanding your hotspots and taking measures to mitigate the most material risks will future proof your assets and operations against risk.
- Investors: Climate risk is becoming a key consideration in investor decision making and investors will demand visibility into your organisation’s climate risk and strategy in place to reduce it.
Your customers are setting targets and will expect their suppliers to as well. The move towards a zero-carbon world is well underway so now is the ideal time to set your own targets – and join other organisations at the forefront of sustainability.
The British Retail Consortium has just announced that 63 British retailers, despite Covid-19, have committed to become net zero by 2040. Scopes 1 & 2 are targeted to be net zero by 2035 and Scope 3, which makes up 90% of the footprint, to be net zero by 2040.
Retailers are responding to increasing consumer demand for action:
- 5X more brand value for brands perceived as having a high positive impact on society
- 85% believe brand should be about something more than profit
- 62% prefer to buy from sustainable brands
- 90% believe companies have an environmental and social responsibility
How can a company mitigate emissions and achieve net zero?
Both carbon reduction and carbon removals are required to achieve a credible net zero target. A net zero roadmap should prioritise absolute reduction in emissions – e.g.: through improving energy efficiency in buildings and operations, reducing travel and supply chain emissions, and switching to renewable energy.
Then secondly look to remove emissions, which can be achieved through investing in carbon removal in the supply chain or purchasing credible carbon offsets in the market. The carbon offsetting market is complex and whilst some standards exist (e.g. Gold Standard and VCS) there is unfortunately no single international standard for guaranteed carbon removal, so businesses need to make a choice of what is credible and what is not. This is critical to ensure your strategy is seen as credible in the marketplace.
Critical questions when building a net zero strategy
- What is a credible emissions boundary?
- What is a credible emission reductions pathway?
- What is a credible emission removals pathway?
- What is a credible net zero timeline?
Before setting a net zero target, it is imperative that a business develops a clear roadmap of the actions that will reduce its own emissions as far as possible in the first instance. Announcing a net zero target without a clear strategic roadmap may well have the opposite effect to what was intended – it risks damaging your green credentials more than enhancing them.
The increased focus on how we use our resources more effectively presents a clear opportunity for the frozen sector to demonstrate leadership by minimising waste, reducing carbon impact, and engaging suppliers. Frozen food is part of the solution, evidenced by the fact we are seeing retailers allocate more space for frozen and that sustainability is becoming a key driver for innovation in refrigeration technology.
Carbon Intelligence partners with clients on multi year programmes to help them reduce emissions in line with climate science and develop credible offsetting strategies. Carbon Intelligence is proud to have supported 1 in 3 UK approved science-based targets and have our own 1.5◦C approved SBT. Contact us today firstname.lastname@example.org