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January 21, 2022

Setting Corporate Net-Zero Targets with Real Impact

Setting Corporate Net-Zero Targets with Real Impact

Specific goals set the stage for decisive action, accountability, and demonstrable success. That’s why when it comes to achieving corporate net-zero, precise targets need to be set based on a crystal-clear, commonly-agreed definition. That’s where the Science Based Targets initiative’s (SBTi) Corporate Net-Zero Standard comes in. 

Boosting Accountability: Certified Net-Zero Targets

While many companies around the world have already committed to net-zero goals, “not all net-zero targets are equal. Without adhering to a common definition, net-zero targets can be inconsistent, and their collective impact is strongly limited.” As that inconsistency could have severe consequences, the SBTi published the world’s most up-to-date definition of corporate net-zero in October 2021. This unambiguous clarity allows every company to make confident, evidence-based moves towards net-zero and paves the way for widespread corporate accountability.

Working with this definition, corporate net-zero means a 50% reduction in total scope 1, 2, and 3 emissions by 2030, and a 90-95% reduction by 2050 where carbon removal initiatives account for a maximum of 5-10%. In terms of small and medium-sized enterprises (SMEs), the SBTi  provides lots of useful resources for SMEs seeking to make a meaningful impact. The focus for SMEs, however, is on reducing scope 1 and 2 emissions, which remains crucial for the fight against climate crisis. Without accounting for their value chain emissions (scope3), SMEs cannot get net-zero certified. 

The Role of Carbon Offsets in Achieving Net-Zero Targets 

It’s important to note that this definition requires companies to actually reduce their emissions rather than offset them. Offsetting actions, no matter how well-intentioned, are either ineffective or simply not enough on their own and removal initiatives are, at present, often hard to measure. There simply is no acceptable trade-off against the harm done by greenhouse gas emissions. 

Planting trees for examples must happen in light of a native, diverse habitat and with ongoing care and protection. If instead, offset projects plant non-native trees at a large scale, this can have detrimental effects on local ecosystems, can increase the likelihood of wildfires, and deplete groundwater. The best way to counter greenhouse gas emissions is to not produce them in the first place. 

Effective GHG Accounting Must Underpin Net-Zero Targets

Using the SBTi’s definition should prevent corporations from making net-zero claims that are not supported by comprehensive proof. The Net Zero Tracker provides an overview of 2,000 of the largest publicly-traded companies in the world by revenue. Their team found that though 682 of those 2,000 companies have technically committed to net-zero targets, ineffective GHG accounting undermines those claims. Most often, this is because companies do not calculate (or publish) scope 3 emissions and/or have committed to unproven offsetting strategies. 

Take Walmart as an example, which has made an official commitment to reach net-zero by 2040. While that sounds ambitious, the world’s largest retailer’s plan does not account for scope 3 which, according to the company itself, accounts for 95% of its total emissions. Different sector, similar challenge: Mitsubishi has pledged net-zero by 2050 but the automotive manufacturer does not include scope 3 either, even though their 2021 GHG report indicates that their scope 3 emissions are 55 times larger than their combined scope 1 and 2.

The SBTi definition helps companies set meaningful goals and removes any excuse that corporations could hide behind when it comes to ineffective and uncertified net-zero pledges. The goals are clear and the steps for how to achieve them have been outlined. The climate crisis is not a PR opportunity that can be navigated through greenwashing campaigns or impressive-sounding spin, and failure to properly account for and slash reductions is simply not an option.