Carbon neutrality, net zero emissions, science based targets and net positivity – How can business take a leadership role in the carbon debate?
Confused? I don’t blame you if you are. With COP21, there has been increased debate on the role and leadership of businesses in limiting global warming. While climate change policies around the world will progressively get the largest emitters to reduce their emissions, the current policy set up is such that voluntary actions by organisations are definitely required to deliver the speed and scale of emission reductions required to stay below the 2oC threshold, let alone a 1.5 oC.
There are a number of initiatives and programs that businesses around the world can participate in to do their fair share in limiting global warming and there are new ones being announced on a regular basis. In Australia, voluntary programs include the National Carbon Offset Standard (NCOS) and the Take2 Pledge announced recently by the Victorian Government. Other initiatives include the UN’s Climate Neutral Now and the We Mean Business Coalition initiatives (in collaboration with other organisations) including science based targets, 100% renewables (RE100 Initiative) and energy productivity (EP100) initiatives.
This article provides a brief definition of the different terms used but also some brief thoughts on what business can do to take a leadership role in the carbon debate.
So what does some of these terms mean:
Carbon neutrality refers to a situation where the net emissions associated with an organisation’s activities, product, services or events are equal to zero because the organisation has reduced its emissions, and acquired and cancelled carbon offset units to fully account for its remaining emissions. This definition is also applicable to the term net zero emissions. Companies across a wide range of sectors have achieved carbon neutrality, both here in Australia through NCOS or voluntarily or around the globe through other programs and initiatives such as the carbonZero program and the climate neutral now initiative.
A recent initiative called Science based targets (SBTs) is a partnership between CDP, UN Global Compact, WRI and WWF, which helps organisations to determine and communicate carbon emissions targets that are consistent with the level of decarbonisation required to keep global warming to 2°C (or 1.5°C) as described in the Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). There are approximately 168* organisations around the world that have agreed to adopt science based targets. The SBT Initiative develops tools, guidance and other communications materials to enable sustainability professionals and other stakeholders to calculate and set SBTs.
One of the questions that regularly arises is how are SBTs compatible with carbon neutral commitments. Setting a robust, science-based target will help align an organisations reduction and emission avoidance efforts with climate science prior to offsetting to achieve carbon neutrality. An SBT will ensure that investment is prioritised towards low carbon technologies and emission reduction opportunities. It will also bring additional credibility to a corporate’s carbon leadership status.
And lastly, being Net Positive means business need to ensure that the the positive impacts outweigh the negative impacts. The Net Positive initiative launched in 2013 by the Climate Group, Forum for the Future and WWF is still very nascent and it remains to be seen how this approach will be standardised and evaluated.
Organisations have a large role to play in helping to reduce global carbon emission and there are strong reasons to take voluntary actions and go beyond compliance. While the contribution of organisations to this effort will vary including how they manage the associated risks and opportunities. It is evident from studies that those organisations that adapt and mitigate their emissions will increasingly gain competitive advantage in a carbon constrained economy. The reasons are numerous, reputational benefits, reduction in costs, an engaged workforce and improved productivity. In addition, there is likely to be profound impacts to company valuations if companies do not address the risks due to climate change such as new regulations, technological changes and shifts in consumer behaviour .
Taking a leadership position, does mean taking voluntary action and a commitment to activities beyond compliance.
This should also include engaging in the climate debate to share lessons learnt and build capacity, understanding your organisations risks across your supply chain and realising the associated opportunities.
Neil Salisbury is the Managing Director of Point Advisory a leading sustainability consultancy in Australia and the Founder of CleanTek Market, a global clean technology marketplace. Point Advisory are currently assisting a number of government and corporate clients in developing appropriate climate change strategies to manage risks and identify opportunities.