Net Zero Guide: Setting Achievable Targets for your business

Want to slash your company's carbon footprint? Here's how to set realistic net zero targets:

1. Measure your emissions (Scopes 1, 2, and 3)

2. Set science-based targets (near-term and long-term)

3. Focus on high-impact areas

4. Engage employees and suppliers

5. Switch to renewable energy

6. Use carbon offsets as a last resort

7. Be transparent about progress

Key steps:

• Use carbon accounting software to track emissions

• Aim for 90-95% emissions reduction

• Set 5-10 year goals and a 2050 (or earlier) net zero target

• Follow GHG Protocol and SBTi guidelines

• Report progress annually

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Net Zero Basics

Net zero isn't just a fancy term. It's a crucial goal for companies looking to cut their environmental impact. But what does it really mean, and how can businesses set targets they can actually achieve?

What Net Zero Means for Companies

For a business, net zero boils down to this: balance the greenhouse gases (GHGs) you put out with an equal amount you take out of the air. In practice, it usually means:

1. Slash emissions by 90-95% across your operations and supply chains

2. Offset what's left through carbon removal projects

It's a big ask, but it's becoming more and more necessary. As Maria Mendiluce from the We Mean Business Coalition puts it:

"Climate is everyone's responsibility. The transformation is a huge business opportunity for those at the forefront."

How SBTi Works

This is where the Science Based Targets initiative (SBTi) comes in. It's a partnership between CDP, the UN Global Compact, World Resources Institute, and WWF. They give companies a roadmap to set emissions targets that line up with climate science.

Here's the process:

1. Build a GHG inventory: Figure out your Scope 1 (direct), Scope 2 (indirect energy), and Scope 3 (value chain) emissions using the Greenhouse Gas Protocol.

2. Set targets: Create near-term (5-10 years) and long-term (by 2050) science-based targets.

3. Get validation: Send your targets to SBTi for official approval.

4. Take action: Put strategies in place to cut emissions and keep track of your progress.

The impact? As of May 2023, over 4,200 companies have set and gotten the green light for their science-based targets. That's DOUBLE the number from just a year before.

Rules and Standards

To make sure net zero targets are legit and consistent, companies need to follow some specific rules:

1. Scope coverage: Long-term targets must cover at least 95% of Scope 1 and 2 emissions, and 90% of Scope 3.

2. Emissions reduction: Companies need to cut emissions by 90-95% across their entire value chain by the target year, compared to where they started.

3. Timeframe: Long-term targets should be hit no later than 2050.

4. Transparency: Regular progress reports are a must to stay accountable.

In October 2021, SBTi launched their Corporate Net-Zero Standard. It's like a guidebook for these requirements. Elena Cernov from Schneider Electric Energy & Sustainability Services says:

"The new Net-Zero Standard provides a robust description of what a net-zero state for a company should look like."

Measuring Your Emissions

Measuring your company's greenhouse gas (GHG) emissions is key to understanding your environmental impact. Let's break it down:

Direct Emissions (Scope 1)

These are emissions from sources your company owns or controls. Think company cars, on-site energy generation, and even refrigerant leaks.

Here's how to measure them:

1. List your emission sources

Make a list of all company-owned vehicles, facilities, and equipment that burn fuel or release GHGs.

2. Gather your data

Collect fuel consumption records, maintenance logs, and refrigerant top-up records.

3. Do the math

Use standard factors to convert your data into GHG emissions.

For example:

Your company fleet used 10,000 liters of diesel in 2022. The emission factor for diesel is 2.68 kg CO2e per liter.

10,000 L × 2.68 kg CO2e/L = 26,800 kg CO2e (or 26.8 tonnes CO2e)

Energy Use Emissions (Scope 2)

These are indirect emissions from bought electricity, steam, heating, and cooling.

To measure:

1. Get all your utility bills for the reporting period.

2. Figure out if your energy is from renewable or non-renewable sources.

3. Use the right emission factors based on your energy contracts.

Let's say your company used 100,000 kWh of electricity in 2022, and the grid emission factor is 0.5 kg CO2e per kWh:

100,000 kWh × 0.5 kg CO2e/kWh = 50,000 kg CO2e (or 50 tonnes CO2e)

Supply Chain Emissions (Scope 3)

These are often the biggest part of a company's carbon footprint - sometimes up to 90%. They include all indirect emissions across your value chain.

Here's how to tackle them:

1. Map out your value chain.

2. Focus on the biggest emission sources first.

3. Work with suppliers, customers, and your team to get the info you need.

4. Use industry averages or proxy data when you can't get exact numbers.

For instance, a tech company might find that making their purchased electronics is a major Scope 3 source. They could work with suppliers to get specific emission data or use industry benchmarks to estimate.

Creating Your Starting Point

To set your emissions baseline:

1. Pick a representative year with good data.

2. Decide which operations and entities to include.

3. Add up your Scope 1, 2, and 3 emissions.

4. Write down your process for future consistency.

Don't aim for perfection when you're starting out. As Elena Cernov from Schneider Electric Energy & Sustainability Services says:

"The new Net-Zero Standard provides a robust description of what a net-zero state for a company should look like."

Start with what you have and improve over time. The key is to begin and keep refining your approach.

Setting Your Targets

Let's talk about setting net zero targets that actually work. We'll cover both short-term and long-term goals that line up with what the Science Based Targets initiative (SBTi) wants to see.

Near-term Goals

First up: near-term targets. These are your 5-10 year goals that get the ball rolling. Here's what a solid near-term target might look like:

"We're going to cut our scope 1 and 2 emissions by 42% by 2030, starting from our 2022 levels. We'll also measure and reduce our scope 3 emissions."

This follows SBTi's suggestion of cutting emissions by 4.2% each year, which keeps us on track for that 1.5°C goal. Just make sure your near-term targets cover at least 95% of your scope 1 and 2 emissions.

Long-term Planning

Near-term goals are great, but you need a long-term plan to hit net zero. SBTi says you need to cut at least 90% of your emissions to claim net zero. So, your long-term target might be:

"We're aiming to slash our scope 1, 2, and 3 emissions by 90% by 2040, compared to our 2022 levels."

This fits with SBTi's rule that long-term targets should cut at least 90% of emissions across all scopes by 2050 or earlier.

Progress Checkpoints

You can't manage what you don't measure. Set up yearly checkpoints to see how you're doing. Use these to:

1. See how your current emissions stack up against your starting point

2. Figure out what's working

3. Spot areas that need work

4. Tweak your approach if needed

Tools like Emerald Power's carbon accounting software can make this easier. It gives you real-time emissions data and automates data collection, so you're not stuck crunching numbers all day.

Getting SBTi Approval

Want to make sure your targets are up to snuff? Get SBTi's stamp of approval. Here's how:

1. Commit: Tell SBTi you're in by sending a commitment letter.

2. Develop: Use SBTi's resources to create solid, science-based targets.

3. Submit: Pay $4,950 and send in your targets for review.

4. Communicate: If you get the green light, tell the world about your targets.

5. Disclose: Report on how you're doing each year.

As Joshua Rayner puts it:

"The SBTi framework ensures that targets are set to a level of ambition sufficient to mitigate the worst effects of climate change, in line with the latest science."

In other words, SBTi makes sure you're not just talking the talk, but walking the walk when it comes to fighting climate change.

Making it Happen

You've set your net zero targets. Now it's time to act. Here's how to track progress, cut emissions, and keep your team on board.

Tracking Your Data

Good data is key to any net zero strategy. Here's how to stay on top of your emissions:

1. Use carbon accounting software

Get a solid carbon accounting platform. It'll make data collection and analysis much easier. For example, Emerald Power offers automated data collection and real-time emissions tracking.

2. Set up regular check-ins

Look at your emissions data monthly or quarterly. This helps you spot trends and fix issues fast.

3. Integrate with existing systems

Find carbon accounting tools that work with your current software. This cuts down on manual data entry and makes your numbers more accurate.

Ways to Cut Emissions

Now that you're tracking data, it's time to act. Here are some practical ways to shrink your carbon footprint:

Upgrade your lighting

Switch to LED bulbs. You'll use 50-70% less energy for lighting. The Home Depot cut their carbon emissions by over 127,000 metric tons in 2020, partly through moves like this.

Optimize your HVAC

Better temperature control saves energy and makes workers more productive. Try smart thermostats and regular maintenance to keep your systems running well.

Embrace renewable energy

Look into Corporate Power Purchase Agreements (CPPAs) for sustainable energy. Here's what Katie Wallace, Chief Environmental, Social, and Governance Officer at New Belgium Brewing, said:

"When we installed our solar panels on the Colorado packaging hall, it was the largest privately owned solar array at that time in Colorado."

Rethink your travel

Try hybrid work models to cut down on corporate travel. This can really lower your Scope 3 emissions and give employees more flexibility.

Keeping Track and Getting Support

Getting to net zero takes teamwork. Here's how to keep everyone involved and motivated:

1. Create an ESG management system

Use the Plan, Do, Check, Act (PDCA) process to keep improving your sustainability efforts.

2. Engage your employees

Teach your team why eco-friendly practices matter. Try gamification or in-person events to get people excited.

3. Work with your suppliers

Push your suppliers to be more sustainable. Walmart's Project Gigaton challenged suppliers to cut over 1 billion metric tons of greenhouse gas emissions by 2030. They've already saved 93 million metric tons.

4. Celebrate milestones

Recognize progress towards your net zero goals. It keeps people motivated and shows that sustainability matters across your organization.

Forest Reinhardt, Harvard Business School Professor, puts it well:

"An important first step in developing any mitigation strategy is gaining a comprehensive understanding of a company or product's emissions by establishing its carbon footprint."

Carbon Tracking Tools

Picking the right carbon tracking software can make or break your net zero journey. Let's dive into some top tools that'll help you measure, manage, and slash your carbon footprint.

Emerald Power Platform: A Mid-Market Powerhouse

Emerald Power packs a punch for mid-market businesses. Here's why it's turning heads:

• It's GHG Protocol compliant (so you're playing by the rules)

• It sucks in data automatically (bye-bye, manual entry headaches)

• It dishes out real-time emissions data (for those "we need it yesterday" moments)

• It covers all the bases with Scope 1, 2, and 3 emissions

But here's the kicker: Emerald Power is laser-focused on mid-market companies and CSRD compliance. Throw in AI-powered automation and a dedicated sustainability guru, and you've got a serious contender in the carbon-tracking game.

Battle of the Titans: Software Showdown

How do the big players stack up? Let's break it down:

Emerald Power's your go-to if you're a mid-sized business looking for an affordable entry point. Persefoni's got the big guns for enterprises with its AI wizardry. And if you're already knee-deep in Microsoft tools, their Sustainability Cloud might be your jam.

Simon Fürstenberg from Cozero drops this nugget of wisdom:

"It's always a good idea to take an industry-specific solution."

He's onto something. Take Cozero, for instance - they've got logistics and manufacturing down to a science.

When you're shopping for your carbon tracking sidekick, keep these in mind:

1. Will it play nice with your current tech setup?

2. Can you trust its numbers?

3. Will it spit out reports that'll keep the regulators happy?

4. Can it keep up as your business grows?

Choose wisely, and you'll be well on your way to carbon-counting glory.

Reporting Requirements

Tracking and reporting emissions is crucial for businesses aiming to hit net zero. Let's look at the key parts of emissions reporting and how to keep your stakeholders informed.

GHG Protocol Rules

The Greenhouse Gas (GHG) Protocol sets the standard for emissions reporting. It gives businesses a framework to measure, manage, and report their carbon footprints. Here's what you need to know:

The GHG Protocol defines three scopes of emissions:

1. Scope 1: Direct emissions from owned or controlled sources

2. Scope 2: Indirect emissions from purchased energy

3. Scope 3: All other indirect emissions in a company's value chain

Reporting Scope 1 and 2 emissions is a must under the GHG Protocol Corporate Standard. Scope 3 isn't required, but it's highly recommended - and often where you can make the biggest impact.

The protocol aims to make compiling a GHG inventory easier and cheaper while keeping it accurate and consistent across organizations.

Simon Fürstenberg from Cozero says:

"It's always a good idea to take an industry-specific solution."

This advice is key when picking tools to help you follow GHG Protocol standards.

Tracking and Sharing Progress

Good tracking and open reporting are vital for keeping stakeholder trust and showing you're serious about net zero. Here's how to do it right:

1. Use solid systems

Get carbon accounting software like Emerald Power to automate data collection and ensure accuracy. Their GHG Protocol-compliant formulas and real-time emissions data can make your reporting process smoother.

2. Update regularly

Give yearly reports on your net zero progress. Include:

• Your main commitment and targets

• Detailed breakdown of greenhouse gas emissions

• How much you've reduced emissions and what you expect in the future

• Specific actions you've taken to cut emissions

• How your business strategy is changing to include net zero

3. Boost credibility

Think about getting third-party audits and verification of your reporting. The UK Accreditation Service (UKAS) can help you get various accreditations to support net zero plans.

4. Use standards

Look into certification options like the Route to Net Zero Standard from the Carbon Trust. These can guide your business towards net zero while making sure you're reporting in the best way possible.

5. Get ready for regulations

Stay ahead by aligning with new reporting requirements. For example, the SEC now requires public companies to disclose climate-related risks and material Scope 1 and 2 emissions in their filings.

Gary Gensler, SEC Chair, highlights the importance of being open:

"Our federal securities laws lay out a basic bargain. Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called 'complete and truthful disclosure.'"

Next Steps

You've set your targets and picked your tools. Now it's time to act. Here's what to do next:

1. Measure and track

Get a clear picture of your emissions. Use the Greenhouse Gas Protocol (GHGP) to measure your carbon footprint across Scope 1, 2, and 3.

Use carbon accounting software like Emerald Power to automate data collection. Their GHGP-compliant formulas and real-time data make tracking easier.

2. Set science-based targets

Match your goals to climate science. The Science Based Targets initiative (SBTi) helps you set targets in line with the Paris Agreement.

Aim to cut emissions by 4.2% yearly to stay on track for the 1.5°C target. Set both near-term (5-10 years) and long-term (2050 or earlier) goals.

3. Focus on high-impact areas

Use the Marginal Abatement Cost Curve (MACC) to rank your strategies by cost-effectiveness. This helps you prioritize actions that give the best results.

For example, a supermarket saved $1.6 million per year on HVAC costs by using AI to direct cooling based on occupancy and air quality data.

4. Engage your workforce

Make net zero a company-wide mission. Get employees involved in cutting emissions. Start suggestion schemes, sustainability training, and toolbox talks.

A 2021 Atlassian report found that 78% of employees think businesses should take full responsibility for their environmental impact.

5. Work with suppliers

A big chunk of your emissions likely comes from your supply chain. Team up with suppliers to cut these Scope 3 emissions. Walmart's Project Gigaton is a good example - they challenged suppliers to cut over 1 billion metric tons of emissions by 2030.

6. Go renewable

Switch to clean energy. Look into on-site generation or Corporate Power Purchase Agreements (CPPAs). This can slash your Scope 2 emissions.

7. Offset what's left

Focus on cutting emissions first, but use high-quality carbon offsets for hard-to-eliminate emissions. Choose certified projects that meet quality standards and support UN Sustainable Development Goals.

8. Be transparent

Share your progress openly. Give yearly updates on your net zero journey, including:

• Your main targets

• Detailed emissions breakdown

• Reductions achieved and future projections

• Actions taken

• How your business strategy is changing

Consider third-party audits to boost credibility.

By following these steps, you're not just fighting climate change - you're future-proofing your business. As Maria Mendiluce from the We Mean Business Coalition says:

"Climate is everyone's responsibility. The transformation is a huge business opportunity for those at the forefront."

FAQs

How do you set net zero targets?

Setting net zero targets isn't rocket science, but it does require a game plan:

1. Know your emissions

First, figure out where your greenhouse gases (GHGs) are coming from. You've got three types:

• Scope 1: Direct emissions (like your company vehicles)

• Scope 2: Indirect energy emissions (think electricity)

• Scope 3: Value chain emissions (everything else)

2. Measure your starting point

You can't improve what you don't measure. Get a clear picture of your current emissions.

3. Pick your target

Aim high: shoot for a 90-95% cut in emissions. And give yourself a deadline.

4. Plan your attack

Figure out where you can make the biggest impact and focus there.

5. Get to work and keep score

Put your plan into action and track your progress like a hawk.

Take PepsiCo, for example. They're gunning for net zero by 2040 - that's 10 years ahead of the Paris Agreement. How? They're betting big on regenerative agriculture and switching to renewable energy.

What is the net zero strategy for companies?

A solid net zero strategy for companies boils down to:

1. Slash emissions: Cut 90-95% across the board.

2. Suck up the rest: Actively remove what's left from the atmosphere.

3. Follow the science: Use the Science Based Targets initiative (SBTi) to set goals that align with climate science.

4. Team up with suppliers: Your supply chain is probably a big part of your emissions. Work together to bring them down.

5. Go green with energy: Switch to clean power to zap those Scope 2 emissions.

6. Show your work: Be open about your progress and challenges.

Faith Taylor, Global Sustainability Officer at Kyndryl, puts it plainly:

"To reach net zero, companies will need to both reduce drastically and actively remove their remaining emissions from the air."

It's a tall order, but it's what needs to be done to tackle climate change head-on.