Corporate Net Zero Standards: What They Are and Why They Matter

The Science Based Targets initiative has developed the Corporate Net-Zero Standard to provide a comprehensive framework for companies to address climate change. In this article, we'll dive into the background of the Corporate Net-Zero Standard, who should use it, and how it relates to other key SBTi documents.

In this article, we'll explore what Corporate Net Zero Standards are, why they matter, and how they are developed and implemented.

What is Net Zero?

To understand Corporate Net Zero Standards, it's important to first understand what Net Zero means. 

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>Net Zero refers to achieving a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere. 

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This can be achieved through a combination of reducing emissions and offsetting any remaining emissions through activities such as reforestation or carbon capture technology.

Net Zero Emissions vs Net Zero Carbon

It's important to note that there's a difference between Net Zero Emissions and Net Zero Carbon. 

1. Net Zero Emissions refers to achieving a balance between all greenhouse gas emissions, including methane and other non-CO2 gases. 
2. Net Zero Carbon, refers to achieving a balance between carbon dioxide emissions and removals.

Why Do Corporations Need to Adopt Net Zero Standards?

Corporations are significant contributors to greenhouse gas emissions and therefore have a responsibility to take action to address climate change. Adopting Net Zero Standards demonstrates a commitment to sustainability and can also provide several benefits for the company, including:

• Improved reputation and brand value
• Reduced operational costs through increased efficiency and use of renewable energy
• Increased competitiveness in a market that is increasingly focused on sustainability

How Are Corporate Net Zero Standards Developed?

The development of Corporate Net Zero Standards often involves collaboration between governments, businesses, and NGOs. There are also international standards and initiatives that provide guidance and frameworks for companies to follow. For example, the Science Based Targets initiative sets science-based targets for emissions reduction, while the Carbon Disclosure Project provides a platform for companies to disclose their emissions and climate-related risks.

Who Are the Key Players in Corporate Net Zero Standards?

Many top companies are leading the way in adopting Corporate Net Zero Standards, including Microsoft, Unilever, and Nestle. There are also organizations driving the adoption of Net Zero Standards, such as the Net Zero Asset Owner Alliance and the UN Global Compact.

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Key Components of the Corporate Net Zero Standard

The Science Based Targets initiative outlines the key components of the Corporate Net Zero Standard. These include:

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• Set long-term targets: The Corporate Net Zero Standard requires companies to set a target for achieving Net Zero emissions by 2050 or sooner.
• Reduce emissions in line with the 1.5°C target: The target should be consistent with limiting global warming to 1.5°C above pre-industrial levels.
• Address scope 1, 2, and 3 emissions: Companies must address emissions from their own operations (scope 1), purchased energy (scope 2), and value chain emissions (scope 3).
• Use credible offsets: Any remaining emissions after reduction efforts must be offset through credible, verified emission reduction projects.
• Disclose progress: Companies must publicly disclose their emissions and progress towards their Net Zero target.

Background to the Corporate Net-Zero Standard

The Science-Based Targets initiative

The Science Based Targets initiative is a collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and WWF. The initiative aims to encourage companies to set targets for reducing greenhouse gas emissions in line with the latest climate science. The Corporate Net-Zero Standard is a key component of this initiative.

Purpose of the Net-Zero Standard

The purpose of the Net-Zero Standard is to provide companies with a framework for setting targets that align with the Paris Agreement's goal of limiting global warming to well below 2°C above pre-industrial levels. The Standard requires companies to set long-term targets for achieving net-zero emissions, which means balancing any remaining emissions with removals.

Who should use the Net-Zero Standard?

The Net-Zero Standard is designed for companies that have already set science-based targets for reducing their greenhouse gas emissions. The Standard provides guidance for companies to set targets for achieving Net-Zero emissions by 2050 or sooner, as well as strategies for reducing emissions in line with the 1.5°C target.

The Net-Zero Standard Development process

The Net-Zero Standard was developed through a process of consultation with a range of stakeholders, including businesses, investors, and NGOs. The Standard was also subject to a public consultation period to ensure that it is robust and practical for companies to implement.

How the Standard relates to other key SBTi documents

The Net-Zero Standard is closely related to other key SBTi documents, including the Sectoral Decarbonization Approach and the Criteria and Recommendations for Corporate GHG Accounting and Reporting. Together, these documents provide a comprehensive framework for companies to address climate change and reduce their greenhouse gas emissions.

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Near-term science-based targets

The Net-Zero Standard requires companies to set near-term science-based targets for reducing their greenhouse gas emissions. These targets should be consistent with limiting global warming to 1.5°C above pre-industrial levels and address scope 1, 2, and 3 emissions.

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Long-term science-based targets

The Net-Zero Standard requires companies to set long-term science-based targets for achieving Net-Zero emissions by 2050 or sooner. These targets should also be consistent with limiting global warming to 1.5°C above pre-industrial levels.

Neutralization

The Net-Zero Standard requires companies to achieve Net-Zero emissions through a combination of emissions reduction and neutralization. Neutralization refers to the use of credible offsets to balance any remaining emissions.

Who Are the Key Players in Corporate Net Zero Standards?

Many top companies are leading the way in adopting Corporate Net Zero Standards, including Microsoft, Unilever, and Nestle. There are also organizations driving the adoption of Net Zero Standards, such as the Net Zero Asset Owner Alliance and the UN Global Compact.

What Are the Challenges in Implementing Corporate Net Zero Standards?

One of the main challenges in implementing Corporate Net Zero Standards is the cost of transitioning to Net Zero. This can include investments in renewable energy and other emissions-reduction technologies. There is also a need for transparency and accountability in reporting emissions and progress towards Net Zero.

Conclusion

Corporate Net Zero Standards are an important tool in the fight against climate change. By adopting Net Zero targets and implementing emissions reduction strategies, companies can demonstrate their commitment to sustainability and reap the benefits of increased efficiency and competitiveness. It's time for businesses to take action and contribute to a more sustainable future for all. To learn more about the Science Based Targets initiative and the Corporate Net Zero Standard, visit https://sciencebasedtargets.org/net-zero.

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