As the consequences of climate change become increasingly obvious, many companies are making commitments on the subject. Some claim to be carbon neutral, others are committed to achieving net-zero. What do these commitments mean?
Back to the definition
To understand this, it is important to go back to the source, the IPCC definition. The organization describes carbon neutrality (or Net-Zero CO2 Emissions) as the situation at the global level where anthropogenic CO2 emissions are in balance with CO2 removals from the atmosphere. With this definition, we note that :
1. This includes only CO2. This point is addressed by the concept of Net-Zero Emissions, defined by the IPCC as the balance between GHGs emitted by human activities and GHGs removed from the atmosphere. The first conclusion is that the concept of Net-Zero is consistent with carbon neutrality.
2. Carbon neutrality is applicable at the global level and not at the organizational level. The challenge is therefore to transpose this consideration to an entity such as a company, which is explored in more detail later.
Several standards have been developed in the past without any of them becoming internationally recognized . It should be noted that the ISO 14068 standard is currently being developed to meet this need.
Among the benchmarks currently in use, large companies such as Microsoft use the Carbon Neutral Protocol, developed in the United States by Natural Capital Partners, which allows them to obtain a certification. Other companies apply the PAS 2060, “Specification for the demonstration of carbon neutrality” developed in the United Kingdom. In Canada, the CSA set up the Climate Neutral program a few years ago, which some companies have used. There are other, less widely used benchmarks that have been developed locally and whose credibility remains to be demonstrated. It is easy to understand that this multiplicity of benchmarks leads to confusion among companies and their ecosystems.
Consequences of the absence of a recognized standard or norm
The main challenge is to prevent companies from considering that this is a simple paper exercise (emissions – compensation = 0) and therefore from not making the necessary efforts to reduce their GHG emissions. Indeed, reducing our GHG emissions by a factor of 5 in less than 30 years requires a major transformation of our ways of producing and consuming. The other pitfall to avoid is that of greenwashing, of which several companies have been accused.
To clarify this situation, efforts are being made to converge practices, in particular through the Net-Zero Initiative supported by many actors in Europe.
This initiative has been the subject of a declaration in the form of 10 principles that clarify the main concept: a company’s emissions in its value chain (scope 1, 2 and 3) must be separated from both the emissions reductions it finances and the carbon sinks it promotes. These three items must be presented separately. The argument was recently taken up by Bloomberg, which demonstrates the interest in greater consistency in this area.
What companies should do?
Aim for Net-Zero emissions in the future by relying on but not specifying a framework. A company seeking to do its fair share in the fight against climate change can rely on the Net-Zero Initiative, and declare their contribution to the transition, gradually eliminating the term offset from their communication. This approach is consistent with the targets defined by SBTi, with the scientific framework of the IPCC, as well as with steering tools such as ACT – Assessing Low Carbon Transition.
Thus, the trend is to exclude the notion of carbon neutrality from its low-carbon transition strategy. If the company has already made a commitment to carbon neutrality, it should specify the benchmark it intends to use. It may also decide to update its strategy by committing to Net-Zero.
