The Context behind “Carbon-neutral” and “Net-zero”

Although ideas like “carbon-neutrality” and “net-zero” have existed for some time, small businesses and large corporations have just recently begun to adopt them, mostly for trendy marketing purposes, instead of actually committing to decarbonisation goals. The multiplicity of terminology and the uncertainty surrounding them may mislead uninformed customers. However, being up front and honest about them might encourage businesses to be more proactive.

There is a strong movement of organisations stepping up on climate commitments to meet the 1.5°C call to action, with announcements of carbon reduction initiatives from more than 1,000 companies around the world, including 25% of the Fortune 500, occurring almost daily. Many companies are pushed to control their emissions even in the absence of regulation by the standard market forces of investors, competitors, and consumers.

Carbon footprints of the company’s emissions are increasing in demand from all kinds of stakeholders of their own ecosystem. When communicating, it is crucial for businesses to utilise the terms “net-zero” and “carbon-neutral” correctly. However, it is even more crucial to keep your end of the bargain.

Carbon Neutral

To become carbon neutral, you must offset your emissions in an amount equal to your emissions, although these offsets don’t have to be anything more complicated than carbon reduction offsets. Offsets for carbon emissions include initiatives like solar energy production and wind farms. These kinds of initiatives aid in reducing the overall amount of carbon that is emitted into the environment both now and in the future. An example is AT&T’s carbon neutral pledge:

These initiatives are excellent for the environment, but because they don’t really remove carbon from the atmosphere, they can’t help us reach our less-than-1.5° target by themselves. Additionally, they are typically significantly less expensive than the carbon removal credits needed for net zero.

What does it mean when a business claims they are carbon neutral?

When a business pledges that emissions generated by its operations will be compensated by an approximate amount of emissions being removed from the atmosphere, such business is said to be committed to carbon neutrality. Corporate commitments to achieve carbon neutrality typically only cover Scope 1 and 2 emissions, which can be reduced via a variety of market mechanisms, including carbon offsets.

Not all carbon-neutrals are truly climate-friendly

The problem with carbon-neutral is it allows some businesses to continue with their carbon emissions.

Without actually cutting its own emissions, a company can declare itself to be carbon neutral by monitoring its emissions and then compensating the difference through funded projects outside of its value chain. Contrarily, net-zero does not allow subsidised emissions, which forces businesses to more significantly reduce value chain emissions.

For a corporation to be validated as carbon neutral, most carbon neutral targets don’t specify a level of decarbonisation which can only be reached before applying offsets (i.e. a 50 percent reduction by 2030). It is conceivable, albeit uncommon, for a business to claim carbon neutrality by buying carbon offsets but doing little in the way of actual carbon reduction. Additionally, there are minimal requirements for the kinds of carbon offsets that should be used.

But there is still hope!

However, this is not to say compensation by supporting outside parties are discouraged. In fact, we should all do our part in fighting against climate change. This is not a competition to showcase our efforts, but an opportunity to unite and build a community to drive positive change. A lot of startups and environmental-enthusiasts are working towards our common goal by aligning their businesses with green values.

Learn how you can reward and sustain these green initiatives in your own ways.

Net-Zero

Net zero emission is similar to carbon neutrality, but the scale is broader. refers to establishing an equilibrium between all greenhouse gas emissions created and emissions removed from the atmosphere. We can achieve net zero when nothing contributes to global warming.

Where did the term ‘net-zero’ come from?

To understand where net-zero comes from, we must first discuss the 1.5ºC target. Experts and scientists are very clear that the increase in global temperature must be kept to 1.5°C above pre-industrial levels in order to prevent the worst effects of climate change and maintain a “livable” planet.

The Earth has already warmed by 1.1°C since the late 1800s, and emissions are still rising. Emissions must decrease by 45 percent by 2030 and reach net-zero by 2050 if the Paris Agreement’s goal of keeping global warming to 1.5°C is to be met. 197 nations have committed to keeping global warming far below 2 °C and working to keep it at 1.5 °C as part of the Paris Agreement. With a 50% chance of achieving the 1.5 °C target, 400–800 GtCO2 of the carbon budget remains.

What does net-zero include?

Net-zero emissions encompass all greenhouse gas emissions, including all Scopes 1, 2 and 3, not only carbon dioxide.

The Corporate Net-Zero Standard for the Science-Based Targets Initiative (SBTi), which was formally established in late 2021, clearly prohibits compensation under the new standard. In conclusion, carbon neutrality refers to the capacity to offset emissions, but net-zero implies that you actually eliminate all of your emissions through energy conservation, electrification, the use of renewable energy sources, and other means.

However, in order to prevent a global warming catastrophe, we cannot rely entirely on offsetting activities. It is the duty of every person on this earth to refrain from releasing any greenhouse gases.

Who are the companies that have a net-zero or carbon-neutral pledge?

Coca-Cola HBC (Switzerland)

In 2021, vowed to achieve net zero emissions across its whole value chain by 2040.

Coca-Cola stated that in order to meet its objectives, it would expand its strategic relationship to assist its suppliers in reducing their carbon output, run its business on 100% renewable electricity and low-carbon energy sources, reduce emissions from agricultural condiments, adopt circular economy strategies, and implement a “green fleet” programme.

The organisation’s current science-based ambition to reduce emissions by 25% by 2030 is built upon by the new 2040 objective.

The corporation will cut its value chain emissions in scopes 1, 2, and 3 by 25% by 2030 through an existing, approved science-based target, and by another 50% in the following ten years. CCH will enhance its current collaborative strategy with suppliers to address the 90% of emissions in scope 3 caused by third party activity.

Ford

Ford, one of the world’s largest and influential automobile manufacturer, has formally jumped into the quest to reach carbon neutral emissions by 2050.

To control scope 1, 2, and 3 emissions, scientific analysis has already begun.

Additionally, they intend to invest 11.5 billion dollars in 2022 to make some vehicles, such as the Mustang Mach-E and the F-150 electric, and they aim for every factory to run entirely on locally-sourced renewable energy by 2035.

Ford is the only manufacturer with a complete line. As part of the Paris Climate Agreement, a U.S. automaker committed to reducing CO2 emissions and collaborating with California to advance stricter vehicle greenhouse gas requirements. Ford will concentrate on its facilities, supply base, and vehicle use, which together account for nearly 95% of its CO2 emissions, to meet its objective.

By 2035, the company expects to have all of its manufacturing facilities powered entirely by locally produced renewable energy.