the good, bad and the ugly of net zero targets

published 3.18.21

We must reach net zero emissions by 2050 was the overarching outcome of the Intergovernmental Panel on Climate Change (IPCC) three years ago. This triggered a wave of companies from Microsoft to Google, and governments like the UK and Morocco making net zero commits with mid-century deadlines.  And this year we’ve seen COVID recovery strategies with incentive programs that align with this objective. While these are lauded as huge steps forward, is it all really working? 

Reaching net zero boils down to two things: 

1. The reduction of emissions associated with business activities 

2. The removal of greenhouse gases that are already present in the atmosphere. 

The sum of both balances must equal zero, yet the paths to get there may differ. One approach prioritizes investing in technologies and programs that remove emissions while not disturbing “business-as-usual”. The other is more transformative and sustainable for transitioning to a lower carbon economy emphasizing reduction plans that prioritize green-smart investments.

Here’s what you need to know about Net Zero:

The good: 

Implementing net zero measures gives businesses a competitive advantage, drives innovation, boosts brand reputation, enhances investor confidence, attracts top talent and increases resilience to regulatory changes. 

A 2018 survey showed that 29% of companies with science based targets were already seeing savings. Net zero targets  support enterprise risk management (ERM) plans as  a warming climate will bring many financial risks (See TCFD) and increasing temperatures affect supply chains and investments.

Net zero also gives organizations flexibility to achieve targets, encouraging innovation. There are economic sectors for which the technologies to reduce emissions already exist. For example, in electricity it can be done with renewables or nuclear, a transport system can be electric or run on hydrogen, homes can be energy efficient, etc. However, in industries such as aviation and agriculture the technologies are limited and expensive. These industries have the option to opt for offsets rather than emission reductions and still reach net zero.  Regardless of the difficulty to decrease emissions, any company can achieve net zero as long as the reductions and offsets are balanced. 

The bad:

Both approaches described above hit net zero, yet, if every company chooses offsets rather than reduction we will not slow global warming below 1.5°C by 2050. 

What’s important here is the nuanced difference between steadily decreasing emissions and making cumulative emissions stay below a budget target. If emissions are emitted now and removed later, they will still have a warming effect while they are in the atmosphere. If companies continue business as usual the delayed action is ineffective, requiring more policies and investments in the long-term. Like with medicine, treatment is far more expensive than prevention in the first place.  

companies with net-zero targets are failing in five ways. their plans are:

1. Vague, and lack clear science aligned milestones 

2. Over anchored on scope 1 and 2 (direct and indirect emissions from combustion and electricity) emissions and not inclusive of  scope 3 activities (e.g. purchased goods and services, business travel, transportation and distribution, leased assets and franchises, investments etc.)

3. Dependent on technologies that do not exist or are not technically feasible at  scaling impact (e.g. direct air capture or biochar)

4. Focusing too much on carbon sequestration, rather than reduction and mitigation

5. Not accountable; there’s a significant lack of transparency and consistency across target reductions strategies

The consequences? There are no real actions, opportunities such as COVID relief packages for green operations are being wasted, investors are misled, money is not correctly allocated and people are given a false sense of security.

The ugly:

Ramifications of releasing greenhouse gases are not limited to global warming. They also have serious health and social impacts that disproportionately affect those in lower income countries, Black, Indigenous and people of color (BIPOC) everywhere, and underserved minorities in general. GIS data tells us that lower income communities are exposed to more pollution and at a higher risk of suffering from environmental disasters. 

a net zero path directed by business as usual only perpetuates the  environmental disparities fueled by injustice and racism we see today. 

Business as usual emissions reductions risks a company's license  to operate, increases supply chain disruptions, and negatively impacts communities where they operate. The barriers that prevent BICOP communities from thriving also hinder business growth and sustainability. 

Net zero commitments can work if companies:

• Take environmental justice into account; co-create net zero plans with local, lower-income, climate-risk communities

• Prioritize early mitigation,

• Create actionable plans aligned with science targets while considering the balance of our planetary boundaries. 

Committing to net zero should not be used to justify continued financing in fossil fuels. A real change is needed. 

Click here to download our checklist for better emissions reduction practices, and reach out for more information on how we’re helping companies calculate and manage their greenhouse gas emissions. 

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by María Otero-Estrada
Consultant