Jul 25, 2022 | Conal Love
Businesses globally are going green. In the UK, almost 80% of the FTSE100 firms have committed to a net-zero goal. Just 8%, however, have attained carbon neutrality, with only a further 10% making a commitment to do so. At this point, you may well be asking, “Aren’t Net Zero and Carbon Neutral the same thing?”
Well, no, they’re not. In fact, they are quite different, and achieving them requires different approaches to sustainability.
In this blog, we’ll define the two terms, set out the differences, and analyse the different approaches, applying a commercial lens to help you weigh up both and build a business case to justify the chosen approach for your organisation.
What is Carbon Neutrality?
“A carbon neutral footprint is one where the sum of the greenhouse gas emissions (CO2e) produced is offset by investing in natural carbon sinks and/or carbon credits”. – The Carbon Trust
When a company claims to be carbon neutral, they may still be producing the same amount of carbon they’ve always produced, but due to carbon sequestration or offsetting, they are enabling the absorption of an equivalent amount of carbon from the atmosphere, so neutralising their impact.
When using tactics such as sequestering, businesses need to consider the cost of building biodiversity initiatives into their projects, or offsetting through the purchase of carbon credits. Moreover, when offsetting, finding accredited bodies that you can trust can be a struggle due to a lack of regulation around the process.
Often, trees promised are not planted at all, or they may be planted in unsuitable areas where they cannot thrive and grow, or on land that is poorly managed and protected, leading to a short lifespan that doesn’t meet the purchasers’ expectations. This lack of rigour and transparency can be damaging and risky to your company’s brand, and of course to the planet.
If you’re considering becoming carbon neutral, you’ll want to look into PAS2060, a carbon neutrality standard that will help keep your company right and mitigate potential risks.
One highly effective, but lesser-known option for offsetting may be through investing in blue carbon sequestration, which involves restoring aquamarine and coastal ecosystems and plant life that can be up to 10 times more effective than forests. That’s a blog for another day, however.
What is Net Zero?
“Net zero means achieving a balance between the greenhouse gases put into the atmosphere and those taken out.” – National Grid
National Grid offers a really simple way to understand net zero. Think of it as a bath – as you turn on the tap you add water, and as you pull the plug, the water flows out. To keep the same amount of water in the bath, you need to keep the input and output balanced.
Net zero applies the same principle and is about finding a balance between all greenhouse gases (GHGs) emitted and those mitigated from business operations or absorbed from the atmosphere.
Net zero commitments go beyond just carbon (CO2), and include the reduction of all carbon equivalents (CO2e), that make up the GHGs in a carbon footprint, such as methane (CH4), nitrous oxide (N2O), Sulphur Hexafluoride (SF6) and the rest.
Moreover, Net Zero is a more rigorous commitment than carbon neutrality, as to achieve it, businesses must first work to reduce emissions in their company rather than just offsetting through carbon credits.
Officially, to reach a state of net zero emissions for companies involves two conditions:
- Achieving a scale of value-chain emission reductions consistent with pathways that limit warming to 1.5°C and;
- Neutralising the impact of any residual emissions that are unfeasible to eliminate by supporting offsetting to remove the rest and retain a zero balance
Going a step further, for those businesses that want to follow best practice and align with the Net-Zero Standard issued by the Science-Based Targets initiative in 2021, businesses are required to reduce emissions by 90-95% by 2050. The remaining 5-10% should then be removed through carbon offsetting projects to achieve net zero.
Net zero is a long-term movement to decarbonise economies and requires businesses to measure their emissions and publicly declare their emissions baseline year, as well as a target year to achieve net zero emissions.
Then, working on defined timescales against a carbon reduction plan that should ideally align with PPN 06/21 requirements for commercial benefits, companies should report annually on scope 1, 2 & 3 GHG emissions. Reports should disclose what has been done to reduce, sequester or neutralise CO2e emissions in their operations.
If you’re just getting started on your road to net zero, read our blog on the topic for a more in-depth roadmap.
Which approach should my business take?
Under the UK Government, all businesses must be net zero by 2050.
Furthermore, bodies and regulation such as the Task-force on Climate-Related Financial Disclosures (TCFD), Streamlined Energy Carbon Reporting (SECR), Sustainability Disclosure Requirements (SDRs) and more widely in the EU the Corporate Sustainability Reporting Directive (CSRD) are placing pressures on businesses to conform to a sustainability-centric approach to business.
Implementing a carbon neutral approach can help businesses in beginning to balance their impact, but without GHG emissions reduction by changing operations and company behaviour, it may not be enough.
Commercially, businesses that commit to net zero will stand a greater chance of winning more business as investors and governments prioritise ESG initiatives, and so achieving carbon neutrality and leaving it at that could be a short-sighted decision.
So how do I get started?
Luckily, we’ve recently written a blog on just this – How to get started with ESG and Sustainability. If you’re just figuring things out, or perhaps you’re not convinced you really need an ESG/Sustainability strategy, read the blog here.
SustainIQ provides organisations with an all-in-one, integrated reporting solution that helps them work towards net zero by measuring, monitoring & reporting on their environmental, social, and economic impacts.
Visualise baselines, measure against your carbon reduction plan and achieve net zero empowered by the power of accurate data. If you’d be interested in a demo, reach out to us or drop an e-mail to [email protected].
Related blogs
Businesses globally are going green. In the UK, almost 80% of the FTSE100 firms have committed to a net-zero goal. Just 8%, however, have attained carbon neutrality, with only a further 10% making a commitment to do so. At this point, you may well be asking, “Aren’t Net Zero and Carbon Neutral the same thing?”
Well, no, they’re not. In fact, they are quite different, and achieving them requires different approaches to sustainability.