Skip to main content

The Rise of Corporate Carbon Neutrality: What it Means for Your Business

This is part I of a two-part blog series exploring carbon neutrality goals for business

It’s Climate Week and today from the UN Climate Action Summit, Secretary-General António Guterres is calling on leaders to present their concrete, realistic plans to dramatically reduce greenhouse gas emissions and move toward a zero-carbon future.

Business plays a key role in that future. Increasingly, companies like Nestle, Amazon and Schneider Electric are making bold promises to carbon neutrality. But what is carbon neutrality, how can it benefit business and how can businesses act? In this blog, our sustainability expert, Gabriel de Malleray, explores these questions and more.

What does it mean to be carbon neutral? 

In October 2018, the International Panel on Climate Change (IPCC) issued a report stipulating a new climate change red line: global temperature change of only 1.5 degrees Celsius, a reduction from the previous 2-degree threshold. The report found that without drastic measures to cut carbon emissions, reduce energy use and remove carbon already in the atmosphere, it is unlikely that warming will remain below 1.5 degrees. The report also shows that the difference between 1.5 degrees and 2 degrees – the limit governments committed to in 2015 under the Paris Agreement – is critical to millions of peoples’ homes, jobs and lives.

To reach the 1.5-degree limit, an increasing number of organizations are committing not only to carbon reduction, but to carbon neutrality. Carbon neutrality means changing how we behave to ensure that no additional carbon is added to the atmosphere, striking a net zero balance between releasing carbon and capturing, or sequestering, it. This net zero balance can be applied to any subsystem on earth, such as countries, cities, companies or even individuals.

Today, net zero, carbon neutral or climate neutral claims lack clear, widely accepted definitions. Initiatives differ based on what a company sells, owns, or influences.

For instance, an organization may choose to focus on going carbon neutral with one product or product line as an interim step toward making greater organizational reductions. Another typical step is to adopt carbon neutrality for direct emissions (scope 1) and indirect emissions from purchased electricity (scope 2). While an important step, this goal does not address other sources of indirect emissions (scope 3), which are typically one of the largest and most difficult to address components of an organization’s overall carbon footprint.

The bottom line? Our carbon footprints must shrink faster.

Accelerating carbon reductions to achieve neutrality

The good news is that more than 1,000 companies globally have committed publicly to act under one or more of the most common target schemes, such as Science-Based Targets Initiative (SBTi), RE100, EP100 and others. The recent Deloitte Global Resources Study from February 2019 found that the 2018 IPCC report boosted commitments and investments in decarbonized business: 84% of respondents to the study were aware of recent climate change reports, and 64% had already reviewed and changed targets and programs in response to reports. As a result, businesses across all sectors are now making regular announcements of increasingly ambitious carbon neutrality goals.

Setting public targets can also help accelerate progress towards goals, as a recent research report published by Greenbiz and Schneider Electric found. Companies with public commitments are more successful at securing funds and building business cases for energy and sustainability projects like carbon neutrality. They are also more likely to adopt emerging and innovative technologies.

Companies committing to SBTi, specifically, have access to methodologies to assist with setting 1.5-degree targets and can also provide useful frameworks for moving towards carbon neutrality. Peer-to-peer learning has proven an effective way to understand how other organizations approach the scope of a carbon neutrality goal, and experienced advisors like Schneider Electric Energy & Sustainability Services can further guide companies on leading schemes, initiatives and methodologies.

However, setting a target is only the first step towards carbon neutrality. After making a commitment, the counting and analyzing of emissions must still materialize.

There are 3 steps organizations can take to achieve carbon neutrality:

  1. Limit energy usage and emissions by optimizing energy efficiency
  2. Procure cleaner electricity through onsite or offsite renewable electricity
  3. Address remaining emissions with environmental commodities

Not sure where to begin? Learn more here to get started.

Moving beyond neutrality: carbon positivity

Carbon positivity goals move beyond carbon neutrality by making additional ‘positive’ or ‘net export’ contributions to the total carbon budget. The most common carbon positivity concept is carbon capture: extracting greenhouse gases from the atmosphere keeps the total remaining budget in line with temperature limits.

  • Carbon capture and storage (CCS) is the process of capturing waste carbon dioxide from large point sources (such as a cement factory or power plant), transporting it to a storage site, and depositing it where it will not enter the atmosphere, normally in an underground geological formation.
  • Carbon capture and utilization (CCU) provides even more potential to be integrated into business processes. These technologies involve carbon dioxide capture, transport, and use as a resource to create valuable products.

Many CCS and CCU projects in current operation, but mostly still in R&D mode. While the large-sale breakthrough of these technologies may take several years, niche technologies enabling carbon positivity are already available. Companies can purchase cement that contains carbon dioxide captured from the atmosphere, do business with farmers who store carbon in soil, and buy plastics made from atmospheric carbon. Ikea, the world’s largest furniture retailer, was one of the front runners to announce a carbon positive target. While these cases are still rare, these examples offer the vision of an economy that may one day capture and store more carbon than it emits, providing both economic growth and a means by which we can reverse climate change.

Many organizations have begun the journey towards carbon neutrality. Stay tuned for part II of this blog, where we will describe possible steps to carbon neutrality in further details, featuring some practical client examples.

Want to be alerted when new content is available? Sign up for our weekly Perspectives digest