Carbon neutrality: from commitment to action
- Raphael Der Agopian
- Jul 24, 2024
- 6 min read
Climate action undertaken by companies, primarily focuses on measuring, reducing, and offsetting greenhouse gas emissions. Widely adopted in Europe and globally, there are several pathways to achieve this objective.
Over the course of three successive articles, we will decode the market benchmarks on (i) measuring the impact of a company's emissions, (ii) the various climate commitments and emission reduction actions, and (iv) certification labels framing the final stage of emissions offsetting.
Since global GHG emissions are primarily influenced by corporate activities (directly or indirectly), companies play a crucial role in combating climate change. Many companies have already set GHG emission reduction targets to achieve net-zero emissions (carbon neutrality). Several standards and initiatives provide a framework and guidance to help companies voluntarily implement these ambitious goals. Among the most influential are the Science Based Targets initiative (SBTi), The Climate Pledge, We Mean Business Coalition, Climate Neutral Now, and the Net Zero Initiative.
WHAT INITIATIVES SUPPORT CARBON NEUTRALITY GOALS?
The Science Based Target initiative (SBTi)
The SBT initiative is a collaboration between CDP, the United Nations Global Compact, the World Resources Institute (WRI), and WWF. It helps companies set emission reduction targets aligned with scientific advances to limit global warming to 1.5°C or well below 2°C above pre-industrial levels. The commitment process with the SBT initiative involves four steps: committing to set an SBT, developing this target according to scientific knowledge, submitting this target for validation by a technical committee based on strict criteria, and publicly announcing the target. To date, 5,769 companies have made reduction commitments based on SBT targets, and 3,313 companies have made net-zero commitments.
The SBT initiative distinguishes short-term targets (5 to 10 years) from long-term targets (net-zero by 2050). Companies can set different goals and levels of ambition depending on the emission scope. Depending on whether they are short- or long-term goals, the initiative offers several methods, some with a minimum target:
Absolute Cross-Sector Reduction (ACA) method: This method requires an absolute GHG emission reduction by a fixed percentage, regardless of company growth and sector. For short-term targets, on 95% of GHG emissions from Scope 1 and 2, a linear annual reduction of 4.2% of absolute emissions is generally required to stay aligned with a 1.5°C warming scenario. This percentage increases to 90% reduction targets by 2050. If Scope 3 represents more than 40% of the company's total emissions, an annual linear reduction of 2.5% will be required.
Sectoral Decarbonization Approach (SDA): Instead of applying a uniform emission reduction to all companies, this method is based on the idea that each industrial sector has distinct reduction potentials and trajectories. For example, the energy sector will have a different trajectory than the transport or cement production sectors. This method uses a carbon intensity approach, focusing on reducing GHG emissions per unit of activity or production (carbon intensity per kWh for the electricity sector).
Renewable energy sourcing: For Scope 2 only, companies aim for a target of 80% by 2025 and 100% by 2030.
Physical and economic carbon intensity reduction method: This method applies only to Scope 3. By using physical or economic intensity measures, companies can set flexible targets adaptable to their business growth, thus reducing the carbon footprint per unit of production or revenue.
Supplier and customer engagement: For Scope 3 as well, companies determine a percentage of suppliers and customers who will themselves be committed to the SBT principles.
The Climate Pledge
Co-founded by Amazon and Global Optimism, The Climate Pledge calls on signatories to achieve carbon neutrality by 2040, ten years ahead of the Paris Agreement target. Companies commit to regularly measuring and reporting their GHG emissions, implementing decarbonization strategies in line with the Paris Agreement, and neutralizing remaining emissions through credible offsets.
We Mean Business Coalition
We Mean Business Coalition is a global alliance of non-profit organizations working with the most influential companies to take bold climate action. The coalition encourages companies to adopt science-based targets, use 100% renewable energy, and commit to a low-carbon economy.
Climate Neutral Now
Climate Neutral Now is an initiative by the United Nations Framework Convention on Climate Change (UNFCCC) aimed at encouraging all sectors of society to take voluntary action towards achieving carbon neutrality. Certified companies must measure, reduce, and offset their current emissions while actively working to reduce them in the future.
Net Zero Initiative
The Net Zero Initiative, led by Carbone 4, a consulting firm specializing in energy transition and climate, helps companies achieve carbon neutrality in a meaningful way aligned with climate needs. It is based on 10 fundamental principles guiding companies in reducing their direct and indirect emissions while encouraging credible offsets for residual emissions (Pillar C). The objective of Pillar C is to encourage companies to build a comprehensive climate strategy by contributing to increasing carbon sinks, notably through financial contributions to additional CO2 absorption projects (e.g., sustainable carbon sequestration in biomass).
These initiatives enable companies to set ambitious goals and communicate them. To achieve them, numerous possibilities are available and must be integrated into their short- and long-term strategies.
WHAT ACTIONS CAN BE IMPLEMENTED TO REDUCE GHG EMISSIONS?
Companies can undertake a variety of emission reduction actions. Here are some examples:
Energy efficiency: Companies can improve energy efficiency by conducting energy audits, replacing lighting and equipment with high-energy-efficient versions (LED), enhancing building insulation, and using energy-efficient ventilation and air conditioning systems.
Renewable energy and fossil fuel phase-out: Using solar or wind energy on building rooftops or investing in wind farms can help companies reduce their carbon footprint. Additionally, companies should prioritize purchasing green energy (electricity from renewable sources or nuclear energy). Using biomass or geothermal energy for heating and electricity production are also viable solutions. Generally, companies should aim for a fossil fuel phase-out (as encouraged during COP 28).
Production process optimization: Companies should adopt clean and energy-efficient production technologies and processes. They can also implement preventive maintenance programs to ensure equipment functionality and longevity.
Supply chain optimization: Companies can select suppliers that use sustainable and low-emission practices, optimize transportation and logistics networks through river, rail, or electric/hybrid vehicles, and adopt circular economy principles to maximize material reuse and recycling, favoring short supply chains.
Low-carbon innovation and technologies: Investing in research and development of new technologies and innovative solutions to reduce emissions or using digital technologies to improve energy efficiency (smart grids, IoT sensors, data analysis) supports reducing the carbon footprint. Companies can also invest in eco-design, favor sustainable materials, and reduce the environmental impact of their packaging.
Carbon offsetting
Insetting projects: The company invests in carbon offset projects upstream or downstream of its own value chain. For example, a fast-food company develops more sustainable practices such as regenerative agriculture.
Offsetting projects beyond the value chain: The company offsets its emissions that cannot be eliminated through direct reductions by financing projects that absorb or avoid carbon emissions. Unrelated to its value chain or activity, the company funds a certified project, such as reforestation, forest conservation, or renewable energy projects in developing countries. See our article on the Beyond Value Chain Mitigation (BVCM) initiative.
Employee and stakeholder engagement: By raising awareness and training employees in sustainable practices, encouraging and supporting green initiatives within the company, and communicating transparently about their goals and actions, companies contribute to the overall effort to reduce GHG emissions.
Conclusion
While companies undeniably play a significant role in combating climate change, it is essential to remember that each of us, collectively and individually, has a role to play in tackling this great challenge of the 21st century and ensuring a sustainable future for generations to come.
ABOUT APOLOWNIA
Apolownia is a mission-driven company committed to making a significant impact in the climate sector.
We support businesses and funds willing to engage in long-term and impactful decarbonization strategies - within and beyond their own value chain - by designing, implementing and monitoring science-based carbon reduction projects that restore natural ecosystems.
Through technology and innovative solutions, we aim at shaping a resilient and environmentally friendly world, by encouraging the decarbonization of the economy and supporting social and environmental initiatives.
You can drive positive change for the climate, biodiversity and local communities.
Contact us to engage or for more information. Find us on www.apolownia.com.
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