Ensuring net zero targets are achievable, effective and equitable
Over 3,000 businesses have now made net zero commitments under the UN’s Race to Zero campaign. As commitments increase, the importance of ensuring they represent an achievable, effective and equitable pathway to reducing emissions in line with the Paris Agreement goal of limiting warming to 1.5°C is paramount.
Transform to Net Zero is in favour of transformative net zero implementation and each of our Founding Members has made a commitment to net zero emissions by 2050 or sooner. Our 2025 goal is for 1,000 Fortune Global companies to have targets to achieve net zero no later than 2050, specifically backed up meaningful transition plans. We demonstrate the necessary transformation of our own businesses in order to inspire our peers to include transformation plans to achieve net zero targets.
On moving towards net zero emissions
We agree that the first step towards net zero is reducing absolute emissions in line with the 1.5°C Ambition. In order of preference, and considering where the majority of impact may be, companies should take the following actions to implement their net zero goals:
- Avoid growth in absolute emissions or emissions intensity
- Reduce scopes 1 and 2 emissions
- Reduce value chain emissions
- Invest in carbon reductions or removals beyond the value chain to balance residual emissions, eventually shifting to carbon removals and storage.
On 2050 as a target date
Corporate net zero goals should have a target year of 2050 at the latest, with companies doing their utmost to achieve them sooner. Companies can choose to meet and claim net zero in any year ahead of the target year, but they should continue to remain net zero each year after doing so and be underpinned by long-term decarbonization targets.
Companies with net zero targets must set and deliver an interim emissions reductions target following a 1.5°C trajectory, for example under the Science-Based Targets initiative, or as part of the Race to Zero campaign.
On net zero goals to transform businesses
We see net zero goals as a catalyst to spur business transformation and incentivize decarbonization of the value chain. We only support net zero targets which are consistent with and supplement near-term science-based emissions reductions targets across value chains. Net zero goals commit companies both to decarbonizing their own footprint and to business transformation to build a net zero value chain.
Building a net zero value chain requires genuine business transformation across functions, from supply chain engagement and procurement, to finance, and research and development and product design. Net zero implementation must demonstrate business transformation across these functions. Our work is therefore to support businesses with their transformation journey, by sharing our own.
On the use of carbon credits
Companies can increase their impact on the climate crisis by not merely abating emissions in the value chain en route to net zero, but also taking action to finance carbon reductions and removals beyond their value chain. For example, this could include investments in high-integrity carbon credits and initiatives removing carbon from the atmosphere that have co-benefits for people and nature. Investments beyond the value chain, including high-quality credits or community-based removal projects, can accelerate overall climate ambition. However, they should not take the place of internal emissions reductions consistent with a 1.5C trajectory.
On equitable outcomes
Recognizing that we must reach global net zero by 2050, companies whose emissions footprint sits largely in developed countries that have high historical emissions, should aim to achieve net zero ahead of 2050. Pursuing net zero targets should not be to the exclusion or detriment of historically marginalized communities.
In fact, a company can support these communities through its net zero implementation. Renewable electricity can be purchased from companies with a proven track record of increasing energy access. Carbon credits can be selected which benefit these communities. Low-carbon products and services can be procured in a manner which improves the equitable distribution of benefits of the net zero economy. Businesses should use the transition to a net zero economy to create livelihood opportunities for the people who need it most.
On rigorous net zero goalsetting
A value chain GHG baseline and footprint assessment is essential for setting net zero targets, yet many companies struggle with this step, especially with regards to Scope 3 emissions. Companies also face challenges in developing a credible roadmap for achieving net zero emissions to secure internal buy-in as well as demonstrating credibility to investors, customers, civil society, and other stakeholders amidst increased scrutiny on the strength of corporate net zero targets.
In Transform to Net Zero’s second Transformation Guide entitled Net Zero Goal Setting, three Transform to Net Zero members, Danone, Wipro, and Environmental Defense Fund (EDF) share their approach to navigating the net zero goal setting process and setting net zero ambition that translates into meaningful business transformation. The guide answers the questions:
- How do companies secure internal buy-in for a new net zero target?
- How do companies determine the Scope 3 boundary for their target?
- How do companies generate a roadmap which provides sufficient confidence in implementing their target?
Download the Transformation Guide here
Another resource for companies is “Pathways to Net Zero: The Decisive Decade”, a forthcoming report from EDF and Deloitte, will build on the first Pathways to Net Zero report to shed new light on how businesses can turn net zero pledges into action in the next ten years. It will equip companies with new resources and strategies to assess, identify, and prioritize near-term climate action, creating a uniquely actionable playbook for execution. This report will be accessible via the EDF+Business website.