Scientists and policy-makers alike have arrived at a general consensus that ‘net-zero’ for the planet should be reached no later than 2050. This means that the total amount of CO2 emissions is matched by natural and man-made removals. Today, we are running at a massive surplus of >50Gt of CO2 annually. The sooner and more rapidly we start the drawdown of emissions, the easier it will be to achieve this goal, and the less costly it will be to society.
The private sector is one of the largest emitters, and governments as well as climate campaigners are pressuring every business to reduce their emissions. This has led to thousands of high profile net zero pledges. However, the majority of these pledges are not backed up by a credible plan, and even if all of the pledges turned into reality, they would still not be enough to limit global warming to 1.5C. Pressure is increasing on business to act. The gap between what the world needs and the reality of company action is creating a trust crisis that can be seen in the rising number of organizations criticized in the media for greenwashing.
What should a company aim for amidst the confusion and conflicting guidance? How should a company balance the need for immediate wins and long-lasting impact?
What the current guidance says
The two most important goals companies are striving for are Carbon Neutrality and Net-Zero.
Carbon neutral means purchasing carbon credits equivalent to emissions released, regardless of where the company, brand, or product is in its net-zero journey.
Net-zero means reducing emissions in line with the latest climate science and balancing remaining residual emissions through carbon removal credits.
One way for a company to start is by setting a target with the guidance from Science Based Targets initiative (SBTi), which has introduced a Net Zero standard. Meeting this standard requires companies to prioritize reducing internal emissions, restricting the use of offsets to only when abatement efforts have been fully exhausted.
What most companies are doing isn’t working
The SBTi approach requires significant investment and the internal resources to manage the process. Most companies have neither the skills or resources to go down this route. Instead, an apparently simple solution exists. Identify your carbon footprint, and purchase cheap carbon credits to offset this footprint. The simplicity of this logic and availability of low cost offsets makes this an attractive approach to many.
However, while quick and easy, low cost offsetting lies at the center of a trust crisis around corporate climate action. Negative media coverage around offsetting has exploded, uncovering concerns including:
As a result, calls for change and corporate leadership are increasing. Scientists and media leaders are intensifying their calls for real climate action. More and more companies are beginning to pay attention to the flaws and evolve their climate action plans.
A new model for climate leadership: go beyond offsetting
Companies have a choice — quick, cheap and risky, or high-impact action. Companies can either pay the lowest available cost per ton for a carbon credit, or they can transition their business and pay closer to the true cost. We believe the latter is the best approach, which we call going beyond offsetting.
To go beyond offsetting, companies must do three things:
A higher quality climate impact claim
This climate budget approach changes the mindset away from “find me the lowest cost offsets” to “make sure every dollar achieves the greatest impact.” This means companies deploy their climate budget more effectively, prioritizing impact on climate, nature, and community without greenwashing. The company then has a high integrity climate impact claim that is made up of:
The opportunity for businesses
While it might appear that getting to ‘net zero’ is qualification enough, the reality of the trust crisis is that every business, no matter the size, needs a much more credible climate claim. This requires greater substance.
Going beyond offsetting provides companies with a much richer story to show their customers, employees and investors that they believe not just in doing business well, but in doing it right.
The new climate claim is in effect ‘real’ carbon neutral or ‘real’ net-zero and more, as it enables a company to also focus on nature and community. Overall, this positions the company as a climate leader. It acknowledges the reality that acting on climate change is a complex, company-specific journey with various levers.
How CO2 helps companies achieve real net zero
CO2 helps companies realize this level of corporate climate action. Our team of experts leverages our relationships with partners, suppliers, advisors, and scientists to build a pipeline of vetted, high impact projects. CO2 aggregates them into portfolios that balance risk and optimize impact across climate, nature, and community outcomes. This then enables a confident climate action claim, supported by a multi-dimensional impact summary, annual progress reports, project stories, and marketing tools.
Join us in this new era of corporate climate leadership.
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