Greenwashing 2.0? Defining what it means to be a ‘net-zero’ business

Net-zero emissions has been scientifically heralded as a necessity to reverse the worst impacts of climate change. But a flurry of recent business commitments to become 'carbon-negative' and 'resource-positive' raises a critical question: does achieving 'net-zero' actually constitute business leadership?

Greenwashing 2.0? Defining what it means to be a ‘net-zero’ business

Since the inception of the UK Government’s legally binding net-zero emissions target for 2050, businesses across the country have moved faster to be bolder; setting their own versions of ‘net-zero’ carbon reduction targets, many of which fall well ahead of the Government’s deadline.

As defined in edie’s own report on the topic: “Net-zero refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere of the earth”. The terminology is therefore somewhat interchangeable with that of ‘carbon-neutral’ or with having ‘no negative impact’ on the environment.

Net-zero also takes into account some residual emissions from hard-to-abate areas that are unavoidable. In response, many organisations are turning to offsetting in an attempt to lead the net-zero transition. Offsetting refers to the removal of emissions through either natural or engineered ‘carbon sinks’, such as the planting of trees or the deployment of carbon capture and storage (CCS) technologies, as a means to reach net-zero. But it is seen by many as a controversial tactic, which we’ll come back to later. 

However, three separate commitments set this month serve to highlight an alternative approach that could redefine sustainability leadership in the 2020s; by moving beyond net-zero and seeking to regenerate and give back to the environment more.

First came tech giant Microsoft, which unveiled a bold new plan to reduce its carbon impact to below net-zero by 2030, with an additional goal of removing carbon from the atmosphere that the company has emitted since it was founded in 1975, claiming that “neutral is not enough”.

Then, pharmaceutical giant AstraZeneca has pledged to become carbon-negative across its entire value chain by 2030, with an interim ambition of reaching net-zero operational carbon emissions from operations by 2025.

And completing the triumvirate, global coffee company Starbucks announced a new long-term mission to become resource positive by storing more carbon than emitted, eliminate waste and replenishing freshwater.

It should be noted that these three companies join the likes of Ikea and Interface as firms that are adopting this leading stance and moving well beyond mitigation by setting targets that look beyond net-zero. All of these respective strategies include some form of net-zero or carbon-neutral status as an intermediate step towards a regenerative value chain. This poses the question of whether net-zero is an accurate representation of the power and scope of business to deliver transformational change.

The Cambridge Institute for Sustainability Leadership (CISL) has published numerous reports around this question; examining the role of business in a net-zero economy. For the organisation’s director of policy Eliot Whittington, net-zero is a commitment that all businesses should be making, but it should be seen as a step on the road to regenerative business practices.

“If we are to face up to the climate crisis and avoid the worst impacts of global warming, the atmosphere needs no net emissions,” Whittington says. “By far and away the first priority for all companies is to urgently bring carbon emissions down to as close to ‘zero’ as possible. The lesson from the past few years has been that reducing emissions is necessary and more achievable and affordable than we had previously believed.

“Secondly, all companies need to think how they are helping contribute to preserving and restoring the natural processes and ecosystems that can absorb and store carbon – doing so in a way that supports biodiversity and other benefits nature brings. Setting a strategy that outlines a company’s undertaking to reach net-zero emissions can be valuable in expressing a commitment to all of the actions above – but the order of priority and the understanding that first and foremost every possible step must be taken to stop emitting has to be at the heart of any such strategy.”

Offsetting overload

It is the practice of offsetting where the concept of achieving net-zero can become somewhat muddied and open to a ‘greenwashing’ approach to business growth. Whilst offsetting does, of course, carry some environmental benefits, many green groups have criticised the approach as a means for companies to shirk their environmental responsibilities, essentially paying their way to continue business as usual and avoid any meaningful action on net emissions reductions.

The certification of carbon offsets is also very convoluted, with many schemes offering differing prices. Up until recently, the certifications themselves were being questioned, although the introduction of the Voluntary Carbon Standard (VCS) has added some authenticity to the system. VGS-certified offsets are audited according to the Kyoto protocol, for example. Commitments that are largely reliant on offsetting – such as those seen within the aviation sector, e-commerce platforms and oil and gas industry – have nonetheless contributed to the growing feeling that net-zero strategies are not fully accounting for the business imperative to actually reduce emissions and energy consumption, and have a positive impact on the planet.

The infamous Intergovernmental Panel on Climate Change (IPCC) report concluded that limiting global warming to 1.5°C – the highest ambition of the Paris Agreement – requires “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. In turn, this would lead to carbon emissions to fall by 45% by 2030 and reach net-zero by 2050 – accounting for the remaining emissions through the removal of carbon from the air.

When it comes to achieving this trajectory, the key aspect is remaining and unavoidable emissions, rather than emissions that could otherwise be reduced through energy efficiency and carbon reduction measures. Fortunately, the majority of businesses, when asked directly, have reiterated the need to prioritise reductions over offsets. But that doesn’t stop some from proudly badging their operations and facilities as ‘carbon-neutral’ on the surface.

The ‘real’ zero

There is also the growing emergence of new taskforces to oversee the net-zero transition which should appease concerns of greenwashing. 

Mathew Farrow is the executive director of the Environmental Industries Commission (EIC), which this week launched a Net-Zero campaign in partnership with the Association for Consultancy and Engineering (ACE) to analyse how the UK’s infrastructure should be redesigned to meet net-zero by 2050.

Farrow argues that absolute emissions reductions should be prioritised, even as a business grows, but that offsetting can have a small role to play in a net-zero business strategy.

“In Davos, Greta Thunberg came out strongly against offsetting and net-zero,” Farrow says. “She said we need ‘real zero’… she is right to warn against the human tendency to look for a little wiggle room.” 

“Our Net-Zero Taskforce will look at what needs to be done to create a built environment compatible with reaching full net-zero in the UK. But of course, even the Committee on Climate Change recognises that the UK will need to be removing carbon from the air [mostly through additional tree planting] in order to offset the limited residual emissions they expect to still exist in 2050. 

“Does that mean it is fine for individual firms to reach their own net-zero by paying for offsets elsewhere in the UK? Businesses in other sectors with may be able to make a case as to why they cannot cut emissions in the same way, but my view is that they must pass two tests – any offsetting must be fully quality controlled, and it must not be in place of actions which are needed for their sector to play its full part on the UK-wide net zero pathway.”

Indeed, the EIC’s own Pledge to Net-Zero initiative is aimed primarily at environmental consultancies and insists on no offsetting and absolute emissions reductions even if the firm is growing. For now, this can be considered a best-practice approach to responding to the climate emergency.

There is no doubting that ‘net-zero’ represents a phenomenal movement that has driven many businesses and entire industries to create new, more ambitious strategies; pushing corporates to the very limits of their imagination and transformation. But at its worst, it can also represent a vessel of falsehood and greenwash.

For now, net-zero should be integral terminology for any business looking to deliver long-term prosperity through sustainability. But, when the technologies emerge at scale that allow for carbon capture and greater regenerative practices across the value chain, businesses should be ready for net-zero to become the ordinary rather than exemplary.

Matt Mace

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