What does carbon neutrality mean? And what about net zero? Are you allowed to use carbon offsets? Which type should you choose: carbon avoidance/reduction offsets or carbon removal offsets? How do you demonstrate progress while ensuring it does not constitute greenwashing?
Embarking on the path towards a net zero future requires an extensive understanding and a keen awareness of various factors. As trusted partner and independent consultant, DNV is able to advise and support you throughout your net zero journey. Our long-standing experience in the climate change space and ongoing work with clients from a wide range of industries, allow us to stay at the forefront of the climate change agenda and policies, enabling us to advise you on market-leading practices.
What is carbon neutrality and how does it differ from net zero?
When it comes to achieving carbon neutrality, it’s crucial to set emission boundaries that encompass the entire spectrum of impact. At minimum, this involves addressing both Scope 1 greenhouse gas (GHG) emissions (i.e., direct emissions from owned or controlled sources) and Scope 2 GHG emissions (i.e., indirect emissions from the generation of energy used by the entity). However, we strongly recommend considering Scope 3 GHG emissions as well, which represent all other indirect emissions along an entity’s value chain. This becomes particularly essential for organizational emissions, as they contribute significantly to the overall carbon footprint.
However, when making carbon neutral claims about products, carbon neutrality should cover at least the cradle-to-grave lifecycle emissions, which would by definition include Scope 3 elements. When it comes to net zero, the emission boundaries are much clearer: net zero should cover all of Scope 1, Scope 2, and Scope 3 emissions.
As far as offsets are concerned, unlike carbon neutrality where both carbon avoidance offsets and carbon removal offsets could be accepted, net zero only considers carbon removal offsets. This is because, in order to be in a state of net zero, any residual emissions being released into the atmosphere should physically be captured or otherwise removed from the atmosphere. Carbon Capture and Storage technologies are one way to achieve that. Otherwise, carbon removal offsets arising from afforestation or peatland restoration projects, for instance, could be considered for net zero claims.
We are also finding that the market appetite for fresher offset vintages, meaning carbon offsets which have been achieved/recognised in the last 3 to 4 years, has been increasing in recent years. We believe that fresher offset vintages should be opted for as far as possible, as these are seen as having had more recent carbon avoidance or carbon removal impacts within our atmosphere and are therefore seen as more valuable in climate change mitigation efforts. While there is no strict guidance on vintages to use, we are of the view that fresher vintages will support a robust carbon-neutral claim. It is not clear (yet) what the vintage requirements will be when making net zero claims, but we would certainly expect and recommend even fresher offset vintages to be used to support such claims.
How do you demonstrate progress and make a carbon neutral claim?
Whether it is a carbon neutral claim about an event, manufactured products or even about your organisational emissions, we leverage the internationally recognised Publicly Available Specification (PAS) 2060 for the demonstration of carbon neutrality. PAS 2060 allows us to verify that any claim being made by an entity has met the defined specifications to demonstrate the achievement of carbon neutrality and/or the commitment to maintain that status, thereby ensuring robust and transparent carbon neutral claims.
PAS 2060 is built on the following four pillars:
- Assess: Assessing the GHG emissions for your event, product(s) or organisation based on accurate data and in line with recognised criteria like the GHG Protocol or ISO14064;
- Reduce: Reducing your annual emissions arising from a robust, target-driven carbon management plan;
- Offset: Offsetting residual emissions through the purchase of carbon credits meeting the requirements of PAS 2060;
- Document: Documenting your carbon neutral claim through a Qualifying Explanatory Statement (QES), verifying your QES against the PAS 2060 requirements (external verification recommended) and publishing your QES in the public domain.
This 4-step process must be followed periodically, typically annually, and as external verifiers, we are able to support your company every step of the way, by verifying your QES against the PAS 2060 specifications while also helping you strive for best market practices.
For more information on carbon neutrality and how we can support your decarbonisation journey, please contact our sustainability experts.
By Shuhaib Maudarbaccus, Senior Sustainability and ESG Consultant
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