Net Zero: what does it mean and how can we do it right?

By George Bailey

We are entering the critical decade of action for climate change. We have embarked on an unprecedented challenge of halving global carbon emissions by 2030 – a milestone we must meet if we are to achieve net zero by 2050 and the 1.5⁰C limit laid out in the 2016 Paris Agreement.  

We’re already behind where we need to be. The latest UN Emissions Gap report states that due to slow progress, we now must cut global emissions by 7.6% per year for the next decade. Without further action, this target will increase to 15.5% each year from as early as 2025.  

There is appetite for action, but there remains uncertainty about what to do to get there and this risks confusion.  One way to accelerate action is agreeing a unifying definition of net zero. Once this is defined, agreeing what measurable success looks like in 2030 and by 2050 will be easier.  

In recent years, we’ve seen countries, businesses, cities, local authorities and businesses – including WSP - set net zero targets and unveil strategies to meet them. Many will have used varying interpretations of what net zero means, how it should be measured and what should be included in the scope. Such an approach risks a situation of divide and conquer. 

Thankfully, initiatives such as the United Nations’ ‘Race to Zero’ were set up to stop this risk of divergence. Race to Zero is seeking to pull credible global net zero initiatives under one roof and it is having success as we approach the COP 26 climate conference in Glasgow in 2021. It is providing clarity on what science based and credible net zero plans must look like.  

For example, businesses seeking to become a signatory of Race to Zero are required to go down the ‘Business Ambition for 1.5C’ route which is underpinned by the Science Based Target initiative (SBTi), or ‘The Climate Pledge’ route. In September 2020, the SBTi, published it’s ‘Foundations for science-based net-zero target setting in the corporate sector’ - this is essential reading, even for non-businesses. 

The SBTi report has three key takeaways: 

1. We need clarity and consistency on what net zero means 

We all need to be talking the same language on net zero so that like-for-like comparisons can be made to facilitate informed decisions – whether for investors seeking to invest in ‘credible net zero’ businesses or net zero supplier selection to help meet our value chain targets.  

2. We need to capture everything 

Our value chains are often excluded from many net zero targets – these are known as Scope 3 emissions. They are the elephant in the room. For many companies, emissions released across the value chain make up most of a company’s footprint – in corporate real estate is estimated to be over 85%. Scope 3 emissions must be included in credible net zero plans.  

3. We will need to utilise carbon ‘neutralisation’ or removal offsets 

As part of our net zero journeys, we will be allowed to use credible removal offsets to mop up residual emissions. The huge investment in biological and technical schemes that enable removal offsets will create a global revolution in rewilding initiatives to restore nature, and will support innovations like Direct Air Carbon Capture (DACC). 

A global standard for net zero is overdue. What should your organisation do to pre-empt this? 

A global standard will allow organisations to be compared on a like-for-like basis and enable stakeholders to make informed decisions about investment and procurement based on those companies which are taking meaningful action. We are confident a global standard will be agreed, but in the meantime we should waste no time.  

Cities, local authorities, organisations and businesses can pre-empt change by doing the following: 

1. Identify the Race to Zero approved standard for your sector. For businesses this is the SBTi, for higher education this is Global Universities and Colleges for the Climate, for cities it is C40 Cities’ Deadline 2020 

2. Measure your Green House Gas (GHG) emissions and set credible net zero targets through these standards 

3. Validate your net zero target and seek recognised assurance for your GHG emissions’ footprint and reductions 

4. Deliver meaningful, comparable reductions towards a 1.5⁰C limit on global warming, planning for 2⁰C is no longer going to be enough 

5. Offset any residual emissions that you cannot yet avoid by using certified removal offsets – this is in line with the concept of ‘carbon neutralisation’ in the SBTi paper. 

There is no time to waste 

We are at a pivotal point in deciding what kind of future we want. The world is looking to the private sector to follow bold pledges with deliverable plans for action. 

We must take coordinated action now to tackle carbon emissions so that we’re not faced with a 15.5% target as early as 2025. All of us have a role to play and we can all influence our professional and personal networks to enact real change. 

As you reflect on the above, and look for optimism, we recommend you read ‘The Future We Choose’. Written by Christina Figueres, the inspirational figurehead who played a key role in the Paris Agreement in 2016, it is full of the can-do mindset that we will all need in the coming decade. 

This article was written by George Bailey  in WSP’s Sustainability Advisory team.

By Hannah Probert 

Emissions from the supply chain often account for more of a company’s emissions than those from their own operations.  

Emerging guidance in September 2020 from the United Nations backed Science Based Targets initiative (SBTi) on what constitutes a net zero corporation, requires the inclusion of supply chain emissions.  

This means managing emissions from the supply chain is becoming crucial in the face of increasing scrutiny. Where should corporate organisations start when assessing their supply chain emissions? 

DEFINING THE supply-CHAIN AND SCOPE 3 EMISSIONS 

To understand where emission reductions can be made, a company should first define its value chain. The GHG Protocol, the main reporting protocol for Greenhouse Gas (GHG) emissions, classifies value chain GHG emissions of a company into three scopes: 

Scope 1 emissions are ‘direct’ emissions from owned or controlled sources, such as processes, offices or vehicles. 

Scope 2 emissions are ‘indirect’ from the generation of energy purchased, such as electricity in leased offices.  

Scope 3 emissions are all indirect emissions that occur either upstream or downstream in the value or supply chain.  

The majority of companies have focussed on reducing Scope 1 and 2 emissions as they have more influence over these emissions, and it is mandatory under the GHG Protocol guidance and the UK’s Streamlined Energy and Carbon Reporting (SECR) legislation. 

On average, emissions from the purchase of goods and services (upstream Scope 3) account for approximately four times that of operations i.e. Scope 1 & 2 emissions (SBTi, 2018).  However, as Scope 3 also includes ‘downstream’ emissions – which includes a product’s transport, sale, use by consumer and end of life, Scope 3 emissions often account for more than 90% of the total for some organisations (GHG Protocol). 

Given the increased scrutiny on Scope 3 emissions, their reporting will likely become mandatory. Companies will need to be prepared for this. Scope 3 emissions are the most challenging to address. How can companies manage this? 

IDENTIFYING THE MATERIAL EMISSION SOURCES 

To identify the Scope 3 emissions, an organisation must understand its reach. A ‘materiality assessment’ will identify hotspots - the company-specific sources of emissions that matter the most, and data gaps.  

Priorities can be determined by considering:

a) Significance of emissions relative to sector – for instance, a car manufacturer’s largest Scope 3 emissions are likely to occur from sourcing materials to manufacture vehicles, and the use of the cars by end users. For a service company, a large portion of Scope 3 emissions is likely to stem from outsourced data centres. 

b) Degree of influence – products from manufacturers that account for a significant share of the company’s total supplies.   

c) Stakeholder interest – reporting on GHG emissions that investors and shareholders are interested in. 

We regularly undertake detailed materiality assessments for our clients to help them build a picture of where challenges lie around their emissions, but there are tools to help inform initial investigations. 

The GHG Protocol Scope 3 Evaluator can be used to generate a top-down estimate of Scope 3 emissions using financial data on spend and indicates which emissions may require further investigation.  

In our next article we will review the actions that organisations can take to report on and reduce their Scope 3 emissions as part of their decarbonisation goals.  

By James Peet 

In our last article we explored how emissions from the value chain often account for more of a company’s emissions than those from their own operations, in some case more than 90% of a company’s emissions. 

A materiality assessment can give a company a good understanding of where their emissions lie, but once this is understood what can an organisation do to take action to reduce value chain emissions? 

To get started, WSP recommends capturing data on Scope 3 emissions in order to develop a robust baseline, by following these steps:  

1. Contact relevant suppliers – via contracts with manufacturers, materials suppliers, capital equipment suppliers, third-party logistics providers (as identified in the materiality assessment). 
2. Data Collection – implement a clear and consistent framework forobtaining data from suppliers.   
3. Quantification of GHG emissions – using collated data (and assumptions where necessary), calculate emissions in accordance with accounting principles, for example leading global standards like the GHG Protocol, ISO 14064-1. Bespoke tools can be developed to report GHG emissions in line with these standards.  

Once companies have established where emissions occur in their value chain, plans can be formulated to take action on reduction measures.  

TAKING ACTION TO REDUCE VALUE CHAIN EMISSIONS 

Based on our project work in the private and public sectors, a combination of actions need to be progressed to improve visibility and performance in Scope 3 value chains. 

Engaging with the supply chain – developing a value chain engagement strategy is key to making meaningful reductions. Suppliers that have the highest contribution to the company’s scope 3 emissions should be targeted.  Executive level commitment, using contract requirements to ensure suppliers capture data and incentivising low carbon solutions are key to drive change.  

Designing low-carbon products – finding ways to reduce inputs of virgin materials, and/or to increase product life spans, will reduce emissions from materials and embodied energy. Adoption of circular economy principles to enhance reuse and recovery of products can reduce emissions.  

Purchasing products with a low-carbon footprint – Requesting Environmental Product Declarations (EPD) from suppliers for their products can allow you to select the feasible lowest carbon option. EPDs use a consistent methodology to quantify environmental impacts, and therefore can be used to compare between products and inform consumers. Pilot studies, programmes and partnerships maybe required where there are significant decarbonisations challenges, for example products like concrete in construction.  

Increasing efficiency in logistics – companies should consider optimising their logistical network to reduce Scope 3 emissions. For example, reducing the distance that goods travel from warehouses to distribution centres will also reduce transport emissions. In the longer-term, meeting net zero commitments targets will require logistics and travel embracing alternatives to fossil fuels such as electric vehicles and hydrogen. 

Whether your organisation works in fast-moving consumer goods, the service sector, heavy industry or asset management, compliance with regulations around emissions in the value chain is emerging fast.  

By acting now on value chain emissions, companies will not only benefit from focussed and faster opportunities for decarbonisation, they will ensure they are prepared for compliance with emerging regulations and will increase resilience to shifts in customer preference for sustainable products and services.  

If you are facing challenges around reporting and taking action on your company’s Scope 3 emissions reporting, please do get in touch today. 

By Mike Hardisty 

Carbon offsetting is an umbrella term for a process by which an individual or an organisation can compensate for the carbon emissions they generate. It is not a new concept but is rapidly evolving due to corporate net zero or carbon neutral commitments, formed in line with the Paris Agreement’s 1.5°C temperature rise limit. 

There is now an increased focus on organisations using offsetting to remove carbon from the atmosphere as part of their ’net zero’ strategies.  The United Nations Race to Zero campaign is also strengthening their criteria for accreditation linked to offsetting.

Every effort should be made within an organisation to reduce carbon emissions before offsetting. However, if an organisation cannot reduce their direct or indirect carbon emissions to absolute zero then, for many, carbon offsetting is likely to be one of the only other options. What options exist, and what steps do organisations need to take? 

Differentiating between offsets that deliver ‘carbon neutral’ and ‘net zero’ 

Most offsets to date have been avoidance offsets where an organisation invests in a scheme which helps wider society to avoid the generation of new emissions of carbon elsewhere.  

An example would be a consumer goods firm investing in an international renewable energy project, like solar or hydropower, to displace future fossil-fuel based electricity generation. While the organisation is taking steps to limit future emissions elsewhere, this does nothing to remove carbon emissions generated by the company. 

Avoidance offsets help organisations to become ‘carbon neutral’ as defined by the British Standards Institute’s PAS 2060 standard. However, to become net zero carbon, an offset must actively remove carbon from the atmosphere equivalent to the amount they produce. 

This is the view of the United Nations-backed Science Based Targets initiative (SBTi), recognised as the leading authority on corporate net zero strategies. What options exist for those considering offsetting in their net zero strategies? 

Natural offsets 

An investment in the natural world is one opportunity. Proven carbon removal methods that organisations can invest in include: 

• Tree planting. This includes reforestation to protect and restore forests, but also afforestation to grow trees in new locations. A hectare of new trees will sequester 300-400 tCO2e over its life depending on species and management method. Under the Woodland Carbon Code, offsets can cost an organisation between £10-£20 per tCO2e
• Peatlands and soil. Damaged peatlands can be a source of emissions release, but protected and restored peatlands store carbon. Organisations can now support peatland restoration projects certified by the Peatland Code, a voluntary certification standard 
• Marine habitats. Seagrass meadows, mangroves and marshes are natural carbon stores, in fact they are more effective carbon sequesters than forests on land  

The cost of natural offsetting may be tied to the value of land, with costs increasing as land available for planting and restoration becomes more scarce.  In fact, there will never be enough trees on our planet to wholly offset society’s emissions, this highlights the need for a mix of solutions.

Technological offsets 

Natural offsets alone will not be enough. Many organisations now hope to invest in offsets through technologies that support carbon removal, including: 

• Bioenergy with Carbon Capture (BECC): BECC uses a chemical reaction to capture carbon which is emitted through power generation, like biomass 
• Direct Air Capture (DAC) DAC also uses a chemical reaction to capture carbon, but captures carbon directly from the air, rather than at an emissions source 

BECC and DAC are currently energy intensive and costly. Costs will reduce with as the technology is scaled, and using renewable energy may make it less carbon intensive. 

Some organisations, such as local authorities, utility companies, infrastructure owners and investors, may own land which they can plant trees on or restore habitats to offset their emissions. This is known as insetting. For those where this is not possible, buying carbon credits from third parties investing in offsetting initiative is an option, as is a direct investment in specific offsetting schemes. The latter is known as authentic offsetting. 

Offsetting also provides an opportunity for organisations to deliver wider financial, economic, environmental and economic benefits. This could include creating new green jobs, creating new habitats for wildlife and increased health and wellbeing as part of an investment. Gold Standard is one organisation committed to creating impact and value for people. 

What steps should your organisation take if considering offsetting as part of your corporate net zero strategy? 

1. Assess and quantify carbon emissions before developing a strategy to meet net zero by a target date. 
2. Consider how to use your own assets and land to deliver authentic offsetting and contribute to targets. 
3. Consider how your offsetting plan can support other organisation goals associated with delivering wider economic, environmental and societal in communities. 
4. Develop plans to invest in carbon removal offsets, not carbon avoidance offsets. 
5. Budget for procuring carbon offsets in the future; this will include factoring in potential price rises in the future.  
6. Carbon offsetting remains one of the final cards that should be played in an organisation’s net zero strategy, but it is fast becoming one of the most used tools.  

Get in touch today to discuss how we can help you consider the role of offsetting as part of your plans to achieve your net zero and resilience goals.