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Net Zero in four steps

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With the biggest climate conference, the COP26 taking place in Glasgow in November, there is growing pressure on the private sector to act on climate. Companies, big and small are rushing to join the Race to Net Zero, their commitments already cover half of the global economy and a quarter of global CO2 emissions.

These corporate net-zero targets signal an important message for the transition to a low carbon future, however, as we are facing the highest levels of CO2 emission in our history the unfolding crisis requires immediate actions, we can’t wait until 2050. But how can small entities join the race, with capacity constraints whether it is financing, lack of time or expertise?

Good news is that companies of any size can achieve net-zero emissions, and here’s how you can start the journey in 4 steps.

Liza Degtyareva, Co-Founder of 4D Sustainability Canvas gives 4 steps towards Net Zero.

Why net zero by 2050?

The Intergovernmental Panel on Climate Change (IPCC), the world’s leading authority on climate science, suggests that to limit global warming to 1.5°C (as of 2021 we reached 1.1°C), a level that would keep the natural systems in balance, it is required to reach approximately net-zero CO2 emissions by no later than 2050.

To break it down to interim goals it is suggested to halve emissions by 2030 or set an annual target of 7% reduction.

Reaching net zero practically means preventing further accumulation of Greenhouse gass (GHG) emissions in the atmosphere through restoration of natural carbon sinks like forests and oceans, as well as, deploying carbon capture technologies.

SME’s journey towards net zero

  1. 1. Set the baseline

Probably the most tedious process is when it comes to calculating the company’s carbon and GHG emissions.

The first thing to understand is what we want to measure. Is it only the direct emissions of the operations or of the entire value chain? For this the GHG Protocol categorised emissions in scopes 1, 2 and 3.

Scope 1 encompasses direct emissions occurring at company facilities and company vehicles.

Under Scope 2 there is purchased electricity and Scope 3 refers to indirect emission of purchased goods and services, business travel, capital goods, employee commute and 11 more categories.

Next, is to identify the most material activities to the business along the value chain, this can be done based on industry benchmarks, which will give a clear understanding whether the business needs to commit to net-zero in scope 1 and 2 only (as recommended for small companies in some cases) or include the often more material Scope 3 emissions.

To measure GHG footprint refer to the GHG Emissions Calculation Tool, Carbon Trust Free Calculator or Compare Your Footprint that has a subscription model for small businesses.

How to address Scope 3?

90% of overall business impact particularly of those that are service based falls into Scope 3 category. Here it is key to collaborate with suppliers, no matter how cumbersome collating data can be, it is essential to involve them in your net zero roadmap and work with them in close collaboration to gather credible information and work for a common goal.

  1. 2. Commit to Net Zero

Small businesses can join the SME Climate Commitment and pledge to cut emissions in half by 2030 and reach ‘net zero’ by 2050, the initiative also enforces immediate actions within 3 and 6 months through support provided in measuring GHG emissions and setting short and long-term targets.

There are a number of other initiatives that SMEs can join, depending on the level of ambition and budget. Sign up for the B Corp Climate Collective, the The Climate Pledge, Business Ambition for 1.5°C pledge or set Science Based Targets.

  1. 3. Reduce your GHG footprint

First and foremost look into possibilities to eliminate emissions of the most carbon intensive activities in the value chain (so called impact hot-spots), for instance, this can be done by:

  • Energy efficiency measures like installing smart meters
  • Switching to renewable sources – applies to energy providers, vehicles and commuting
  • Implementing circular business models and product design
  • Encouraging end-user consciousness – involve customers and let them know how they can support a carbon free lifestyle through your products and services

What about offsetting?

It can go only so far when it comes to eliminating emissions, SMEs are often not in a position to change certain suppliers or switch to low-carbon alternatives, but they can turn to carbon offsetting. It essentially means funding high-quality projects which remove carbon from the atmosphere.

Reaching net-zero, however, should not happen by simply offsetting while continuing business as usual, SMEs need to make sure they compensate not more than 10% with carbon credits and use those that would finance projects certified by the Verified Carbon Standard or Gold Standard in line with the UN SDGs. To dive deeper follow the Carbon Offset Guide.

  1. 4. Transparent and regular communication

Finally, once the roadmap and targets are set, continuous disclosure of the company’s carbon data and progress is essential to create trust and credibility among the stakeholders. The SME Climate Hub is preparing a simplified reporting format that is expected to be released in 2021, for the time being share your net zero journey in blog posts, newsletters, and data visualisation platforms.

For more advice on helping the planet with your business, check out this article.

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