How to Set Ambitious and Realistic Net Zero Targets

TL;DR: In general, aim for 2035-2040 as an ambitiously realistic net zero target. If you’re a rapidly growing organisation (among other conditions), you can also join in by focusing on reducing your carbon intensity.

Each business, country, and the world will have to reach net zero to limit the effects of climate change. Therefore, if you’re in charge of an organisation (or country!) or can influence decision-making, it’s vitally important that you set one, not just for the greater good of the planet and the people on it, but because it also makes good business sense.

Stephen Henry, founder of Positive Planet, previously discussed what aiming for net zero entails (in a UK SME context). However, once you decide that you want your organisation to actively go for, you’ll run into two important questions:

• What net zero year should we choose?
• What should we aim for to be net zero?

Several companies, both in the UK and my hometown of Hong Kong, will look at their government’s 2050 net zero target and immediately draw the conclusion that they too should be setting 2050 as their target. But is this really the right option?

2050 will be too late

To have a good shot at 1.5º of warming, the entire world has to halve their emissions by 2030, and reach net zero by 2050. However, there will be large parts of society and the world that won’t keep to this – especially halving emissions by 2030. Although some of this is down to straight-up negligence, in some scenarios even these bare-minimum emissions reductions goals aren’t feasible.

Firstly, some less developed countries do not currently have the infrastructure to function effectively. In the UK as well as Hong Kong, we are lucky to already have developed our infrastructure ecosystem, with virtually complete road, rail, port and electricity networks. Many countries do not have this privilege, and we shouldn’t stop them from developing this (albeit in a sustainable way to the fullest extent possible).

Secondly, we have to accept that despite our best efforts to develop a sense of public urgency toward the climate crisis, there will be countries, companies and people that just do not heed this, and continue to pollute ungodly amounts of carbon into the atmosphere. (For example, last year China greenlit the building of two new coal plants every single week…)

And lastly, there are a few high-carbon activities worldwide that we can’t reasonably expect to have halved their emissions by the end of the decade – activities such as heavy shipping, heating, and aviation – even in our country.

Because of this, having everyone set 2050 as their net zero year will cause us to collectively whoosh past this deadline due to the inevitably large swathes of the planet who won’t make it to net zero by then.

So what we need is for everyone that can – organisations, sectors, countries, maybe you – to set your net zero target earlier than 2050. But how much earlier? How early can we ambitiously and realistically aim to reach net zero before it becomes a pipe dream?

“2024!!”

Unfortunately, no. Currently, organisations can get rid of some emissions sources right now (such as switching to renewable electricity) and can drastically reduce some others (like minimising business travel, especially via car and plane; switching to electric heating, and using an electric company fleet). However, some emissions sources aren’t this easy to decarbonise.

The largest emissions source will often be procurement emissions – it will also generally be the hardest. These emissions not only come from buying parts and materials to manufacture and sell, but also other business operations such as buying computers and furniture; day-to-day office supplies; insurance and pensions; consulting and accountancy services; broadband…

Although these scope 3 emissions aren’t under your direct control, you can influence your suppliers through your buying power – by selecting lower-carbon suppliers; persuading your existing suppliers to implement net zero plans; buying secondhand; or finding ways to simply buy less.

Be warned though; your suppliers will also be facing these decarbonisation challenges – the same challenges as you. Climate-conscious suppliers will reduce their emissions in the areas where they can, but mainly due to the indirect emissions of their suppliers, they probably won’t be able to reach net zero within this decade.

The only way you can force your suppliers to reach net zero, when you want them to, is to have an insanely high purchasing power (and therefore insanely high bargaining power). Apple, the BBC, and the UK Environment Agency, who all have net zero target years of 2030, are the kinds of organisations who can do this. Some also invest in their suppliers’ carbon reduction projects, such as installing solar panels, to help speed things along.

If you don’t have insane purchasing power, the best path forward is still a sustainable procurement policy, as well as encouraging your suppliers to put in a sustainable procurement policy of their own. It’ll mean your whole value chain tries to only buy from companies who are working to reduce their emissions.

When your value chain is engaged and trying to reduce their emissions like this, your indirect emissions will go down too. This phenomenon is called ‘passive decarbonisation’, and will be the key for your SME (and smaller public companies) to reach net zero.

(It’ll also reduce the emissions of your suppliers’ other customers, meaning you’ll have made an outsized impact.)

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Ambitiously realistic

For these reasons, a conservative estimate of when SMEs will generally be able to reach net zero would be 2040, and an ambitious estimate would be 2035. The reason we have a range is because reaching net zero is dependent on how fast this sustainable supplier ‘ecosystem’ can develop. Obviously we hope this will happen sooner rather than later, your organisation can help foster this, and Positive Planet would be able to help with it.

Another factor for which year you choose is whether your organisation is able to accommodate this: of course an earlier year is better, but whether you can choose 2035 or will have to go for 2040 will depend on whether you’ll financially and operationally be able to switch from potentially net-zero-lagging suppliers to net-zero-leading suppliers in order to reach net zero five years earlier. (Having said this, in some cases you may even be able to save money by switching.)

What defines net zero?

To achieve net zero, companies generally aim to reduce emissions in line with science-based targets (SBTs). These targets are set by organisations and are considered “science-based” when they align with the reductions needed to keep global temperature rise well below 2°C, and preferably 1.5°C as per the Paris Agreement. SBTs provide companies with a pathway for sustainably transforming to a low carbon economy.

Currently, the Science Based Targets Initiative (SBTi), the group which sets guidance and verifies companies’ targets, states that most organisations should reduce their total emissions across all scopes (ie both direct and indirect emissions) by 90% by 2050 at the latest. Carbon removals should then be used to neutralise the residual emissions. This is called an ‘absolute reduction’ approach.

Our opinion at Positive Planet is that an absolute reduction of 90% is a great goal for at companies meeting all these conditions:

1. aren’t expanding much
2. didn’t do big carbon reduction initiatives in the baseline year (the ‘reference’ year you measure the 90% reduction target against)
3. have a baseline year that isn’t during the pandemic.

However, many companies obviously don’t fit this criteria – either they’re rapidly expanding (which is normal especially for SMEs); they’d (rightly) been proactive enough to reduce their emissions by the baseline year; or had started measuring their emissions during COVID. One of SBTi’s largest criticisms is that absolute emissions reductions don’t work for many firms.

For companies without those specific conditions, we have been recommending an alternative route that still would align with the spirit of SBT: reducing an organisation’s emissions intensity. We’ve determined through industry insight that for service-based businesses, an emissions intensity equivalent to the current guidance is an emissions intensity reduction in all scopes to 1 tonne of CO2e per full-time employee equivalent (1 tCO2e/FTE), then using carbon removals to neutralise the residual emissions.

This ‘intensity reduction’ approach solves the problem of a flimsy baseline year: because it doesn’t rely on it so much, reducing your intensity accommodates growth and rewards already-low emissions. (It’s still a good idea to measure your absolute emissions though, to get a clear understanding of what your carbon impact is.) When thinking about which net zero approach to choose, think about whether your organisation meets the conditions above.

The most important thing is to get started

Of course, setting an ambitiously realistic net zero goal is super important, whether it’s 2035, 2040, or something else. This is something we at Positive Planet can help you with, as it’s very easy to get analysis paralysis trying to decide which year and which approach to go for.

However, what’s even more important is to get started on your net zero journey now – start measuring your emissions and start getting those carbon reduction initiatives into place. Once the ball’s rolling and we know what emission drivers we’re working with, we’ll be able to develop a comprehensive Net Zero Roadmap to analyse how you can get your organisation’s emissions down to net zero – whichever path and year you end up choosing.

Sean Barry is a Senior Sustainability Consultant at Positive Planet, a net zero advisory based in Manchester, UK. To partner with us to get your organisation’s emissions to net zero, Check out Positive Planet.