Around the world a consensus is taking shape about targets for ‘carbon neutrality', the point at which any given organisation or community (and that might include a whole country) contributes zero carbon emissions across all its activities.
Policymakers are converging on one target date which is 2050. A few have gone even earlier, with Sweden aiming for 2045, Austria 2040 and Finland 2035. But most large economies have settled on 2050 – although China, which came late to the party, says 2060 is its target date.
These policy targets are beginning to have an impact on the corporate world. In fact, many big companies are now busy bidding up the target, going for earlier carbon-neutrality deadlines or a combination of neutrality and other eye-catching commitments. But amid a cacophony of claims and counter-claims on sustainability, carbon neutrality and climate responsibility, there is a lack of clarity on what corporate climate targets actually mean: which parts of the value chain are implicated, what counts as mitigation, and how to measure it all.
Ambitious targets
It is clear that the corporate world is trying to get ahead of the curve on climate change – and that is good. It makes sense for companies to act early, rather than having change forced upon them by policymakers.
Amazon has pledged carbon neutrality by 2040. Consumer goods giant Unilever has committed to 2039. In what may be the most ambitious move of all, Microsoft has committed to being ‘carbon negative' (that is taking more carbon out of the atmosphere than it puts in) by 2030, and carbon neutral over the entire 75-year lifetime of the company by 2050.
There are plenty of indices and certifications designed to rank climate policy. Some companies – including Pirelli – adhere to the Science Based Targets initiative, which validates various emissions targets including carbon neutrality. There is also the carbon neutral protocol from Natural Capital Partners, as well as the standards issued by the British Standards Institution and the brand certifications offered by the Climate Neutral organisation.
Clear definitions
Yet for all of the important work being done to create an agreed framework for setting and measuring corporate climate policy, the average person would probably still struggle if asked to define zero emissions, or carbon neutrality.
Does ‘emissions' cover everything a company does? Does it cover everything its suppliers do? Does it include carbon offsets, and if so what sort?
If an airport group claims carbon neutrality, does that cover the carbon emitted by the airlines it serves? If an energy company aims for zero emissions, does that cover what happens to the oil it pumps, or just the way it pumps it? What about emissions of other gases such as methane, nitrous oxide and fluorocarbon gases, which according to the UN account for more climate warming than CO2?
Where there is uncertainty there will also be disagreement. No wonder some companies have already got into trouble for making unsubstantiated claims.
A rebuke from the regulator is one thing. Governments telling businesses how to operate is quite different and something most companies would want to avoid. The way to forestall that (and most likely get to net zero faster) is to be as clear and transparent as possible on what exactly your corporate commitments mean.
That way the air will be a lot cleaner and the path to follow far clearer.
