The world’s leading authority on climate science, the Intergovernmental Panel on Climate Change, had not delivered a major report in 7 years. But the installment released last month paints a dire picture of our future.
On our current path, we will likely breach the Paris Agreement’s stretch target of limiting global warming to 1.5°C above pre-industrial levels in the next two decades, and may breach the fallback target of well below 2°C around mid-century.1 For these goals set just a few years ago, the 2020s will truly be the decisive decade. This year’s scourge of wildfires in California and Siberia, floods in Germany, and deadly storms like Hurricane Ida remind us of what is to come.
The IPCC report tells us that climate change isn’t a problem we should solve for the next generation; it is a problem we must solve immediately, for ourselves. The impacts of a 1.5°C and 2°C world – extreme heat and weather, species loss, crop yield reductions, fishery decline, disrupted supply chains, public health crises and displaced communities – would arrive during our own working lives. We, not our children, would see how the dice are loaded. The heatwave that happened once every 50 years before industrialization would happen 9 times at 1.5°C and 14 times at 2°C.2
So, the staggering rise of corporate net-zero commitments comes at an auspicious time. Over the past three years more than 3,000 businesses, large and small, have made net-zero commitments now aggregated under the UN’s Race to Zero campaign.3 All of these meet a set of criteria in force as of this June.4 This momentum from businesses to build net-zero value chains can change our global trajectory. But net-zero commitments are also increasingly subject to five criticisms which implementation must address to be truly credible and transformative.
- The first criticism is that net-zero commitments divert attention from immediate abatement, effectively licensing short-term emissions. That is why companies with net-zero targets must also set and deliver an interim emissions reductions target following a 1.5°C trajectory, for example under the Science-Based Targets initiative, or as part of the Race to Zero campaign.5
- A second criticism is that net-zero commitments, which are typically based on a company’s fair share of global net zero carbon dioxide by 2050, should not be inequitable as between developed and developing countries. That is why, companies whose emissions footprint sits largely in developed countries who have high historical emissions, should aim to achieve net zero ahead of 2050.
- A third criticism is that net-zero commitments, by focusing attention on removals which net out emissions in the target year, divert attention from immediate climate investments outside the value chain needed to keep 1.5°C within reach. Companies can dramatically increase their impact on the climate crisis by not merely abating emissions in the value chain en route to net zero, but also compensating for emissions outside the value chain, for example by investing in climate solutions and methane reductions.
- A fourth criticism is that net-zero commitments may greenwash business-as-usual action. Building a net-zero value chain requires genuine business transformation across functions, from supply chain engagement and procurement, to finance, and research and development and product design. Net zero implementation then must demonstrate business transformation across these functions, including integration into the company’s business strategy with a clear climate action plan which has been vetted and approved by shareholders.
- Finally, a fifth criticism is that net-zero commitments perpetuate climate and environmental injustice, for example in BIPOC and low wealth communities. Here a company can support these communities through its net zero implementation. Renewable electricity can be purchased from companies with a proven track record of increasing energy access. Carbon credits can be selected which benefit these communities. Low-carbon products and services can be procured in a manner which improves the equitable distribution of benefits of the net zero economy. This is where net-zero implementation strategies intersect with equity in the sustainability agenda.
These criticisms point towards what climate leadership will look like in future. This includes:
- Selecting a net-zero target year earlier than 2050 if your footprint is largely in developed countries;
- Setting and delivering an interim emission reduction target consistent with a 1.5°C trajectory;
- Compensating for emissions outside the value chain enroute to your target year;
- Implementing business transformation across functions;
- Supporting communities which have suffered from climate injustice through net zero implementation;
- Using your company’s influence to advocate for policy which advances climate justice and which supports a just transition for all.
This can be a lot to ask of a company formulating its next climate target and implementation plan. But debate over net-zero commitments is heating up as COP26 approaches and will not slow down anytime soon. Listening to these concerns from the climate community helps companies to make their net-zero implementation commensurate to the crisis at hand.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.