|  April 29, 2024

🕓 Reading time 8 minutes

Table of contents

1. Introduction: What does net zero mean?

2. The origin of “Net Zero” in the SBTi Corporate Net Zero Standard

3. What is the difference between “Net Zero” and “Climate Neutrality”?

4. Who is affected by the net zero requirement?

1. Introduction: What does net zero mean?

Net zero is a term that is increasingly used in discussions about Climate protection and sustainable corporate management. But what does it mean exactly and how does it differ from similar concepts such as Climate neutrality?

The term “net zero” was largely coined by the Corporate Net Zero Standard of the Science Based Targets initiative (SBTi) This standard was developed to provide companies with a scientific basis on which to base their emissions reduction strategies.

It aims to limit global warming to 1.5°C by far-reaching emission reductions and real climate protection measures It provides clear definitions and guidelines on how companies can radically reduce their greenhouse gas emissions, before them about Compensations ponder.

To achieve “Net Zero” according to the most stringent standards, such as those of the Science Based Targets initiative (SBTi), the inclusion of Scope 3 emissions The SBTi Net Zero Standard explicitly requires companies to implement measures to reduce emissions beyond all three scopes with a particular focus on the extensive and often neglected Scope 3-emissions.

2. The origin of “Net Zero” in the SBTi Corporate Net Zero Standard

The SBTi's Corporate Net Zero Standard requires companies to reduce their emissions by at least 90-95% compared to a specified base year before they can even consider offsetting. This approach is based on the latest climate science and ensures that companies make real changes to their CO2 balance rather than relying on external compensation that may have less impact.

Scientific basis

The setting of this standard is based on the latest climate research, which clearly shows that significant and immediate reductions in greenhouse gas emissions are essential to achieve the goals of the Paris Agreement. The SBTi uses comprehensive scientific data to ensure that its targets not only ambitious, but also realistic and technically feasible The standard considers various scenarios and models from climate science to increase the likelihood that the targets set can limit global warming to 1.5°C above pre-industrial levels.

Reduction before compensation

The clear focus of the standard on reducing emissions before any compensation is crucial. This prioritization helps companies fundamentally rethink their business models and focus on innovations and efficiency improvements that lead to real emission reductions. Offsetting, although useful, should be viewed as a last resort to address residual emissions that remain after maximum reduction efforts. This prevents companies from resorting to the often-criticized "buying of Climate neutrality“, in which emissions are offset by payments to external projects without directly reducing their own emissions.

transparency

Another key element of the Corporate Net Zero Standard is the requirement for transparency. Companies that commit to achieving this standard must report regularly and in detail on their progress. Reports are made publicly available, which enables stakeholders, including investors, customers and civil society, to assess real progress.

3. What is the difference between “Net Zero” and “Climate Neutrality”?

In the context of corporate environmental strategies, the term “Climate neutrality“ widely used, but often misunderstood or simplified in its meaning. Traditionally, Climate neutralitythat a company’s CO2 emissions fully offset by compensation measures for example, by purchasing CO2 certificates or supporting reforestation projects. This method allows companies to continue to emit greenhouse gases, as long as these emissions neutralized elsewhere become.

Science-based reduction before compensation

In contrast to the “Climate neutrality“The SBTi’s Corporate Net Zero Standard calls for a significant reduction in emissions across Scope 1, 2 and 3, before Offsetting should be considered. Companies must reduce their direct and indirect greenhouse gas emissions by at least 90-95%. This is based on the scientific evidence that drastic emissions reductions are necessary to prevent the worst impacts of climate change.

Scope beyond Scope 1, 2 and 3

To achieve “Net Zero” according to the strictest standards, such as those of the Science Based Targets initiative (SBTi), must the emissions across Scope 1, 2 and 3 To achieve Climate neutrality There is no standardized scope. Some programs and certificates allow companies to focus on Scope 1 and Scope 2 Ideally, the inclusion of Scope 3-Emissions, to ensure a holistic and effective climate strategy, especially in sectors where these emissions account for a large proportion of total emissions. Communication should always transparent be made, over which scope the Climate neutrality extends.

Long-term responsibility and real change

This approach forces companies to Rethink core processes and practices and invest in more sustainable technologies and methods. It's about bringing about a real transformation in the way companies operate, rather than relying on external projects that may not have the same long-term impact or direct relevance to their own emissions. The reduction commitment before offsetting promotes more profound and lasting changes in the business world that go beyond mere numbers.

Criticism of traditional climate neutrality

Traditional methods of Climate neutrality can sometimes lead to “greenwashing”, where the actual environmental impact of a company concealed by the compensations There are concerns that such compensation measures are often not adequately reviewed in terms of their effectiveness and sustainability. Furthermore, the emphasis on compensation could push much-needed innovation within the company into the background. 

4. Who is affected by the net zero requirement?

The demand for net zero emissions comes from a broad coalition of stakeholders, including governments, international organizations, non-governmental organizations, investors and civil society. Within the framework of international agreements such as the Paris Agreement, many countries are obliged to achieve net-zero emissions by the middle of the century. This Pressure on industry to formulate and implement appropriate climate targets.

Is the SBTi Net Zero Standard mandatory for CSRD-compliant companies?

The CSRD requires companies to comply with the ESRS E1 Standard report on their climate impacts and disclose how their strategies contribute to achieving climate goals. This includes information on greenhouse gas emission reduction targets and the methods used.

Although the CSRD does not explicitly mention the SBTi Net Zero Standard, it encourages companies to align their reporting with internationally recognized frameworks and standards. Many companies therefore choose the SBTi as a basis for its objectives, since this is Gold standard for science-based objectives is considered and widely recognized.