What is net zero?
Net zero refers to reducing our greenhouse gas emissions to as close to zero as possible while removing any remaining emissions with carbon removal solutions, such as direct air capture or afforestation. With net negative emissions, we can take this one step further by removing more CO₂ than we emit, addressing the excess of historic CO₂ already in our atmosphere.
Why is net zero so important?
Reports from renowned bodies like the IEA and the IPCC consistently highlight the need for immediate action to address the climate crisis within the next decade. In response, there has been a notable surge in the adoption of decarbonization commitments. Companies are swiftly and assertively taking net zero measures by diminishing their emissions and working to neutralize any residual environmental impact. But despite some good progress here, carbon emissions continue to rise globally. We still need more businesses to take action, and we need innovation within those industries which present greater challenges for decarbonization, such as iron and steel manufacturing, as well as transportation modes like aviation, shipping, and road haulage. At present, existing climate policies are projected to lead to a global temperature increase of at least 2.7°C by 2100, far surpassing the 1.5°C target outlined by the Paris Agreement. That’s why companies pledging net zero targets need to strengthen their climate strategies now in order to deliver.
How can companies achieve net zero?
Global warming is the greatest challenge humanity has ever faced, but there is a clear route ahead to change things for the better. The most important component is drastic emissions reductions— by emitting less CO₂ to begin with, there will be less CO₂ to cancel out with carbon dioxide removal. More specifically, the Science Based Targets initiative, or SBTi, has stressed that we need to reduce emissions by at least 90% by 2050 and remove the remaining 10%.This is consolidated by the latest report from IPCC, which outlines that drastic emissions reductions will not be enough to get us to net zero and, in doing so, limit global warming to 1.5°C. To reach net zero, companies will need to both reduce their emissions drastically and actively remove their residual emissions from the air.
Both reductions and carbon removal are key in our guide to building your company’s net zero strategy – but let’s talk through the entire process step-by-step.
Step 1: Measure your baseline
The typical starting point for any net zero strategy is to assess your company’s greenhouse gas emissions. This is known as carbon footprinting and provides a baseline from which to establish current environmental impact, including major emissions sources, so you can begin the work of identifying lower carbon alternatives. To measure this baseline as a business, you will need to work across these three scopes:
Scope 1: This includes your company’s direct greenhouse gas emissions. The key word to remember here is “burn,” as we’re talking about the emissions your company directly releases from the burning of fossil fuels — I.e., via boilers, furnaces, and vehicles.
Scope 2: This includes your company’s indirect greenhouse gas emissions. The key word here is “buy,” so consider your purchasing of electricity, heat, or steam.
Scope 3: This is a broad scope that includes 15 different categories in total, spanning all indirect emissions not covered in Scope 2. The key word here is “beyond,” as these emissions are often beyond an entity’s control but can account for more than 70% of a company’s carbon footprint. Upstream, this might include emissions from external parties who source, extract, produce, or transport the raw materials and components used by a business. It might also include employee commuting and business travel. Downstream, it might also include the logistics involved in using or disposing of company produce and activities such as investing or franchising.
While calculating Scope 3 is a challenging endeavor, you should be able to start with Scope 1 and 2 before referring to resources such as the EPA Corporate Center for Climate Leadership for Scope 3 guidance. Once you’ve used all three scopes to measure your emissions baseline, you can begin the work of assembling your net zero strategy.
Step 2: Set science-based targets
From your baseline, the next step is to plan science-based targets in line with the SBTi’s Net Zero Standard framework, in which it’s detailed that companies much commit to halving emissions by 2030 and approaching net zero emissions by 2050. To achieve this, companies must set near-term and long-term targets, both of which require emissions reductions across Scope 1 and 2, but particularly 3. Here’s a brief overview of each:
Near-term science-based targets are to be met within 5 – 10 years and address emissions across Scope 1 and 2. However, in cases where a company’s Scope 3 emissions make up more than 40% of their emissions, it’s also necessary to cover two-thirds (67%) of Scope 3 emissions in near-term targets.
Long-term science-based targets are to be met by the year 2050 or sooner. These cover 95% of Scope 1 and 2 emissions and 95% of Scope 3 emissions. To effectively reach “net zero,” a company must have demonstrably reached its long-term science-based targets.
Step 3: Build a reductions roadmap
Once you’ve set your baseline and agreed on the parameters for your science-based net-zero strategy, building a reductions roadmap must be your next priority. As detailed in the IEA’s recent Net Zero by 2050 roadmap, there are various milestones that policymakers and world leaders must follow over the coming decades, particularly in investing in low-carbon technologies and clean energy research and development. Here are some examples of how businesses can support this trajectory and minimize their ecological carbon footprint...
Transitioning to renewable energy sources such as solar or wind power. This decreases our reliance on fossil fuels and helps to cut down emissions, as outlined in the COP26 letter on the importance of clean energy.
Implementing energy-efficient practices, such as building insulation optimization, investing in energy-saving appliances, and adopting lighter transportation methods such as walking on foot or taking public transportation.
Encouraging remote work or flexible schedules for employees. This can contribute to emissions reductions by minimizing company-wide commutes.
Prioritizing sustainable procurement practices by favoring suppliers who adhere to environmentally friendly standards.
Adopting recycling and waste management initiatives within your business operations to reduce the emissions associated with waste disposal.
With a comprehensive approach that factors in areas such as these, companies can make substantial strides in reducing their carbon dioxide emissions. However, emissions reductions must be combined with carbon removal to have a true impact in the race to net zero.
Step 4: Commit to carbon dioxide removal
Once you’ve completed steps one, two, and three, you’ll have a better understanding of exactly how much of your residual emissions you’ll need to remove. Now’s the time to start buying carbon dioxide removal in parallel with your reduction efforts; back planning your removals to ensure you deliver on your targets. There are many carbon removal solutions on the market to choose from – spanning nature-based, hybrid, and technological – you can visit Mckinsey’s buyer’s perspective guide for advice on which solution is right for you. Most approaches either seek to restore and protect nature’s innate capacity for CO₂ storage (as with afforestation) or support the natural world by removing CO₂ from the air at scale (as with direct air capture). But no matter which solutions a company selects, it’s important to ensure the chosen services are high-quality. Here are some examples of non-negotiable criteria to look out for as outlined in Shopify’s carbon removal buying guide:
An impactful carbon removal solution must be net negative, I.e., remove more CO₂ from the atmosphere than it releases over its lifecycle.
Carbon removal suppliers should be able to measure and verify the quantity of CO₂ that has been captured and removed so that you can track your progress.
Carbon removal solutions should be truly additional, which means that without your purchase, the CO₂ would stay in the atmosphere.
As more players enter the carbon removal market, it’s essential to know your supplier is deploying their service in a responsible, trustworthy way. That means the solution is safe and works in harmony with the environment.
Aside from these considerations, it’s also likely your business will want to investigate the durability and capacity of prospective carbon removal suppliers. In terms of durability, carbon removal solutions can be roughly understood as fitting into the following categories: permanent, low risk of reversal, long-term temporary, high risk of reversal, and short-term temporary.
To go into more detail, a permanent solution, such as underground mineralization, traps CO₂ for over 10,000 years, which is as close to permanently removed from the atmosphere as we can get. A solution with a low risk of reversal, such as biomass buried in an anoxic environment, can remain dormant permanently unless disturbed. Long-term temporary solutions, such as biochar which decays slowly in soils, will eventually re-release their stored CO₂ back into the atmosphere. High risk of reversal solutions, such as forests, mangroves, or grasslands, store carbon in a short-term carbon cycle but will naturally release their CO₂ if they die after 50 – 100 years. And lastly, there are short-term temporary solutions, for example, where landowners are incentivized to wait for a time before harvesting their trees (to maximize their absorption of CO₂).
Ultimately, solutions with permanence or a low risk of reversal are preferable due to the imbalance of carbon dioxide already in our atmosphere due to the burning of fossil fuels. With solutions that re-release their captured CO₂ in less than 100 years, there’s a risk that your business’s investment will be lost before we’ve slowed climate change. That’s why it’s important to consider durability when broadening your portfolio to include high-quality tech solutions, such as DACS.
As for what you should look for in terms of capacity, it’s a question of which carbon removal solutions your business is choosing to support and, in doing so, helping to scale up. As recommended by climate experts, we need to remove billions of tons of CO₂ from the atmosphere before 2050. We can’t do this through natural solutions alone – afforestation, for example, can’t be scaled to the required levels as it demands far more land area than we can possibly provide. Equally, many technological solutions, such as DACS, haven’t yet moved down the cost curve and can be too expensive to invest in alone. Therefore, an effective carbon removal portfolio should include natural solutions, particularly for their additional environmental benefits, such as encouraging biodiversity, but also prioritize solutions with the capacity to capture CO₂ at the enhanced scale we need. Direct air capture, as an example, can remove 4,000 tons of CO₂ from the air each year on a land area of 0.42 acres. This same area would host 220 trees with an estimated capacity of 22kg each (source), i.e., only 4.62 tons of CO₂ per year.
Step 5: Lead the race to net zero
By incorporating carbon removal services into your climate strategy, your business demonstrates proactive climate leadership and takes a comprehensive approach (as recommended by SBTi) to achieving its net-zero goals. But beyond this, early participation in the nascent carbon removal market also enables your business to...
Contribute to the scale-up of new technologies and help shape a robust carbon removal market.
Secure future supply and demonstrate preparedness for the regulatory market.
Support opportunities for economic growth and job creation in this emerging sector.
Demonstrate a commitment to environmental stewardship and position itself as a leader in sustainability, appealing to environmentally conscious consumers and investors.
At present, less than 10,000 tons of CO₂ has been removed from the atmosphere, and we need to reach multiple billions of tons every year by 2050 to reach net zero. With carbon removal, businesses can make a tangible impact on mitigating climate change while simultaneously fostering the growth of a resilient and prosperous low-carbon economy.
Interested to learn more?
Discover how we’re using technology to fight climate change in: Direct air capture: our technology to capture CO₂.
What happens once we capture CO₂ from the air? Find out in: What is geological CO₂ storage?
Learn how to assess the quality of CO₂ removal solutions in: Transparency in the carbon removal market.
Lead the race toward net zero
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