Know the jargon Net zero Carbon neutral

Carbon footprint

Key to both terms is the Greenhouse Gas Protocol (GGP) which sets out how to measure a business’ carbon footprint. Carbon is used as a generic term to represent all greenhouse gases.

‘Think of greenhouses gases in terms of currency,’ says Tim. ‘A tonne of carbon is given a value of one but other gases are far more potent. For instance, one tonne of methane has an equivalent value of 28. This potency is called global

The way a company’s carbon footprint is measured is broken down into three scopes – read more about this on page 13 – and each scope is investigated in terms of emissions.

Carbon neutral

What does it mean if an organisation is ‘carbon neutral’? There are different explanations, according to Tim, and they range from quite restricted boundaries to highly ambitious achievements.

‘You could say an organisation is carbon neutral if the amount of carbon dioxide (CO2) it produces is balanced, or offset, by carbon credits,’ he explains.

‘Other definitions go further and require more greenhouse gases to be taken into account.’

The minimal way of getting to carbon-neutral status involves looking at the emissions listed in Scopes 1 and 2 and offsetting them.

However, says Tim, ‘It’s best practice to not just stop at 1 and 2, but to also include the most controllable factors in Scope 3. Once you’ve actively tried to reduce your carbon footprint, any remaining emissions can be balanced or offset by carbon credits.’

Carbon credits

Buying carbon credits is a way for companies to financially support projects that help reduce carbon emissions.

These projects can be anywhere in the world and include the likes of windfarms and reforestation schemes. Some reduce emissions by providing an alternative source of power such as hydro electricity generation, while others suck up existing emissions from the atmosphere using direct-air-capture technology.

‘Where carbon is not directly drawn from the atmosphere, the number of credits available to buy for each project is worked out according to a predicted baseline,’ says Tim. ‘This looks at what a project will save in terms of emissions. For example, how much gas will not be used if a hydro dam is built. The hydro company can sell the difference as credits.’

The credits should be verified and come from a registered supplier like Verified Carbon Standard (Verra) and Gold Standard. They ensure the projects are legitimate and meet scientific criteria.

Net zero

Carbon neutrality is achievable within a short time frame, but net zero is a whole other ballgame. There are various definitions but the Science Based Target initiative (SBTi) has set out a protocol for larger companies. Unlike carbon neutrality, there is a final target in terms of reduction over a baseline, which means net zero cannot be achieved immediately.

In general, organisations have to make a broader commitment when looking at the various emissions from each scope.

A short-term target of five to ten years stipulates that 95% of Scope 1 and Scope 2 emissions are included in the plan. For companies with Scope 3 emissions that are 40% of their total emissions, at least 67% of those emissions should be considered.

The long-term target, which is likely to be met between 2030 and 2050, states that 90% of Scope 3 emissions are included – and that’s for all companies, not just those with more than 40% of their emissions in Scope 3.

Once this target has been met, the remaining 10% can be offset, but only through credits for projects that involve permanent removal and storage of carbon from the atmosphere.

Companies have only achieved net-zero status when they’ve completed this long-term target.

Future-proofing

‘Both carbon neutrality and net zero are about trying to do the right thing,’ says Tim.

As companies start identifying their targets, they will also find themselves looking at their suppliers to see what actions they’re taking.

‘It may seem daunting but it’s about working in a drip-feed way and completing the process over a realistic time frame. When you look ahead to 2050, you can see there is time for transition,’ says Tim.