One of the most critical aspects of corporate net zero targets is the range of emissions sources covered by the target boundary. The target boundary determines whether a company commits to addressing the most significant emission sources in its value chain. In some cases, companies set targets that cover only their operational emissions or activities in specific geographic areas. In other cases, companies set targets only for products or activities within their value chain.
The combination of measures used to achieve the targets determines how effectively a company eliminates its impact on climate. Three common mitigation strategies are abatement, compensation, and neutralisation.
Emissions abatement corresponds to measures that prevent the release of greenhouse gases into the atmosphere by reducing or eliminating emission sources associated with a company’s operations and value chain. Neutralisation is the removal and permanent storage of atmospheric carbon. This measure can, in theory, neutralise or offset the effects of releasing CO2 and other greenhouse gases into the atmosphere. Compensation measures commonly used by companies include direct investment in emissions reduction activities, purchasing carbon credits, and avoiding emissions using products sold.
Another critical aspect determining the ambition and impact of a company’s net zero targets is its timeframe. Unlike greenhouse gas emissions reduction targets, which typically express the expected change in emissions between a base year and a target year, corporate net-zero targets typically specify a target year by which the company is expected to have achieved a state of net-zero emissions.
In the current landscape of net-zero targets, long-term net-zero targets often imply widespread emissions reductions and actions to offset or neutralise the emissions that are not reduced.
At the COP26 climate change conference in November 2021, Prime Minister Narendra Modi committed India to achieving ‘Net Zero’ emissions by 2070 and strengthened the country’s 2030 commitments.
The new Business Responsibility and Sustainability Report (BRSR) will apply from the 2022-23 fiscal year to the top 1,000 listed companies. The Reserve Bank of India, too, has joined the global Network for Greening the Financial System, to mobilize capital for green and low-carbon investments
There are several transition pathways, each with different impacts on our climate, nature, and society. Actions that limit warming to 1.5°C, with little or no overshoot, require achieving net CO2 emissions by 2050 at the latest, accompanied by a rapid decline in non-CO2 emissions. This would be achieved through rapid and profound changes in global energy, industrial, urban, and land systems which include
Companies must shift to business models that create value for stakeholders without causing greenhouse gas accumulation in the atmosphere. Transitioning to net zero is such a daunting task that companies often assume it is impossible to accomplish while maintaining their profit margins. It is possible for companies to transition to net-zero business models profitably, especially compared to a future of inaction. Companies that ignore or postpone these opportunities could be caught unprepared when customers, investors, and policymakers increasingly demand that they reduce carbon emissions. Hence, companies with significant emissions are likely to be more affected by transition risk than other companies.
We help organisations identify and prioritise climate risks and opportunities, understand current performance relative to peers, and assess the value implications and change needed to mitigate climate risks. We evaluate the business, develop, and implement business strategies that focus on sustainable development issues and help align the company’s operating model with its net-zero strategy.