There are many ways to define carbon neutrality. Understand and choose your path.
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Why you should take this step
Welcome to the first step in your journey to becoming a carbon neutral business! Without a doubt, you are among the world’s first-movers to commit to carbon neutrality – perhaps even the first in your industry, country or community! Naturally, you have many questions about how to clearly define your ambition, and you may not know where to look for advice. Don’t worry: we’ve achieved it, and we’re ready to share what we learned along the way!
Questions on your mind
What emissions is my company responsible for?
How much time will it take to achieve carbon neutrality?
Are all approaches to carbon neutrality equally credible?
Is carbon neutrality “greenwashing”?
How much will this cost my business?
SET YOUR BOUNDARY
Your carbon neutrality pledge needs a defined emissions boundary or limit, stating which emissions it includes and which it excludes. To be carbon neutral, you will have to reduce or offset all the emissions you include in your pledge. The minimum carbon neutrality claim must address direct emissions (Scope 1) and indirect emissions from purchased electricity (Scope 2).
Which scopes will you include?
Carbon neutral product
Includes all direct and indirect emissions in a product’s life cycle (Scope 1, 2, 3 in the Greenhouse Gas Protocol). For a manufacturing business, emission calculation begins at natural resources extraction and ends at the product’s end of life.
Carbon neutral business
Includes your link in the supply chain: the CO2 emissions you can influence (Scope 1, 2 and part of Scope 3). For a manufacturing business, emission calculation begins as material leaves your supplier and end as your product passes to a customer.
Tip
Incorporating Scope 3 emissions into your carbon neutrality claim is optional, so decide which to include based on your most significant footprint. For example, if your industry has high transport emissions, you can choose to include these in your boundary and claim ‘carbon neutral transport’.
Set your timeline
You should ideally focus on reducing your emissions internally before you start to offset. In terms of climate impact, reducing your immediate carbon footprint is considered a better option than compensating via offsets. Realizing significant reductions in your footprint, however, can take time and sometimes requires considerable investment, whereas offsetting can be done immediately. You should expect to look at a combination of both reductions and offsetting as part of your strategy, with various emphasis depending on whether you have decided on a shorter or longer timeline.
Timeline options
Short term (1-2 years)
Creates a sense of urgency, but you may have to compromise on the extent of your commitment. You may have to purchase more carbon offsets, if you don’t have time to significantly reduce emissions from your business (Step 6).
Long term
Allows you to take responsibility for more emission types. You will have more time to collect data, change the way you work and reduce your biggest emission sources, rather than opting for the quicker (and less impactful) offsetting option.
Allocate resources
One thing is sure: you need to allocate resources to your carbon neutrality program. But, you can generate sufficient savings to cover your program costs. These savings will appear as you analyze emission data, revealing opportunities for improved efficiency or more affordable electricity sources within your business.
Assemble your team
Take a good, hard look at your organization. The skills and competences in your team may not match what is required to achieve your pledge and you will most likely need to commission some external help. You need to be realistic and transparent from the outset, as you do not want to be stuck in a situation where you cannot promote your pledge or, worse, cannot fund the measures that will make your company carbon neutral.
Reflection point
Has your company ever published a Sustainability Report?
A Sustainability Report is a company’s most important resource for sustainability programs and data. As part of the report, your company most likely articulated a sustainability strategy, implemented programs and collected data – perhaps even on emissions. As such, the report itself and the reporting cycle behind it are useful starting points for several steps of your carbon neutrality pledge.
A Sustainability Report reveals your strategic direction, established data collection processes and historic data. If you don’t have this report, your carbon neutrality pledge may be your company’s first major sustainability program! In this case, be realistic when defining your ambition. Achieving carbon neutrality without a history of sustainability within your company will take extra effort.
Does your company have a Sustainability department, with a budget?
This is a great foundation, which indicates your organization has commitment, expertise and perhaps even sustainability policies in place, on which you can build your carbon neutrality pledge. Make sure to utilize this in-house capacity, and secure their time and support as an anchor point for your company-wide effort.
Don’t worry, there isn’t a right or wrong organization set-up. Rather, the key is that you assign clear responsibility for each element of your program. To drive holistic change, you’ll benefit if your Business Strategy and executive functions contribute to, or own, your program. Avoid making your pledge the responsibility of a single department, such as Environment, Health and Safety.
Does management understand and support your carbon neutrality pledge?
Congratulations! This gives you a huge advantage and opportunity to amplify your efforts. Make sure to leverage their support during engagement activities inside and outside your organization. Position your senior leaders as active ambassadors and spokespeople when communicating the benefits of your program to your stakeholders. The more authentic voices you have, the better!
Clearly you have some support, or you wouldn’t have been able to make your pledge! But, there are always sceptics and stakeholders who take longer to buy in. Invest the necessary time and energy into bringing these critics onboard, using facts, data and engaging examples of the benefits for their department and your whole business. Customize your pitch to their specific situation when possible.
Does your company have a process for calculating its carbon footprint?
Existing data gives you a huge advantage, perhaps indicating the amount of emissions you need to reduce and offset to reach a net zero carbon footprint. This data also makes it easier to establish your carbon neutrality timeline, budget and project team. If you haven’t done so already, ask an external expert to review your carbon footprint methodology to ensure you follow the appropriate standards.
To go carbon neutral, you need to know your starting point. Consider signing a partner who is an expert in measuring corporate greenhouse gas (GHG) emissions, also known as GHG accounting. You’ll rely on your baseline data at key moments throughout your carbon neutrality pledge, to determine how much you reduced your emissions and demonstrate the business case behind your program.
Does your company have emission reduction programs in place?
That’s great! The program owners should be your key allies, as they have first-hand experience with reducing emissions. Engage and learn as much as you can from them to enable you to further reduce your emissions. However, be aware: Initiatives that work in one part of your business may not automatically work in other parts. Continue your journey through our 10 Steps for added inspiration.
You have a big task ahead of you! Without ongoing emission reduction activities already established, you will have to design and implement them yourself. Continue your journey through our 10 Steps (particularly Step 6), and we’ll help guide you along the way.
Things to consider
There are multiple ways to reach carbon neutrality – carbon neutral company, carbon neutral product or based on Science Based Targets.
A life-cycle approach may contribute to double counting as other companies in your supply chain eliminate/offset the same emissions.
Carbon neutral may not be the end goal – you could raise the bar and become carbon positive.
The LM Wind power Way
Our boundary
We decided to go beyond the minimum requirements of carbon neutrality (Scope 1 and Scope 2 emissions) to include the emissions over which we have operational control.
How we built our business case
Christopher Springham, VP Global Communications & Sustainability, shares how we established our Sustainability function and created the business case for carbon neutrality.
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