The Intergovernmental Panel on Climate Change’s (IPCC) report published late in 2018 calls for a net zero economy by 2050 but the commitments to emission reductions made by countries under the Paris Agreement of 2015 leave a sizeable gap in where we need to get. Business action is critical, but what steps are corporates taking to deliver action and impact now while policymakers continue their discussions?
Microsoft’s internal carbon tax, UPS’ carbon neutral shipping option, and VMware reaching its carbon neutral goal two years ahead of schedule are just a few examples of companies leading the way on climate action through their carbon neutral commitments. But with time getting tight to meet the 1.5 degree target, carbon neutrality needs to extend beyond a group of inspirational leaders. Climate change risks are impacting businesses of all sizes and sectors, and the benefits from taking meaningful action now are available to all: reduced costs through operational efficiencies, meeting investor expectations, attracting and retaining talent, and building resilience in supply chains. Companies can make and meet carbon neutral targets today through internal reductions and financing of verified emission reductions.
To further uncover the application and impact of carbon neutrality in business, in 2018 Natural Capital Partners conducted a series of roundtable discussions through the UN’s Talanoa Dialogues. We convened 61 corporates, with revenues totaling over US $1.3 trillion, in seven events across the EU and the US, to explore how private sector commitments to net zero emissions will support higher ambition in the Paris Agreement.
Through the discussions we found that companies are increasingly using carbon neutrality to establish an internal price on carbon, to shift climate action from compliance or corporate responsibility responses to business strategy, and to earn the reputational benefits from delivering action and impact. To achieve these goals, successful carbon neutral strategies have focused on:
- Reducing emissions through investments in internal efficiency measures that reduce costs and align with targets informed by climate science
- Decarbonizing consumed electricity and gas by direct production or purchase of renewable energy and the retirement of energy attribute certificates (EACs)
- Financing verified emission reduction projects, and aligning projects with specific business objectives, driving low carbon sustainable development, building resilience in supply chains and delivering impact on the UN Sustainable Development Goals.
Despite the range of benefits, making the commitment to start a carbon neutral program continues to be challenging for many. The CarbonNeutral Protocol sets the standards and criteria for companies to ensure their carbon neutral action is clear, transparent, of the highest quality, and aligns with current methodologies, such as the GHG Protocol. At its core, market-based carbon pricing gives a high degree of flexibility in finding cost-effective solutions to deliver immediate emission reductions. As a result, the price of carbon paid by a company goes to emission reduction projects and activities that make an immediate positive impact.
The IPCC’s report had a simple call to action: “the world needs to build a net zero economy by 2050”. Our discussions demonstrated that companies are using carbon neutral programs to lead the way to that single most important goal. And importantly, corporates will not wait until 2050 to deliver results.
By Melissa Vernon, Director of Client Engagement, Natural Capital Partners SPONSORED CONTENT