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How Your Business Can Avoid Net Zero Greenwashing

Updated: May 11, 2023

Since the adoption of the Paris Agreement in 2015, an unprecedented number of net zero commitments have been made by corporations and financial institutions. The intent of these net zero commitments should be to reduce greenhouse gas emissions in line with what science says is necessary to avoid catastrophic climate change by limiting global average temperature rise to 1.5oC above pre-industrial temperatures. It is critical that there is integrity and action associated with these commitments as our window to limit dangerous global warming is quickly closing. Unfortunately, lack of integrity of some companies’ net zero commitments have raised greenwashing concerns from citizens, consumers, environmentalists, and investors.


To develop more robust and transparent standards for net zero commitments made by businesses and other organizations, the United Nations (UN) established a High-Level Expert Group on the Net Zero Commitments of Non-State Entities (HLEG) in March 2022. The HLEG is chaired by Catherine McKenna, the former Canadian Minister of Environment and Climate Change.


At the 27th Conference of the Parties (COP27), the HLEG launched their report, a “how-to” guide, that businesses can use when defining their net zero targets and actions. The report stresses that businesses cannot claim to be net zero while investing in fossil fuels, lobbying against climate change, or reporting only some of their emissions. It clearly outlines ten recommendations that explain what businesses must consider during each stage of their progress towards achieving net zero and fighting climate change.


Recommendations


The ten recommendations are summarized as follows:


1. A net zero commitment should be made publicly by company leadership and should contain interim targets that are consistent with limiting warming to 1.5°C above pre-industrial levels.


2. Businesses must have short-, medium-, and long-term absolute emissions reduction targets across the value chain that are consistent with limiting warming to 1.5°C.


3. Businesses must prioritize urgent and deep emission reductions across their value chain. Voluntary purchases of high integrity carbon credits should not be counted towards interim emission reductions and only be made if required. All carbon credits should meet the criteria of additionality and permanence at a minimum.


4. Businesses must publicly disclose their net zero transition plans, which must cover all emissions reduction targets and business actions that will be undertaken to meet all targets and support a just transition. Transition plans should be updated every five years and progress should be reported annually.


5. Net zero commitments should include specific targets aimed at ending the use of fossil fuels. Renewable energy procurement targets should be included as part of net zero transition plans.


6. Businesses must lobby for positive climate action, not against it. They must align their external policy and engagement efforts to the goal of reducing global emissions by at least 50% by 2030 and reaching net zero by 2050.


7. Businesses should avoid the conversion of remaining natural ecosystems— eliminating deforestation and peatland loss by 2025 at the latest, and the conversion of other remaining natural ecosystems by 2030. Businesses should anticipate the final guidance of the Taskforce on Nature-related Financial Disclosures by factoring in nature risks and dependency to all elements of their net zero transition plans.


8. Business must annually disclose all emissions data, net zero targets, and their plans for and progress towards meeting those targets and their reported emissions reductions must be verified by independent third parties.


9. Businesses with operations in developing countries should demonstrate how their net zero transition plans contribute to the clean energy transition and economic development of the countries in which they operate.


10. Businesses should prepare for more regulation and standards in the areas of net zero pledges, transition plans, and disclosures.


By closely following the above recommendations, businesses can ensure that their net zero commitments are transparent and credible, which prevents ambiguity and greenwashing (United Nations, 2022).


Pathways to Action


The report also identifies a range of potential “pathways to action” or critical next steps to deliver on the recommendations. The following are some key actions that your business can take to achieve your net zero ambitions:


  • Review your net zero commitments against the ten recommendations above to see how you compare, with a focus on your interim targets, how your targets are set, and how your progress towards those targets is reported.

  • Support small- and medium-sized enterprises (SMEs) and microenterprises in your efforts to decarbonize your business. As SMEs are part of larger entities’ value chains, they are crucial to meeting net zero objectives.

  • Consult an independent third party to verify your emissions reductions reporting.


To learn more about additional steps businesses can take towards achieving net zero ambitions, please refer to the HLEG report.


How Achieve Sustainability Can Help


Achieve Sustainability can help you with setting science-based targets, developing and implementing your net zero plans, and reporting on your progress. We can also assist with engaging SMEs in your supply chain. Reach out today for a complimentary consultation.


References

1. United Nations (2022). COP27: ‘Zero tolerance for greenwashing’, Guterres says as new report cracks down on empty net-zero pledges. https://news.un.org/en/story/2022/11/1130317 Retrieved on November 22, 2022.


2. United Nations (2022). Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions. https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf Retrieved on November 22, 2022.




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