What Does “Net Zero” Actually Mean, and How Do You Get There?

Among occupiers and publicly traded landlords, “carbon” is a term has come up more frequently around the board room, and Cushman & Wakefield notes that COVID-19 has only amplified the conversation. “With fewer people in the office over the last year, significant reductions have been achieved through changes in daily business operations, supporting many companies in their quest to become more sustainable,” write the firm’s Melissa Gutierrez-Sullivan and Gary Graham. 

“Now, as businesses start to look past COVID-19, they are viewing carbon reduction as a critical step to mitigating climate change, recruiting and retaining employees, and better serving their customers, shareholders and stakeholders,” they continue.

Spurred by demand from customers, as well as pressure from investors and employees, the number of companies that have pledged to become “net zero” has increased in recent years. Many are moving their targeted timeline up to 2030 from the initial goal of 2050, write Gutierrez-Sullivan and Graham. 

“But with so many companies setting ambitious goals and talking about becoming ‘carbon neutral’ or achieving ‘net zero,’ what does that actually mean?” It’s a question that is being asked more frequently, and Gutierrez-Sullivan and Graham offer this answer:

“Carbon neutral is a term used to describe a situation where organizations have ‘offset’ or balanced out the amount of carbon they emit into the atmosphere through an equivalent amount
of carbon reduction and/or savings elsewhere. 

“Net zero carbon, on the other hand, means any carbon produced during the organization’s operation requires an investment in a projectthat removes the equivalent amount of carbon from the atmosphere. These terms are often used interchangeably today as most organizations are incorporating the strategy to meet their goals— reduce emissions, utilize clean energy sources and offset any remaining emissions. They can apply to an entire organization, or only to certain ‘scopes’ pertaining to their business.”

However it’s defined, there are essentially three different steps to achieving net zero emissions: 

1. Set a baseline. Calculate carbon emissions and other greenhouse gas emissions created by business activities. 

2. Reduce emissions wherever possible through increased efficiencies and investments in on- site renewable energy. 

3. Balance the remainder of emissions through purchasing carbon offsets. 

In order to gauge the extent of a company’s contribution to global warming, it’s first necessary to calculate the company’s carbon footprint. Unfortunately, Gutierrez-Sullivan and Graham note, “the definition of carbon neutrality is vague, and it is increasingly viewed as common and is not much of a differentiator.”

Instead, companies that want to demonstrate their commitment to climate change increasingly are adopting the Science-Based Targets initiative (SBTi), which independently assesses whether a company is aligned with the carbon emissions reduction requirements outlined out in the Paris Climate Agreement. “If a company is not on track, SBTi helps guide the company to determining the number of reductions needed each year to achieve the company’s end goal and timeline.” 

For occupiers, next steps will vary. “If you’re just starting, it’s a great time to educate yourself” on matters related to carbon and greenhouse gas emissions, advise Gutierrez-Sullivan and Graham. “Work with
your team and key stakeholders to determine if reducing your carbon footprint is in line with your values and goals. If you decide to pursue any sort of carbon neutrality, it is best to have someone on your team who can guide you through the process.”

For those with more experience in sustainability and reducing carbon, “next steps would be to make sure you’re in line with SBTis and getting your program third-party verified. Another initiative might be to move up your carbon neutrality timeline. 

“No matter where you are in your carbon journey, these initiatives will help you and your company be better stewards of the planet, increase investor attention and prove to your employees and customersthat you’re standing behind your commitment to them and future generations.”