Makes sense of the company’s net zero liability maze

Although the pace of change may be too slow for some, there is no doubt that net zero is more mainstream in the business world than it was, say, a decade ago.

According to the Net Zero Tracker, almost two-thirds (683) of the 2,000 largest listed companies in the world have now committed.

A recent white paper from Finnish start-up Compensate – Getting Claims Right – highlights many of the issues around net zero liabilities.

For example, it notes that some companies have set targets decades away but have not set emissions reduction targets over the next 10 years, or that some “routinely exaggerate or misreport” progress towards their net zero goals.

Compensate’s chief impact officer, Niklas Kaskeala, who has more than 15 years of experience in sustainability and climate change, said that over half of the largest companies in the world now have some kind of climate change, carbon neutrality or net zero goal.

But he added that there is a lot of ambiguity in these goals, particularly around how net zero is defined or how being carbon neutral is different.

“It’s a good thing that these goals are being set,” he said. “But what worries me is that they are not often followed up with actions that would be in line with the original goals.”

Kaskeala said the main priority for these businesses should be to reduce emissions and “do everything possible” to establish an emissions reduction trajectory, in line with the IPCC target of limiting global warming to 1.5 degrees.

He added that for most companies this would mean cutting their own emissions by 50% by 2030.

“If you set that path, then you’re in a good place,” he explained. “But even that is not enough. You must also take responsibility for the emissions you cause today, tomorrow and in five years.”

He said it is also important that all corporate commitments are based on science-based targets, such as the Net Zero Standard, which states that most companies will require deep decarbonisation of 90-95% to reach net zero.

“My argument is that you shouldn’t wait until 2040 and then use the carbon market to achieve your net zero commitments, you should do it today,” Kaskeala said. – The urgency of the climate crisis is so visible that we must act now.

And he said it’s also important to think about the quality of any carbon offset schemes a company uses and spread the money it has across multiple portfolio projects.

“When first-time buyers come into the carbon market, they don’t really know what they’re buying and it’s quite confusing. You have to “look under the hood” and see if a project actually has a real climate impact.”

According to the Norwegian tire recycling company Wastefront’s strategy manager and co-founder Christian A. Hvamstad, companies that seriously believe in net zero simply cannot rest on their laurels if they want to understand whether a green project can have a real effect.

“Too often, companies with ambitious net zero goals fail to live up to the goals they set,” he said.

“From board level to the factory floor, actions to follow through on well-intentioned promises can be sorely lacking. It is critical that companies put in place support to drive a transition across all levels and departments of their business.

“By setting goals that are left to sink into the background, some companies are failing their partners, investors and ultimately our planet. Instead, ESG goals must remain at the forefront of everything an environmentally friendly company does.”

The company recently announced a partnership with Newcastle University in the UK to conduct a study over the next 18 months to characterize and improve Wastefront’s recovered carbon black (rCB).

“Our partnership with Newcastle University is a clear example of how companies can show that actions still speak louder than words. By bringing in the best and brightest minds, we can ensure that our circular practices are at the forefront of industry innovation, said Hvamstad.

“It’s a clear statement of intent that shows we’re serious about meeting our goals, and going above and beyond to play our part in tackling climate change at scale.”

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