A warming planet and a decarbonizing economy have exposed businesses to a number of new physical, regulatory, and market-based risks. For companies around the world, reaching net zero is quickly becoming imperative. In just over two years, the share of publicly listed companies with net zero targets has more than doubled.

Those who haven’t yet set targets should embrace the many opportunities of a net zero journey, including better corporate reputation, stakeholder relationships, and resilience in the face of a changing climate and evolving regulatory standards.

But net zero has become so interchangeable with other climate action jargon that it’s important to take stock of what it really means and what it takes for businesses to meet net zero standards.

Download the complete guide that details four key steps every company can take to achieve net zero.

What is net zero?

Net zero means causing no overall increase in greenhouse gasses (GHGs) in the atmosphere and therefore not contributing to climate change.

Net means on balance, overall, or, in this context, considering the balance between GHGs fluxes into and out of the atmosphere.

Zero here simply means zero emissions of GHGs.

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A worldwide net zero society is one that experiences no overall increase in greenhouse gas emissions. In practice, this looks like very few actual emissions (<10% of current emissions) and investment in carbon removal technology to effectively ‘neutralize’ those few remaining emissions.

From a corporate perspective, the definition is much the same. The SBTi defines net zero as reducing scope 1, 2, and 3 emissions to zero or a residual level and permanently neutralizing residual emissions at the net zero target year and beyond (through carbon removals).

Why net zero?

According to the world’s leading climate scientists at the IPCC, achieving net zero globally by mid-century is crucial for maximizing our chances of limiting warming to 1.5°C and mitigating some of the more catastrophic effects of global climate change.

For corporates, the benefits of net zero go beyond contributing to a stable planet. Climate commitments improve corporate reputation and stakeholder relationships, can foster engaged cultures and improve talent attraction and retention, and also improve resilience to prepare for exposure to the physical and transition-related risks of climate change.

Proactive leaders and stakeholders know that the next few decades will look dramatically different from decades past. The opportunities are clear, but the risks of inaction also loom large. From supply chain disruptions to reduced capital availability, reputational damage, and plummeting asset values, continuing with ‘business-as-usual’ is a losing strategy.

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