Explainer: Net zero business planning

‘Net zero’ is the state in which no net greenhouse gases are added into the atmosphere – i.e. any gases emitted are balanced by emissions that are permanently removed. This can only be achieved if greenhouse gas emissions are reduced to the lowest possible levels. 

Enough countries, regions and cities around the world have already committed to achieving net zero to cover 83% of total global emissions, 91% of global GDP, and 80% of the world’s population, according to Net Zero Tracker. But pledges made by local and national governments will not result in achieving net zero unless individuals and companies change the way they operate. 

This is something the global business community is starting to take on board. According to Net Zero Tracker, more than one-third of the world’s largest publicly traded companies now have net zero targets, up from one-fifth in December 2020. However, the organisation’s annual stocktake found that 65% of corporate net zero targets do not yet meet minimum procedural standards of robustness. 

In the UK, many companies involved in infrastructure delivery have aligned themselves with the government’s 2050 net zero target date while others, for example in the water sector, have pledged to get there earlier. 

There are many reasons why a company might choose to become a ‘net zero business’. The primary one is to halt global warming. As Carbon Trust associate director Dominic Burbridge says: “It’s about being part of the solution, not part of the problem. Every business in the world should be working to lessen the effects of climate change, not contributing to it, and the best way to do that is to become net zero.” 

There are also sound business reasons for adopting sustainable business practices, such as complying with emerging regulations; responding to pressure from stakeholders; winning tenders; getting onto procurement frameworks; and attracting and retaining staff. Businesses could be at risk of non-compliance, supply chain instability and being exposed to extreme weather events if they do not do all they can to cut greenhouse gas emissions. And, as FM Conway sustainability director Matt Tallon points out: “Saving carbon can save money, so the time and effort in doing so can pay for itself.” 

To reduce your carbon footprint, you need to know what it is now, so the first step is to define and measure the emissions associated with every activity and item that is currently in your organisation’s value chain under Scopes 1, 2 and 3.

This data enables the business to understand the environmental consequences of its operations and work out where to prioritise its efforts on the pathway to net zero. There are various organisations such as the Carbon Trust and Planet Mark, as well as commercial consultancies, that can advise on how to calculate and measure this baseline. 

Once you have a baseline of the greenhouse gas emissions within your organisation, you can establish science-based net zero targets and a net zero strategy. The Science Based Targets initiative (SBTi) provides guidance on how to decide on a timeframe for achieving net zero and how to set appropriate short-term and intermediate targets leading up to the end date. 

Intermediate targets are essential to ensure that the net zero strategy starts to have an impact on emissions straight away. Any business aiming to be net zero by 2050 should have measures in place to halve its emissions by 2030.

Having defined and measured your existing carbon footprint, you will be able to see exactly where your emissions are coming from, and your strategy will identify what needs to be done to reduce and – ideally – eliminate them. For most office-based organisations, the biggest carbon impacts come from the energy needed to run the office and from business travel. Switching to a renewable energy supplier is a ‘quick win’, as is holding more meetings online or incentivising lower-carbon travel options. Other savings can come by improving the efficiency of waste, water and energy systems in office buildings. 

When it comes to construction materials, there are steps that can be taken already that allow you to stay within a client’s design brief but choose lower carbon options, such as concrete with the maximum GGBS content and steel made in electric arc furnaces. 

Of course, decarbonising completely will also require complex solutions, collaboration throughout the value chain, investment in new or innovative technologies or changes in business processes and behaviours. This is why any strategy should include short-, intermediate- and long-term targets. 

Sustainability consultancy Planet Mark says: “Unlocking the passion of your team is the key to achieving your organisation’s sustainability goals.” Some people won’t need any encouragement to engage with the drive for net zero; they will inherently believe it is the right thing to do.

Other people will need to be persuaded why it should be important to them – whether it is because it is what the market is demanding, because clients’ procurement rules require it, or even because the business’ survival depends on it. It is important for staff to know that their actions in achieving the company’s net zero ambitions have a real and meaningful impact. 

The UK has enshrined in law the target to become net zero by 2050, so many businesses are focused on meeting that date. However, as Mott MacDonald carbon management team lead Mark Crouch says: “The UK has a national target of 2050, so an ambitious company would probably want to be ahead of that target.” 

Mott MacDonald’s target is to be net zero by 2040. “Although we are primarily office-based, we do have a contracting business,” he explains. “We wanted to make our target as ambitious and as near as possible, but we also wanted to include the contracting business, which made it more challenging. The decision was rooted in the reality of how difficult it would be to decarbonise all the materials that are used in the construction business.” 

Targets should be evidence-based and verifiable. Until recently there was no universally recognised method for setting net zero targets, but in October 2021 the Science Based Targets initiative (SBTi) launched its Net Zero Standard, which provides guidance and tools for companies to set science-based net zero targets.

Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to well below 2C above pre-industrial levels and trying to keep it to 1.5C. Having verified, science-based targets shows employees, clients, suppliers, collaborators, shareholders and all other stakeholders that your net zero targets are credible and align with current climate science. 

Skanska has set a target date of 2045. “We didn’t pick 2045 just because it looks good,” says the company’s UK carbon manager Conor McCone. “We went through a thorough process to get to that date. We used our procurement system to assess the quantity of materials we use per year – including Scope 3. Then we used industry roadmaps for carbon in concrete, steel, vehicles, etc, and projected them out to where we would be at by 2045. It still leaves an innovation wedge if we are going to decarbonise completely.” 

The Greenhouse Gas Protocol, the international greenhouse gas accounting standard, divides emissions into three categories, referred to as Scope 1, 2 and 3. These categories cover the different kinds of carbon emissions a company creates in its own operations and in its value chain, all of which have to be included in any company’s strategy to reduce its carbon emissions. 

Scope 1 and 2 emissions are mostly within a company’s direct control and there are already many solutions to reduce these emissions to zero, for example, switching to renewable energy or transitioning to electric vehicles. But Scope 3 is where the most impact is made, with these emissions typically accounting for around 70% of a business’s carbon footprint, according to Deloitte. 

Some companies opt to become ‘carbon neutral’ as a stepping stone on their pathway to net zero. Being carbon neutral means that you reduce what you can, but then buy carbon offsets equivalent to the remaining emissions. A business can only be called net zero if it is offsetting 10% or fewer of its residual emissions, and these offsets must remove carbon from the atmosphere for a minimum of 100 years. 

Organisations involved in carbon reduction advocate applying a hierarchy similar to the waste reduction hierarchy engineers are familiar with (reduce, re-use, recycle, recover, dispose). The equivalent for carbon emissions reduction is shown in the graphic below.

“The first thing is to use as few resources as possible,” says Burbridge. “That goes beyond energy efficiency; it’s being smart about everything you buy, procure and use. If you’ve got to use something, then use it as efficiently as possible and make sure it’s created and/or powered by a renewable source of energy. 

“If it’s something you really need, and it’s powered and/or created by renewable energy, you can neutralise anything that’s left by carbon removal offsets – nature-based or technological solutions that draw down carbon from the atmosphere and secure it for over 100 years. That’s your pathway to net zero.” 

He adds: “Once you’re on a pathway to net zero, and maybe you’re going to get there by 2050, in the meantime you can compensate for your residual emissions as you reduce by buying very good quality offsets, which should be carbon removal rather than carbon avoidance offsets.” Burbridge urges any business thinking of using carbon offsets to comply with The Oxford Principles for Net Zero Aligned Carbon Offsetting, originally launched in September 2020, which outline how offsetting should be approached to ensure it helps achieve a net-zero society 

Crouch agrees that offsetting is not a panacea. “Offsetting is the very bottom part of that hierarchy,” he says. “You should be reducing your emissions absolutely as far as you can go.” He adds that the cost of offsetting is going up, and rather than investing in carbon offsets, companies could be using that money to decarbonise their organisations. 

Infrastructure businesses whose main activity is construction and maintenance have the challenge of decarbonising the materials they use. This is a very difficult challenge for steel and asphalt, which have energy-intensive production, and even more so for concrete, which not only requires energy for extraction and manufacture but also emits heat when it is produced. 

Office-based designers and consultants do not have to deal with these issues in their direct emissions, but they can have an impact on whether these materials are required at all. This is an example of considering not only the emissions over which you have control, but also those over which you have influence. 

“Everyone focuses on where they have control, because that’s where you get the biggest value,” explains Burbridge. “But you should also think about where you have influence. For most professional services companies, their biggest carbon footprint comes from running their office and business travel. But that’s insignificant compared with the influence they have over their clients and their designs. Engineers have the ability to influence and educate their clients and help them make more informed business decisions.”