What Are the Reputational Risks of Claiming Net Zero?

Almost six in ten consumers are willing to change their purchasing habits to help reduce negative environmental impact (IBM, 2020). With findings like these, companies are desperate to demonstrate all they are doing. However, implementing measures to reduce environmental impact is not easy, and numerous companies have made claims like ‘Net Zero’ that don’t hold up under scrutiny.

What does Net Zero actually mean?

Net zero emissions are achieved when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period (IPCC). The SBTi definition requires emissions reductions in line with the Paris Agreement 1.5°C limit, and for remaining emissions, permanent removal of an equivalent amount of atmospheric CO2.

The reputational risks

1. Incorrect time frames: Tree saplings take ~40 years to absorb one tonne of CO2. Buying Ex Post offsets (already-established forests) provides no added benefit. Offsets allow business-as-usual while claiming ‘Net Zero’. 2. Carbon offsets don’t count toward climate targets: The UN Global Compact states avoided emissions and offsets are not counted towards Net Zero commitments. Use science-based targets instead. 3. Regulators are calling out false claims: The ASA has strict rules; Shell, JP Morgan, and Brookfield have all faced criticism for misleading net-zero claims.

What to do instead

Focus on direct impact through minimising emissions in your operations. Set realistic science-based targets and be transparent with your customers. Covering up emissions through offsetting is greenwashing. Instead of claiming Net Zero, consider being honest about where you are on your journey.