How to become a climate neutral company?

The term “climate neutrality” is frequently used nowadays, but what does it actually mean? Climate neutrality refers to a balance between greenhouse gas emissions and their absorption from the atmosphere. In order to achieve net zero emissions, all global greenhouse gas emissions must be dramatically reduced, and unavoidable emissions must be balanced by removed or offset.

What does this process look like for a company? Any organisation embarking on the journey to becoming climate neutral should follow four main steps in their carbon management process. 

  1. Measure your company’s carbon footprint

More importantly, measure your company’s carbon footprint across the entire value chain. While it’s usual to measure Scope 1 and 2 emissions within the GHG protocol, it is even more crucial to deep dive into Scope 3 emissions, which typically account for the majority of a company’s carbon footprint. These include energy, heating and cooling of leased spaces, such as offices, production plants, and warehouses, energy usages from home offices (especially relevant during the COVID-19 pandemic), personal electronics, business travel and commute, as well as the digital footprint of rented servers, online meetings and events. 

2. Reduce your GHG emissions where possible

Once you have a clear picture of your carbon footprint baseline and have identified the most impactful areas of your business that produce the most emissions, create an emission reduction plan with clear targets. Reducing emissions can be achieved through optimized energy use, transportation and shipping, reducing business travel, investing in energy efficient equipment, renewables, recycled packaging and more sustainable materials. It is important to engage your suppliers and partners in this process in order to reduce emissions across the entire value chain. 

3. Offset unavoidable emissions

The remaining emissions that could not be reduced can be offset by purchasing carbon credits from certified emissions reduction projects. 

Carbon offsetting can be a valuable mechanism to tackle climate change, if coupled with efforts to significantly reduce the emissions first. Simply put, offsetting one tonne of carbon means there will be one tonne less carbon dioxide in the atmosphere than there would have been otherwise. The money spent on these carbon credits is used to support the emissions reduction projects and make them financially sustainable. These projects can then continue to reduce global carbon emissions by improving technologies and changing community awareness and behavior. 

The United Nations’ Clean Development Mechanism (CDM) supports emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, which are equal to 1 tonne of CO2. These credits are traded on the UN’s carbon offset platform. The mechanism promotes sustainable development and emission reductions while allowing industrialized countries some leeway in meeting their emission reduction


4. Disclose your carbon management efforts

Finally, it’s important to build trust and transparency with your stakeholders by reporting your carbon footprint and action taken towards reducing and compensating your company’s emissions. This can be done through an impact report, ESG report covering the Environmental, Social and Governance areas, press releases, company policies and public sustainability roadmap. The information should be accurate, truthful, and relevant to your customers, employees, partners, investors, and other stakeholders. 

Following these four steps are essential for companies accounting for their environmental impact and taking steps towards climate mitigation. A company cannot call itself climate neutral if it ignores the emissions produced by its entire value chain. That’s why it’s imperative to lead by example and invest efforts in measuring the carbon footprint across all three scopes, taking significant action to reduce it, compensate for the remaining emissions and be honest and transparent in disclosing carbon management efforts.