Net zero for business explained

Why net zero matters to your organisation and what you can do to improve both your cost and carbon performance

To deliver on the UK's legally binding net zero 2050 target, businesses like yours will be required to take action and do your bit for the environment. It's estimated that one sixth of the global economy is subject to a net zero target ¹, but what exactly is net zero? What does net zero mean for your organisation and what actions should you take to reduce your carbon footprint – both now and in the future?

Climate change is the number one economic and social threat facing the world today, but there is widespread confusion surrounding net zero and climate action.  According to the latest UK public attitudes tracker, only 5% of the public has a deep understanding of what net zero is, despite 82% expressing climate concerns.

In this blog we aim to  shed some light on what net zero means for you and your business and answer your questions about decarbonisation.

What is net zero? Your questions answered

1. What's the difference between the various terms used to describe decarbonisation and sustainability, e.g. net zero, gross zero, carbon neutral, carbon negative, carbon positive?

Net Zero means achieving a balance between the greenhouse gases emitted into the atmosphere and those removed from it.

Consultation by the Science Based Targets initiative (SBTi) is currently underway to agree a detailed definition of net zero for businesses.  Meanwhile, the Carbon Trust defines a net zero company as one which "sets and pursues  an ambitious 1.5°C aligned science-based target for its full value-chain emissions. Any remaining hard-to-decarbonise emissions can be compensated using certified greenhouse gas removal."

Unlike a gross zero target, where all emissions are zero, net-zero considers some residual emissions from hard to remove areas.

Net zero and carbon neutrality are most often confused, but the big difference is that offsets are acceptable to achieve carbon neutral status. Net zero permits some certified methods of emissions removal, such as carbon capture and storage or nature-based solutions such as tree planting.

Taking sustainability one step further, carbon negative (sometimes referred to as climate positive) reduces an organisation’s carbon footprint to less than neutral by removing more CO2 from the atmosphere than it emits.

To reach 'net zero', emissions from homes, transport, farming and industry will need to be cut." For energy there are three key areas: decarbonisation of power, transport and heat.

Recognising the urgent need to make net zero a reality, Centrica has announced that it will accelerate its commitment to be net zero by 2045, five years ahead of its previous target and the UK deadline. The company is also announcing a new commitment to helping its customers be net zero by 2050.

Download our Edie explains guide: Net Zero Carbon Business

2. Are greenhouse gas emissions the same as carbon emissions?

Carbon dioxide (CO2), or carbon for short, is the most significant greenhouse gas (GHG) – accounting for 81 per cent of total UK greenhouse gas emissions in 2019 ². The other main GHGs are water vapour, methane (CH4), nitrous oxide (N2O) and ozone.

These gases occur naturally in the Earth's atmosphere, where they absorb and re-emit heat. Burning fossil fuels and other human actions are increasing GHG levels – causing global warming and climate change.

CO2 is often misinterpreted as an expression for all greenhouse gases. A more accurate way of talking collectively about greenhouse gases is to use the term carbon dioxide equivalent, (CO2e) ³. This is useful in providing the carbon equivalent impact of any greenhouse gas.

As the second largest contributor to greenhouse gases, electricity and heat production is also the area where the biggest progress is being made by reducing demand through energy efficiency measures and generating energy from renewable sources. As we work towards creating a net zero future, everyone, from suppliers to businesses and households, has a role to play. If you haven’t already, why not start now by switching your business to green business energy.

3. Why is it so important for my business to take urgent action on carbon reduction?

The climate emergency clock is ticking – so taking the first carbon reduction steps, however small, is essential. Those who leave their net zero planning until 2030 or beyond will face an uphill struggle. And they'll also miss out on the potential cost and operational savings of green innovation and the reputational benefits that going green brings.

Many organisations falsely believe they need to work out all the decarbonisation steps before getting started. Even the most advanced sustainability leaders don't have a complete 30-year net zero blueprint. In fact, many of the technologies that will underpin that journey don't exist or haven't been commercialised yet.

While the scale of the net zero challenge can appear daunting, your pathway to net zero can be broken down into manageable  steps as defined by our sister company, Centrica Business Solutions, to simplify the decarbonisation process.

By taking an incremental approach, you can prioritise quick win carbon savings – using initial savings from low cost actions, such as installing smart meters  and energy efficiency measures, such as LED lighting and building management controls to help fund low carbon projects with longer returns.

Read our 8 steps to creating  your sustainable energy strategy

4. Is carbon reduction and net-zero target setting relevant to smaller organisations?

All types and sizes of organisations have an important role to play in reducing their carbon footprint.

Your employees, customers, suppliers, shareholders and investors all expect you to be environmentally responsible. In fact, demonstrating your green credentials is becoming an increasing pre-condition of winning new contracts, so could help you increase sales and profits.  Governments are also driving action through increasing regulation and green incentives.

Whatever size organisation you run, managing your energy efficiently for cost and carbon reduction makes good business sense.

A great example is switching to electric vehicles. New technology and falling costs have opened the EV opportunity to organisations of all shapes and sizes. Installing electric vehicle charging points is now achievable, affordable and scalable for small and medium sized businesses – not just large corporations with huge fleets. Plus, there are attractive finance and tax incentives for early EV adopters, including EV charge point grants up to £14,000.

5. Is it ok to use carbon offsets to decarbonise my business?

Carbon offsetting by purchasing renewable energy or Power Purchase Agreements (PPAs) can play a role in reducing carbon emissions, particularly in the early stages of your sustainability journey. But it won’t get you all the way to net-zero.

PPAs are long term supply contracts for trading power from an independent renewable power generator to a business. From a net zero perspective, it is preferable to select certified agreements that support funding of additional new renewable generators.

British Gas offers a range of green business energy tariffs, including 100% renewable electricity, which is independently certified by the Carbon Trust. This provides confidence in the quality and origin of its renewable status as part of sustainability reporting requirements.-

However, it’s important to blend green energy procurement with energy management measures that can improve both your financial and environmental performance.

6. Is going green going to cost my business more?

Amid the current economic uncertainty, many organisations are sensibly focusing on cost and operational efficiencies. Happily, managing energy more sustainably can provide both financial and environmental gains. In fact, our latest energy trends research shows that 61% of the best performing businesses are also sustainable energy leaders.

There are many low and zero cost carbon reduction measures that can quickly reduce emissions, while helping you to manage energy costs. Educating and influencing your employees to improve their energy saving behaviour costs nothing, while installing energy monitoring and control systems to drive efficiency can also be implemented with little expense.

There are many government grants, tax efficiencies and finance options to support businesses with green initiatives such as installing EV charge points for your business.

Even the more advanced distributed energy technologies, such as solar, heat pumps and data insights, are now more accessible and affordable. Indeed, these solutions can yield such positive and predictable returns on investment that innovative zero CAPEX financing models can be applied, repaid via operational savings. Depending on your product requirements, flexible finance options and managed help to access government grants such as the Salix Energy Efficiency Fund and Industrial Energy Transformation Fund are also available.

Most recently in the budget, the Chancellor of Exchequer Rishi Sunak announced a Super Deduction for businesses looking to implement capital projects. This deduction can help organisations reduce their corporations tax expenditure incurred from 1 April 2021 until the end of March 2023. Companies can claim 130% capital allowances on qualifying plant and machinery investments, which includes solar and EV charging points.

Now’s the time to put your carbon reduction plans into action

Going green isn’t just good for the environment; it can help your business become more resilient, save money and improve your brand reputation.

By building energy sustainability into your business strategy, you can balance both financial and environmental goals.

There are many potential pathways to carbon reduction and net zero but getting started is important. There are actions you can take today to reduce your carbon footprint, such as moving to electric vehicles, switching to energy from renewable sources and implementing low-cost energy efficiency measures.

See how British Gas business and Centrica Business Solutions can provide the step-by-step support and expertise you need to deliver on your commercial and sustainability goals:

Pathway to sustainable business growth

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