Searches for Net Zero have increased by over 3,000% in the past 2 years alone, so you would be forgiven if you’ve not heard of it as it stormed into the business lexicon. With the United Nations Climate Conference, COP26 later this year, there’s more talk than ever about how the world reaches “Net Zero”.
It’s certainly not going anywhere, and the term is here to stay. So what is it, and why do you need to know about it?
eCommerce businesses are complex machines that struggle with environmental impact. From sourcing products from the other side of the world, to warehouse operations and to delivery on diesel vans, there are many stages where a company produces emissions.
So what do you need to know about Net Zero, and what can you do to prepare for the next “Decisive Decade” where the environmental impact of your brand will be under scrutiny?
👉 What is Net Zero?
Before we get stuck in, what is Net Zero?
Net Zero is the balance between your emissions and your greenhouse gas removal activity.
Greenhouse Gases, or GHGs, consist of Carbon Dioxide, Methane and Nitrous Oxide, with carbon dioxide (CO2) being the most common.
Imagine your business emissions like a budget. If you spend £10,000 and earn £10,000, you have a balance of Zero.
Net Zero is the same, but with carbon rather than cash.
If you emit 10 Tonnes of CO2 through your business activity, then to be Net Zero you need to also remove 10 Tonnes of CO2 from the atmosphere.
Removing GHGs is currently quite difficult, so the best way to achieve Net Zero is through the reduction of your output.
The less you emit, the less you need to remove.
One of the common ways to balance emissions is through carbon offsetting, which is a whole new challenge. More on this later!
👉 Net Zero Scopes
In terms of measuring your emissions, there are three core Scopes that your business activity is broken down into:
- Scope 1 – Energy you produce. For most retailers this isn’t relevant.
- Scope 2 – Energy you consume. The easiest way to reduce your Scope 2 emissions is to ensure you’re using renewable energy.
- Scope 3 – This is essentially your supply chain and everything else. Your deliveries, shipping, product sourcing, production of products, packaging, food consumed in the office – everything.
For most companies, their Scope 3 emissions will be 60 – 99% of their emissions.
Scope 3 is vast and is broken down into 15 further categories which we won’t go into here. However, it’s important to start thinking about the entire product lifecycle of your products and every step it take from creation to customer.
From the raw materials to produce it, to the processing and production into a product, its travel to your warehouse, to the customer, and finally disposal by the customer – all of these have emissions related to them and are scope 3.
With Scope 3 emissions being so vast and tied up in your supply chain, it’s important to collaborate and work with other suppliers who are also trying to achieve Net Zero. This way, you’ll benefit when they also make progress.
So, what does all of this mean for you?
1️⃣ Customers are Demanding Action
One of the key drivers is that increasing awareness of environmental issues is translating into consumer demands. There are plenty of studies out there with different statistics, but it’s reported that 60 to 90% of consumers are changing their behaviour due to environmental concerns.
The short of it is that brands who make changes now to be more sustainable and environmentally transparent will be more successful in the long term. Not only because it makes their customers happy, but because there are business opportunities and benefits to doing so as well. Adopting to Net Zero really is a win-win scenario.
Failing to act will ensure you are left behind. Let’s look at what you can do to make customers happy and move towards net zero.
2️⃣ Reduce, Don’t Replace
One of the common battlegrounds with customers is plastic, with concerns around plastic packaging rising continuously. However, it’s important not to conflate Plastic Pollution with Net Zero.
The two are important, however Plastic can have a lower carbon footprint than plastic-free alternatives. It’s therefore vital that you reduce your consumption entirely, rather than just replace with plastic free alternatives.
Let’s take the plastic bag as an example.
Here are the estimated CO2 emitted in the production of a single bag:
- Plastic: 3g
- Paper: 12g
- Cotton Tote: 140g
If you replaced all of your plastic bags with cotton tote bags, your total emissions would increase and you would be moving further away from Net Zero. This is not to say we should just be using plastic bags still.
If you’re reviewing your packaging and wondering how to reduce the environmental impact, the key thing is to reduce the amount of total packaging you use. Paper packaging is a good alternative because it is widely and easily recycled, where some other plastic alternatives are not and can emit methane if not disposed of correctly (emissions from waste management being one of your scope 3 emissions).
We’ve all seen the photos on twitter of a USB stick coming in a massive Amazon box surrounded by paper.Reduce the packaging you use, make more of it paper, and only use packaging that is appropriate to the product.
This goes for every decision. Don’t use more energy because you’re on a renewable tariff. Reduce, reduce, reduce.
3️⃣ Communicate: Be Honest
There are two reasons companies often fail at communicating their environmentalism:
- Green Washing – A company misrepresents or misleads customers on the actions they have taken. Their actions are actually ineffective or more damaging, and as a result receive a negative response
- Green Hushing – A company is doing genuinely good work but says nothing about what they’re doing for fear of being accused of Greenwashing, usually because of fears over customers misunderstanding their actions.
Both of these are a result of the same problem: a lack of honesty and transparency.
As you make improvements, it’s vital you are honest about what you are doing and not doing. If you’re a smaller business, it’s perfectly realistic and understable that you can’t control all of the changes and become net zero overnight.
In some cases technology or alternative products simply aren’t there – and if this is the case then tell your customers! They will then know that you have at least tried, rather than saying nothing at all.
If you want an example of how to do it, Haglof executes this perfectly:
Their open and honest discussion of what they’re doing, not doing and planning to do means they can’t be accused of greenwashing despite not being perfect.
4️⃣ Your Carbon Will be a Cost
If you’re unsure of the reasons to reduce our emissions, one major consideration is that carbon pricing is on its way. In the UK plastic packaging taxes are coming into play in 2022, and it’s highly likely that COP26 will result in agreements on further pricing mechanisms.
We don’t know what pricing on emissions will look like, but it’s a matter of when, not if. Preparing and thinking of your emissions like a budget will allow you to reduce the risk to your business. You’ll be in a far more resilient position and not come under as much legislation or taxation pressure in the future.
5️⃣ Tree Planting is Cheating
One final comment on Net Zero.
Once you’ve reduced your emissions down, to balance your remaining emissions you’ll likely need to offset by removing existing emissions from the atmosphere. One of the common ways to do this is Tree Planting schemes.
It is only effective if you invest in planning after you have removed all of the emissions you can from your company. There is no point planting trees while also using non-renewable sources of electricity, for example.
Planting trees is not always a guaranteed way to reduce your emissions, and while it is cheap and looks good to customers, the effectiveness of the schemes is in doubt. Wildfires, failed growth, poor administration and creative carbon accounting all means that it’s hard to ensure accurate carbon offset figures. While good schemes do exist (Check for the Gold Standard), it’s still not 100% certain that carbon will be absorbed as a result.
That is not to say that tree planting schemes are bad, but often the way they are used is.
This links to the honesty policy. If you are using tree planting to offset your carbon emissions because you have done everything else – tell your customers this. Avoid simply having a commitment to planting x number of trees, without communicating why you’re doing it or why you’ve chosen that scheme.
👉 Conclusion – What do you need to know about Net Zero?
Net Zero is a simple concept but one that is complex to calculate and effectively achieve.
However there are some core steps you can follow to ensure you’re on the right track for a more sustainable business, both environmentally and financially:
- Collaborate – Most of your emissions are in scope 3, which are hard to measure and complicated because they are in your supply chain. Reduce the impact by changing suppliers and partners, such as changing packaging or logistics companies
- Reduce – Reduction will always be a better environmental decision than trying to replace it with a new “eco friendly” option. Look at ways to minimise your business operations as much as possible from packaging consumption to waste created to miles travelled.
- Be Honest – Customers are demanding action, but they want to know what you’re doing. Smaller businesses have limited impact so own this! Be honest with what you can do, can’t do, and want to do. This is a journey, and we’re all starting from different places.
- Prepare – Reducing your emissions now will save you money in the long run as carbon pricing, taxes and fines come into action. Going Net Zero is a sensible business decision, as well as good for the planet.
- Don’t rely on tree planting – Tree planting is easy, and that’s why it might not work. Reduce as much as you can, and then be selective about which schemes you invest in.
I hope that’s helped clarify some of the concerns around Net Zero for you!
Adam runs Small99, a resource hub guiding 1 million small businesses to net zero by 2025. Their focus is on practical guidance to get business owners and managers started on reducing their emissions.