Net-Zero: Where Are We Now?

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position. Please refer to official GRESB documents for assessment related guidance.

The newly released Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (AR6) indicates that climate action is becoming increasingly urgent to avoid the most damaging impacts of climate change. Businesses play an important role in addressing climate change by reducing what are often significant greenhouse gas (GHG) emissions from their operations and value chain. 

Today, almost 1,700 companies have set science-based emissions reduction targets with the Science-Based Target initiative (SBTi), in line with limiting global warming to well-below 2°C above pre-industrial levels. Approximately 700 of these companies have committed to setting targets in line with limiting global warming to 1.5°C. Companies with targets verified by the SBTi have collectively cut their emissions by 25 percent between 2015 and 2020 while global emissions from energy and industry as a whole have increased by 3.4 percent over the same period. 

Despite this significant progress, more action is needed. According to both the IPCC 2018 Special Report on 1.5°C and AR6, the best chance to avoid a global temperature increase beyond 1.5°C is reaching net-zero GHG emissions by 2050, a state of balance with anthropogenic emissions and removals.

Updates on net-zero guidance 

Guidance on reaching a state of net-zero emissions is lacking; however, the SBTi is working to change that. 

In September 2020, SBTi released an initial foundation paper for setting net-zero targets, offering recommendations for companies to set achievable targets that will halve emissions by 2030 and reach net-zero by 2050. The paper emphasized that any net-zero strategy should focus on immediate reductions in value chain emissions, allowing companies to produce as close to zero emissions as possible by 2050 and neutralize any residual emissions that cannot be reduced. SBTi is now turning these foundations into specific criteria and the first global standard for organizations to meet net-zero. 

SBTi held a public consultation for the first draft of the net-zero criteria at the beginning of 2021, and this summer companies are road testing the Net-Zero Standard to ensure the criteria, guidance and target setting tools are sound in advance of publication. SBTi is prioritizing development of emission reduction target methods in the process to develop the Net-Zero Standard. As a result, the road test is focused on setting near-term and long-term science-based targets (SBTs), outlining a pathway to net-zero. 

The Net-Zero Standard is slated to launch in October 2021 ahead of COP26, and SBTi plans to begin validating net-zero targets starting in January 2022.

What changes have been made?

Due to the increasing climate emergency, SBTi has made changes to its near-term criteria. Starting July 15, 2022, SBTi will only validate targets aligned with 1.5°C for scope 1 and 2 and a minimum level of ambition of well-below-2°C for scope 3. Additionally, the timeframe for the target year has been reduced from a maximum of 15 to 10 years from the date of submission.

SBTi has also provided more detailed guidance on long-term SBTs for the road test. 

Long-term SBTs indicate the level of decarbonization needed to achieve net-zero and are supported by near-term SBTs to drive early action. Companies must select a long-term target year by 2050 (see Figure 1 below from the SBTi Net Zero Corporate Manual). 

Under the Net-Zero Standard, a company will have reached net-zero when it has achieved its long-term SBT. The company cannot balance its emissions with removals ahead of that and claim to be net-zero.

Figure 1: Near-term SBTs compared to long-term SBTs (Source)

SBTi has introduced two main pathways for setting long-term SBTs and recommends companies set separate absolute contraction targets for each: 

1. A universal pathway, which covers global GHG emissions except forestry, land-use and agriculture (FLAG) 
2. An agriculture pathway, which covers FLAG emissions

Figure 2 below from the SBTi Net-Zero Corporate Manual summarizes the target boundary, timeframe, method eligibility and minimum ambition requirements for near- and long-term SBTs. These methods are still in development and are subject to change before the release of the final guidance in October 2021.

Figure 2: Summary of near-term and long-term SBT target boundary, ambition, timeframe and method eligibility (Source)

Implications for real estate and infrastructure

As discussed in the previous iteration of this article, the main impacts for real estate and infrastructure come from building materials and direct fuel use for operations. 

The most effective way to reduce fuel use emissions is to electrify, which eliminates reliance on fossil fuels and allows the use of renewable energy for electricity. Switching to sustainable fuels such as biomass fuels is also an option, but there are pros and cons depending on the fuel type.

For reducing emission from building materials, embodied carbon — emissions involved in the extraction, processing, transportation, utilization, and end-of-life disposal of building materials — should be minimized. Concrete is the largest material source of GHG emissions in buildings and accounts for more than eight percent of global emissions due to burning fossil fuels in manufacturing and chemical reactions during processing. Steel also has a large amount of embodied carbon from fossil fuel use in manufacturing.

Reducing the volume of building materials through efficient design is an effective way of reducing embodied carbon in buildings, as well as using natural (e.g. sustainably grown wood [FSC certified]) and recycled materials where possible. It is important to make these considerations early in the design process, and consider the reuse of existing buildings where possible. 

Life cycle assessment (LCA) is a useful design-stage tool to identify the embodied carbon of materials, help select those with the least carbon impact and determine the quantity of removals required to reach net-zero. There are many easily accessible and user-friendly LCA tools available, including the Embodied Carbon in Construction Calculator, Tally, Athena Impact Estimator for Buildings, and One Click LCA. 

Architecture 2030 has also developed a Carbon Smart Materials Palette that identifies attributes that contribute to a material’s embodied carbon impact and suggests alternative products and strategies for reducing embodied carbon.

What you can do

We need bold, science-based action now. As part of the GRESB network, it is important to stay up to date on the latest target-setting guidance and learn from peers in the industry for best practices. SBTi is a great place to start and anyone can sign up for its mailing list to receive news and updates, particularly on net-zero developments. 

Organizations can also commit to reaching net-zero emissions as part of the Business Ambition for 1.5°C campaign or the World Green Building Council’s Net-Zero Carbon Buildings Commitment and set net-zero targets once the SBTi criteria is released.

This article was written by Madeline Frieze, Associate Consultant, Sustainability, Energy, and Climate Change at WSP USA