Out of control

It’s time to rethink corporate net zero targets and how they're communicated

Photo by Paul Krüger on Unsplash

This article first appeared in Earned First

Most companies are in for a rude shock, because the decarbonisation targets they have set and in many cases trumpeted are structurally – and fatally – flawed. The momentum that is still gathering could actually be propelling companies’ sustainability and communications teams into a brick wall of over-optimistic targets and high public expectations. At the point of impact, it’s not going to be pretty.

Despite many high-profile cases of companies abandoning or watering down their climate-related goals, most haven’t done so and continue to pursue their own efforts to reduce their carbon emissions. While headlines might suggest a broad boardroom climate retreat, the Science-Based Targets Initiative (SBTi), the leading standard setter in the field, says the number of companies striving to reach its targets for decarbonization is still rising. Many sustainability experts also point to the potential for technologies like AI to enable companies to streamline processes and simplify reporting.

But more fundamental challenges await everyone involved in promoting corporate sustainability. And those responsible for corporate communications in particular will find themselves on the front lines – and increasingly under fire.

Let’s look at the problem and then consider what corporate communicators can do about it.

The established framework for corporate decarbonisation focuses on reducing carbon emissions across three “Scopes”, representing a company’s direct emissions from its own operations (Scope 1), indirect emissions from purchased energy (Scope 2), and all other indirect emissions across its value chain, from suppliers to product use and disposal (Scope 3). Many of the limitations of this approach, ranging from measurement challenges to double counting, are well-known. But one fundamental weakness of the approach has so far been much less discussed.

That fatal flaw is set out by Robert Hoglund in a recent article entitled A New Lens on Corporate NetZero. The problem, Hoglund says, is that traditional net zero targets treat all emissions as equally deliverable, when that is obviously not the case.

An airline, for example, might struggle most with Scope 1 because its core activity – burning jet fuel – has no economic low-carbon substitute. A data-driven tech firm, on the other hand, might be constrained by Scope 2, since its climate performance depends on securing huge volumes of clean, reliable electricity. A large retailer, by contrast, would be most challenged by Scope 3, where emissions embedded in international multi-tier supply chains far exceed its own operational footprint.

And while some emissions are within a company’s control, many are not. Some depend on carbon-intensive electricity grids, for example, while others are limited by existing technologies.

“The problem is not ambition,” Hoglund argues, “but that targets bundle emissions companies can directly control with reductions that depend on broader system change.”

This isn’t just splitting hairs. Not recognising the fundamental difference between emissions reductions that are within or outside a company’s control will condemn almost any net zero target to failure – with serious reputational implications.

So, what’s a corporate sustainability communicator to do?

As usual, what a company does remains much more important than what it says.

Hoglund recommends that companies make clear what policy changes and/or technical developments or breakthroughs their targets depend on.

Where policy change is required, companies should plan to advocate for the changes their targets need to occur. If a company’s net-zero goal depends on carbon pricing, grid decarbonisation, or permitting reform, companies should openly support those changes.

And where barriers exist, companies should fund initiatives that address them, whether technical proof-of-concept deployments, cross industry collaboration, or funding scientific research.

Those actions create the substance around which corporate communicators can reframe their organisations’ sustainability stories on a more, excuse the pun, sustainable basis. The more a company is clear about what is and isn’t within its control, the better understood its actions will be.

Beyond talking publicly about these actions, communicators should also shift the terms their companies use to describe their targets. Hoglund suggests splitting decarbonisation commitments into what might be called “core”, “operational” or “value chain” emissions targets (where the company has direct influence and a good degree of control) on the one hand, and “conditional” emissions on the other.

Reframing net zero communications need not be a painful 180-degree pivot. There are already a number of initiatives that shine a light on “beyond the value chain” factors and have the potential to make a difference to corporate decarbonisation.

SBTi standards, for example, already call for companies to declare what actions they are taking outside their value chain. I’ve written elsewhere about one large company’s transition plan (Swiss Re) that adopts a similar distinction. Futerra/Oxford NetZero’s Spheres of Influence initiative proposes a useful framework for companies to act beyond the boundaries of Scopes 1, 2, and 3.

Climate action zealots may respond to such efforts by accusing companies of backsliding. Given the evident challenges in meeting such flawed targets, that’s perhaps inevitable. But that may not be all bad: I’ve previously covered some of the possible unexpected upsides of companies falling short of their climate commitments. In any case, it’s surely better to address the challenge now than wait until targets lay in tatters alongside stakeholder goodwill and trust.

Make it additive to existing targets. Make it gradual if you like. But do it before your targets go down in flames.