26 June 2024: Impactful interventions including fossil fuel phase out and renewable energy procurement, alongside clearer parameters for setting baselines for net-zero targets, are some of the key areas that could be addressed to enhance the voluntary governance landscape around net zero, according to new research commissioned by BSI.
The independent study, conducted by Oxford Net Zero, identifies gaps in consensus around the path to achieve net zero. The report suggests areas where the voluntary landscape could be tightened in order to better support organizations on their net zero journey and accelerate progress towards a sustainable world.
Governing Net Zero: assessing convergence and gaps in the voluntary standards and guidelines landscape, analyzed 37 resources used internationally to guide net zero action, including net zero standards, guidelines, and initiatives. These were assessed against over 60 criteria across the seven stages of setting and implementing a net zero target.
The research highlights strengthened convergence amongst net zero governance resources in comparison to an earlier study completed by Oxford Net Zero in 2022 (netzeroclimate.org). The report also identifies major developments amongst governance instruments, with steps including recommending science-based net-zero targets for 2050 and Scope 3 target-setting being the norm.
The research identified key areas where guidance has progressed since an earlier study by Oxford Net Zero in 2022, including:
- Recognition of the strategic importance business executives pay in setting firms’ net-zero pledges and targets
- The need for organizations’ product and service portfolios to shift towards ‘climate solutions’ or low-carbon alternatives
- The need to quantify and set targets for Scope 3 emissions and aligning business lobbying and advocacy with a Paris-aligned climate future
- Accounting for offsets and avoided emissions separately from reductions in organisations’ inventories
- Consideration of transition plans’ impacts on a ‘just transition’.
The analysis shows that recommendations to act or disclose activity could be improved, including around:
- Clarity on how base years should be selected for targets and emissions reductions calculations
- Investing in and planning for climate adaptation, as well as the frequency at which transition plans and targets should be updated
- Setting impact targets for biodiversity and nature, separate from emissions reductions goals
- Recommending that business models be compatible with a net-zero world, including the role of advisory services and engaging customers
- Recommending interventions including fossil fuel phase out and renewable energy procurement as material ways to decarbonise organizations’ value chains
Other areas for improvement focus on reporting on limitations and discrepancies in data on organizations’ progress to net zero, as well as the requirement for independent auditing, verification and assurance of reporting.
Recommendations were also made on definitions. While there is convergence that offsets should only be used to neutralize residual emissions to meet net zero, and not towards interim targets, ‘residual emissions’ are poorly defined (though many resources cap the definition at 5-10%). Additionally, more detail is needed on the definitions of additionality and permanence in the use of carbon credits, offsets and sinks. There should also be better defining for ‘relevant’ and ‘material’ emissions sources for Scope 3 targets.
Scott Steedman, Director-General, Standards at BSI said: “Building a robust baseline for the governance of net zero action is essential to provide good practice and clear ground rules for all. Strong governance can help ensure net zero pledges that translate into action. This is something we know organizations are urgently seeking. Our recently published fourth annual Net Zero Barometer showed that many businesses say a lack of clarity and understanding is preventing them from taking further action on net zero.
“BSI welcomes the findings of this report, which shows that there is growing convergence in governance criteria for net zero action. However, more can be done. Standards are a powerful tool to get to the next level, by bringing stakeholders together to agree what good looks like and providing organizations with the assurance that their net zero actions reflect agreed best practice.”
Dr Matilda Becker, Strategic Partnerships Manager at Oxford Net Zero comments “Our research shows that there is clear guidance from across the voluntary landscape for how organisations should contribute to global net zero by 2050.
“Our work has dispelled the myth that the voluntary governance landscape is muddled in the recommendations it makes to organisations. Rather, there are clear benchmarks and best practice approaches for quantifying and reducing GHG emissions while minimising negative social impacts for a just transition. However, we note that whilst the course to net zero has been charted by these instruments, there are still significant details that need to be ironed out for organisations’ net-zero journeys to be executed with urgency, integrity and equity at their core”.
“Understanding the net-zero voluntary governance landscape is crucial if we are to ensure that best-practice finds its way into regulation and policy. Voluntary initiatives are the first step on the conveyor belt to regulating non-state actors’ actions towards setting and meeting net-zero targets. Therefore, what is contained within the voluntary landscape matters as it signals the need for organisations to pursue net-zero with urgency, integrity and equity, and sets the tone for regulation.
“Our report finds that, by and large, this urgency and integrity is accounted for within the voluntary landscape, but sizeable gaps persist, particularly relating to details of how to quantify and report Scope 3 emissions, how to ensure permanence and additionality through offset and carbon credit usage, and how to materially reduce an organisation’s carbon emissions.”
You can access further information on the report and the voluntary standards landscape by visiting netzeroclimate.org.
You can download the full report on the voluntary standards landscape by visiting netzeroclimate.org.
