From entire economies (such as the UK’s commitment to be net zero by 2050) to the construction of a single building, the concept of net zero has proven highly adaptive to different units of analysis. In this article we look at what it takes to be a “net zero carbon company” and use our experience as an example.
A net zero carbon company seeks to “cancel out” the amount of carbon it generates from all its business activities. This typically involves not only the operation of its buildings, but also travel and the procurement of goods/services. One of the more difficult tasks for any business is first establishing what its carbon footprint is so that it can be reduced. In the discussion that follows we cover not only what to measure but also provide a worked example showing how to do this.
Not every business is the same which means approaches to becoming a net zero carbon company will vary. Here we present some strategies that are likely to apply more universally, highlighting what you need to measure and reduce and offering some potential solutions as you get underway.
From building to company
Most companies in the built environment will be familiar with new net zero aspirations for buildings as exemplified by frameworks from the WorldGBC, UKGBC, RIBA and LETI. Although there are nuances among these, the general principle is the same. Buildings should reduce the amount of carbon they generate (either construction or operational), employ renewable energy (either on or offsite) and then offset any residual carbon so that the overall balance is zero.
For companies, the logic is much the same, although the boundaries of what is in “scope” will be larger. Buildings will be involved, as they are a main - if not the main - source of carbon emissions for many companies, but there may be other significant components of carbon emissions – particularly from travel and business supplies/consumables that need to be considered.
In the section that follows, we will cover how emissions are categorised (Scope 1, 2 and 3) and focus on strategies for measuring them. It is easier for companies to define and measure Scope 1 and Scope 2 and more difficult to quantify Scope 3 emissions.
Emissions are typically divided into three different categories or “scopes”:
Scope 1 and 2 are most within an organisation’s control as companies will normally have the source data (from meter readings/invoices/mileage records) needed to convert direct consumption data into emissions.
Converting this data into emissions is done by multiplying the amount of energy by the carbon intensity of the fuel. Carbon intensities may be provided by the supplier itself (“market-based” factor) or the Government that maintains a database of these for the country as a whole (“location-based” factors).
In Scope 3 - many travel companies and waste service providers will send carbon emissions to companies as part of their services. If these are not available, the task of measuring travel/waste and multiplying by carbon factors can be significantly more difficult. If this is the case, companies will want to appoint a person(s) responsible for collating travel and other types of data that can be converted to carbon emissions.
The terminology of Scope 1, 2, and 3 was introduced in the Greenhouse Gas Protocol (GHG Protocol), which sets the standards for measuring GHG emissions all around the world. The Paris Agreement and the majority of corporate sustainability reporting programmes are based on the GHG Protocol, making it crucial to understanding the framework.
How can you reduce consumption?
There are clear energy reduction requirements, known as energy use intensities (EUIs), as part of net zero carbon guidelines for new buildings. These are very stringent reductions and set the direction of where buildings are intended to be over the next decade. For existing buildings, there is far less guidance about what good performance looks like. Typically, existing buildings operate far above the EUIs set out for new buildings. Operators of existing buildings should not be put off by the prospect of trying to reach the net zero carbon operational targets for new buildings.
Instead, it may be helpful to engage a firm to conduct an energy audit to suggest physical improvements, or, alternatively, consider operational changes to the building. There is a great deal of scope to reduce energy consumption in buildings through small changes that do not require any capital costs – reductions of up to 1/3 are possible simply by adjusting operating hours of equipment, widening the comfort bands of temperature, moving computing functions to the cloud, going paperless and so on. Many of these are good business decisions in and of themselves, with the added benefit of reducing carbon.
Moreover, there are increasingly many ways to reduce emissions beyond building operations through re-thinking the need for travel. There will always be reasons to travel, and some functions cannot be done remotely. But advances in communication have clearly enabled a different set of working relationships so that travel is not the business imperative it once was. There are other options to reduce these types of Scope 3 emissions as well – switching any fleet vehicles to EV and enabling employees to work flexibly rather than commute.
The potential to reduce carbon emissions through the generation or procurement of offsite renewables has grown significantly over the last decade. The offerings for renewable energy are many, and it can often be procured at or around the cost of typical fuels. It is not a significant expense to move to the procurement of renewable power, and, after reducing consumption, this is one of the most significant ways companies can act in the move to net zero.
“One of the most effective decarbonisation strategies companies can take is to purchase offsite renewable energy.”
Not all renewable power is the same, however, and to guarantee the “authenticity” or merit of the supplier, companies should seek out “REGO-backed” power. REGO stands for “renewable energy guarantees of origin” and provides a layer of security that the power has comes from a transparent and vetted source.
Of course, not all carbon can be eliminated and so all companies will need to purchase “allowances” or “offsets” to become net zero carbon. This should be a last step, after reductions in consumption and increases in renewable energy have been considered.
As with the procurement of renewable energy, companies should seek a guarantee that offsets are reliable. We suggest going with a well-known and trusted programme such as “The Gold Standard.” The typical cost of allowances under such programmes are in the range of £10-15 per tonne of carbon.
The options are, of course, virtually endless. But it is important to remember that, in the above example, there are more emissions that could be counted. These include travel emissions from trains, planes and hotels (these are often available from travel providers, or can be computed using online calculators), or from waste to landfill, supply chain activities and so on.
It can get complicated quickly, so in our experience it’s best to start with known sources of emissions like building consumption and mileage (which are usually processed by accounts) and work outwards, casting a net as widely as possible.
Give yourself time
“Net zero requires companies to interrogate their practices.”
Most companies that make net zero carbon commitments promise to reach that target in around a decade. This may seem like a long time given that some important actions can be taken quickly (such as changing energy providers), but the length of time underscores how complicated it can be to categorise, measure and then reduce all known sources of emissions.
There are also reasons why emissions can rise, including more employees or higher turnover. It can be wise to understand your business well over a period of time before making commitments that cannot be met. It is also important to understand that the definition of good practice is going to change (expect that allowances/offsets will become a less accepted alternative as time goes on).
All these caveats aside, there is much that businesses can do to improve financially by committing to net zero. Net zero requires companies to interrogate their practices. This almost always reveals inefficiencies and costs savings. On the value side, becoming a net zero carbon business also has reputational benefits as well, as virtually all stakeholders (from employees to investors) have signalled a preference to work with net zero carbon companies.
Becoming net zero is a challenge, but it is becoming a business litmus test for service providers, especially those delivering buildings and infrastructure for the future. It is certainly possible to attain, although it requires a full knowledge of the business and a commitment by all to new ways of doing things.
Our journey to net zero carbon
We understand the challenges of becoming a net zero carbon company because we are doing this ourselves. In 2021, we announced our net zero carbon goals, with a commitment to be net zero as an organisation by 2030.
Consistent with guidance in this article, we have developed five commitments to help us progress over the next decade:
- Create a baseline year and continue to measure Scope 1, 2 and 3 emissions: We have used 2019 as our baseline year (the last representative year before COVID), but we realise that in a post-COVID world many business activities may change, as will the emissions profile of our activities. In line with “giving yourself time,” we are committed to reducing our emissions, but also understanding better the ongoing carbon profile of the business and how it is evolving.
- Reduce consumption: In all our activities – whether it is building operation, travel, or procurement - we are committed to being more efficient and to demonstrating real reductions in our impacts. We have already made reductions in energy through moving to cloud computing, adopting “follow-me” printing, procuring more efficient M&E equipment and changing operational practices. We agree that allowances should be purchased only as the last option and so our priority is real reductions in carbon achieved at our sites and in our business activities.
- Procure renewable energy: The procurement of renewable energy is one of the more meaningful choices we have made. Beginning in 2020, we switched our procurement contracts from conventional to renewable suppliers.
“As of January 2022, all buildings where we have operational control are 100% run by renewable power.”
- Reduce Scope 3 emissions, including business travel: We have taken, and will continue to pursue, actions and decisions that reduce Scope 3 emissions – including business travel. We currently monitor emissions from travel sources (planes, trains, hotels, etc) and are investigating “Gold Standard” or similar reputable offsetting practices to mitigate the emissions we incur from this aspect of the business.
- Be net zero carbon as a company by 2030: Ultimately we aim to be net zero carbon as a firm by 2030. We believe that our first successes will come in our buildings, but we aim to drive down travel emissions as much as possible while still being able to provide a world-class service to our clients. Naturally, we will never be able to eliminate carbon completely, but through efficiency, better procurement decisions and, when needed, the purchase of high-grade carbon "Gold Standard" allowances, we expect to be a net zero carbon firm by the end of this decade. Find out more about our net zero carbon commitments in our Net Zero Carbon Policy.
As we undertake our own net zero journey, we are happy to share the opportunities and hurdles we have encountered – get in touch with our experts today if you think our experience can help.