A Guide to Net-Zero

2nd October 2023

What is Net-Zero?

Net Zero is a state of balance between the greenhouse gases produced in the atmosphere and the amount removed from it and as there is an increasing need to combat climate change throughout the world, the journey to net zero becomes ever more important. The UK Government has set out its own net zero reduction strategy and aims to achieve net zero by 2050 with an interim emissions reduction target of 45% by 2030. 

So, what does a business need to do? Well, for many categories of UK organisations, carbon reporting, net zero migration planning and eventual net zero status are now mandated by law. However, for those where it is not mandated the market is a minefield. Carbon accounting practices have lagged somewhat behind legislation and so it is only comparatively recently that a loose selection of user defined best practices have hardened into internationally recognised methodologies and standards. The first stage in any journey though is to measure where you are now, measure your starting point, as you cannot MANAGE what you cannot MEASURE.  To coin a phrase, I hear in a well-known TV advert, “simples”, surely, well actually no. There are many providers of carbon footprint reports (CFRs) in the market, often with a convincing sales pitch and testimonials from satisfied customers. To the uninitiated, one carbon footprint report looks much like any other, and in the absence of further information it is tempting just to buy the cheapest, but that may not be the best solution.

WHAT FOLLOWS IS AN EXPLANATION OF THE WAYS IN WHICH THEY DIFFER, AND WHY ALL CFRS ARE NOT CREATED EQUAL.

Due to a dearth of robust official guidance, most legacy CFR providers developed their own proprietary ‘black box’ methodologies using whatever conversion factors, calculation methodologies and data protocols were available (or known to them) at the time. Some also developed their own proprietary carbon-related badges and/or certifications. However – the world has moved on apace, and what was acceptable even 6 months ago is probably no longer compliant with modern standards and procedures. The problem is – whereas it might temporarily feel good to receive a CFR (or carbon-neutral logo) from an external body – unless the processes and documentation which underpin it are compliant with modern standards and unless that CFR is verified by a UKAS accredited external body – it is unlikely to be recognised as valid by a wider (and better informed) commercial/regulatory audience. A compliant CFR is based upon verifiable, primary (‘direct from source’) data. This is time-consuming but necessary. Some proprietary CFR providers save time (and can therefore offer a far cheaper product) by omitting much of this process, substituting actual data with sectoral, regional, national or international averages. Because average figures are liable to err on the side of overestimation rather than underestimation, this can have three unwelcome implications:

  1. The CFR obtained therefrom will over-estimate the subject’s emissions
  2. As a consequence, the subject will incur unnecessary expense by purchasing more carbon offsets than is actually required if that is the path chosen and this overspend is likely to reoccur, year after year
  3. The CFR obtained therefrom will fail any attempt at external verification

Decisions made at the start of any carbon reporting process will determine what data is collected, by whom, and whether the resultant CFR will be sufficiently broad in scope and detail to satisfy the criteria for external verification. Online ‘check your carbon footprint’ calculators, homebrew spreadsheets and proprietary solutions are seldom based on a deep knowledge of what considerations are important – or where certain efforts (such as collecting additional data) are wasted effort.  I want to finish by dispelling a myth I often come across that ISO 14001 certification is a substitute for a verified PAS2060 compliant CFR. It is not and this confusion arises from the misunderstanding of the difference between certification and verification. Certification is the activity of evidencing that a management system has been correctly constructed and conforms to a particular standard and is therefore capable of functioning in accordance with that standard. Verification is the process of checking that the output of a system (usually a dataset) is accurate. For example, an MOT testing station will be certified by the DVLA as having the correct systems in place to test vehicles to a defined standard. The testing station will test each vehicle using the systems and processes defined by the DVLA to verify whether or not that vehicle is roadworthy. For many organisations, carbon reporting and emission reduction is now a legal obligation or a commercial necessity. At the very least, customers, shareholders and investors have a growing awareness of environmental/CSR considerations. Social media has hugely increased the speed at which any accusation of greenwashing will spread, magnifying its reputational damage. It is no longer sufficient, or compliant, to base environmental reporting on unverified, proprietary documentation. The world has moved on, and Auditel has moved with it. As we head towards net zero and 2050, the pace of change will only accelerate.

 

How to Calculate Carbon Footprint For Businesses

There are many providers of carbon footprint reports (CFRs) in the market, often with a convincing sales pitch and testimonials from satisfied customers.  To the uninitiated, one carbon footprint report looks much like any other, and in the absence of further information, it is tempting just to buy the cheapest.  What follows is an explanation of the ways in which they differ, and why all CFRs are not created equal. We show you how to calculate your business carbon footprint the right way.

For certain categories of UK organisations, carbon reporting, net zero migration planning and eventually net zero status are now mandated by law. Carbon accounting practices have lagged somewhat behind legislation hence it is only comparatively recently that a loose selection of user-defined best practices has hardened into internationally-recognised methodologies and standards.  Put simply, many CFR providers have failed to keep up.

Weaknesses of ‘black box’ solutions

Due to a dearth of robust official guidance, most legacy CFR providers developed their own proprietary ‘black box’ methodologies using whatever conversion factors, calculation methodologies and data protocols were available (or known to them) at the time.

Some also developed their own proprietary carbon-related badges and/or certifications.  However – the world has moved on apace, and what was acceptable even 6 months ago is probably no longer compliant with modern standards and procedures.

The problem is – whereas it might temporarily feel good to receive a CFR (or carbon-neutral logo) from an external body – unless the processes and documentation which underpin it are compliant with modern standards and unless that CFR is verified by a UKAS-accredited external body – it is unlikely to be recognised as valid by a wider (and better informed) commercial/regulatory audience.

Five considerations with proprietary CFRs are:

  1. Being opaque in nature, it is difficult or impossible to determine if the calculation methodologies, emission/conversion factors and data collection methods used in ‘black box’ CFRs are compliant with the standards relevant to that particular circumstance, inter alia GHG protocols, PAS2060 or ISO 14064.
  2. In the absence of documented, transparent compliance with the above, that CFR can never receive verification by a UKAS-certified body. For that reason, a question mark will always hang over its veracity. As knowledge about carbon-related legislation becomes more widespread, B2C and B2B customers (not to mention shareholders and investors) will increasingly scrutinise ‘green’ credentials. Moreover –‘greenwashing’ is not only a PR disaster waiting to happen – as of September 2021 it became a criminal offence.
  3. Where the subject of the proprietary CFR wishes to gain official verification in the future, it would not be possible to recoup the expense of the uncompliant CFR by building upon it – the work would need to be conducted afresh.
  4. A compliant CFR is based upon verifiable, primary (‘direct from source’) data.  This is time-consuming but necessary.  Some proprietary CFR providers save time (and can therefore offer a far cheaper product) by omitting much of this process, substituting actual data with sectoral, regional, national or international averages.  Because average figures are liable to err on the side of overestimation rather than underestimation, this can have three unwelcome implications: a) The CFR obtained therefrom will over-estimate the subject’s emissions;
    b)As a consequence, the subject will incur unnecessary expenses by purchasing more carbon offsets than is actually required.  This overspending is likely to reoccur, year after year.
    c)The CFR obtained therefrom will fail any attempt at external verification.
  5. Compliant CFRs take account of three greenhouse gas (GHG) factors:a)Sources (positive GHG emissions);
    b)Sinks (negative GHG emissions);
    c)Reservoirs (negative GHG emissions).
    Many proprietary CFRs only take account of GHG sources.  Whilst not all factors apply in every circumstance, omitting their inclusion in cases where they do apply will overstate GHG emissions and probably trigger recurring overspending on unnecessary carbon offsets.

Ancillary Projects

This is where Auditel’s carbon compliance service really differentiates itself.

For many organisations, carbon measurement and reporting are unwelcome additional expenses.  A CFR, ongoing management and high-quality offsets will be required each year.  Further down the line, the attainment of net zero precludes the use of offsets at all.

If an organisation is to move from being a carbon emitter to a net zero emitter, how can it do this without operational change?

Ancillary projects will be either desirable or essential to:

a)Reduce GHG emissions;

b)Reduce yearly offset expenditure;

c)Mitigate/recoup the cost of carbon compliance.

Once cash is spent on offsets, it’s gone forever.  Initially, most organisations prefer to spend money on projects which will persistently reduce their carbon output (e.g. led lighting, heat pumps etc) rather than offsets.  If executed properly, these can also recoup some of the cost of the emissions programme.  Organisations will need guidance in evaluating the many project variables (supplier selection, capital cost, ease of implementation, carbon impact, etc), especially when overlaid with their own unique circumstances and priorities.  They will also need help with project implementation.

Auditel is a long-established procurement and cost-management consultancy with huge experience in delivering these types of projects.  If we are already managing an organisation’s carbon reporting, the information and relationships necessary to deliver ancillary projects will already be in place. It makes obvious sense to use the same provider for both.  We have the competencies in-house to deliver the whole package – virtually every other CFR provider does not.

Materiality, scope and other considerations

Decisions made at the start of any carbon reporting process will determine what data is collected, by whom, and whether the resultant CFR will be sufficiently broad in scope and detail to satisfy the criteria for external verification.

Online ‘Check your carbon footprint’ calculators, homebrew spreadsheets and proprietary solutions are seldom based on a deep knowledge of what considerations are important – or where certain efforts (such as collecting additional data) are wasted effort.

The myth of ISO 14001 exemption

There is much misapprehension that ISO 14001 is a valid substitute for a verified PAS2060-compliant CFR.  It is not. The confusion stems from a misunderstanding about the difference between verification and certification.

Certification is the activity of evidencing that a management system has been correctly constructed and conforms to a particular standard, and is therefore capable of functioning in accordance with that standard.  Verification is the process of checking that the output of a system (usually a dataset) is accurate.

A simple analogy – MOT testing stations are certified by the DVLA as having the correct systems in place to test vehicles to a defined standard. The testing station then tests each vehicle using the systems and processes defined by the DVLA – it measures various aspects of a vehicle’s performance to verify whether or not that vehicle is roadworthy.

To extend the analogy – the certification approach would allow the car to be submitted for the MOT and then have a report issued when complete. The MOT and the content of the report, i.e. that which has the intrinsic value, is a verification. The user of the report is only really interested in the validity of the report and that validity can only be assessed from the test results and the test itself.

Certification and verification are not synonyms.

To Conclude

For many organisations, carbon reporting and emission reduction is now a legal obligation or a commercial necessity.  At the very least, customers, shareholders and investors have a growing awareness of environmental/CSR considerations.  Social media has hugely increased the speed at which any accusation of greenwashing will spread, magnifying its reputational damage.

It is no longer sufficient (or compliant) to base environmental reporting on unverified, proprietary documentation.  The world has moved on, and Auditel has moved with it.  As we head towards net zero and 2050, the pace of change will only accelerate. To find out more about our carbon solutions, visit our carbon consultancy page.

How to avoid Greenwashing?

June 23rd 1988 marked the date on which climate change became an international issue. In a landmark testimony before the U.S. Senate Energy and Natural Resources Committee, Dr. James  Hansen, then director of NASA’s Institute for Space Studies, stated that;

“Global warming has reached a level such that we can ascribe with a high degree of confidence a cause-and-effect relationship between the greenhouse effect and observed warming…In my opinion, the greenhouse effect has been detected, and it is changing our climate now.” 

Building on over 20 years of energy saving and supply chain experience, in 2020 Auditel’s Carbon Strategy Group released a guide to design and deliver a sustainable business. Our clients desire for recognition of the decarbonisation work Auditel had helped implement led to a quick realisation that a standard for demonstrating Carbon Neutrality was needed. Following extensive research, dating back to 2012, we adopted PAS2060, the only internationally recognised standard for carbon neutrality, which had been released with a relatively slow uptake by BSI in 2010. PAS 2060 was developed by BSI (and other organisations such as BP Target Neutral and Forestry Commission) to specify requirements to be met by an organisation seeking to demonstrate carbon neutrality through the quantification, reduction and offsetting of greenhouse gas (GHG) emissions and came into effect in April 2010.

Auditel worked closely with BSI during the early part of 2021 to raise awareness of the benefits of using PAS2060 due to help support market demand and at the same time become one of the first members of their Associate Consultants programme to be able to  offer support to the standard. The reason for our market positioning was clear; over a 32-year period from 1988 to 2020, the environmental movement had developed at pace through organisations passion to save our planet. However, this passion was in a totally  unregulated market.

There has been development both in organisations trying to do the right thing themselves, together with independent companies offering their own set of guidelines and accreditations achieving their self-generated badge of honour for public display of commitment to the cause.  There are three main areas of certification, accreditation and standards to consider.

SELF-CERTIFICATION

SME or corporate, some companies will try to do it themselves, believing they may have both the knowledge and the resources internally after a degree of research. This can be a breeding ground for some of the worst types of claims for greenwashing being made  whilst the organisation really is trying to do the right thing. There is an argument to say, why would you do this, you have an accountant and a solicitor, carbon emissions are now government compliance, with balance sheet liabilities and corporate taxation on  their way for 2023. Carbon accounting is a professional service that probably should be left to the experts. The old saying is true ‘what gets measured gets managed’. When left to your own devices, this in turn opens up the options of calculation methods. There are  a plethora to choose from including free online calculators in exchange for your email address, all the way to bespoke software packages encompassing eye watering costs. As this market is also unregulated, the accuracy of these products also vary and go un-challenged.

If carbon neutrality is the ultimate goal, the plan will inevitably include the purchase of offsets. Robust examinations prove there is a vast disparity in the accuracy of the current calculation tools, which can lead to purchasing either too many or indeed too few offsets defeating the original objective, again leading to potential claims of greenwashing.

INDEPENDENT ACCREDITATION

Outsourcing professional services has traditionally led to some very passionate organisations with a wealth of environmental knowledge, promoting their beliefs on sustainable business practices. There are a few who have been around for quite some time and with the lack of any recognised standards, historically creating their own, effectively you could say marking their own homework. This could arguably be better than self-certification, as certainly the passion and possibly the knowledge will be more robust, usually involving an annual subscription fee to be a member or partner of the organisation.

They will each have their preferred calculation software, again unregulated, but firm in the belief that it will provide the service needed by the client. The membership fee will also include the use of their own certification, together with the use of their logo for marketing purposes. Some of the organisations have been around for many years, which can in some cases allow them to drift off course in terms of the detail in claims being made due to the lack of regulation and guidelines. An example of this are spurious claims of working to a recognised standard, which when challenged prove not to be the case, together with certificates being issued, which again when challenged are swiftly reviewed and amended due to inaccurate  statements being made.

The difficulty in selecting partners in this sector are that they are well established, with a strong client portfolio to boast, which in most cases looks both impressive and credible. It has been acknowledged by certification bodies that this activity encourages a bit of a ‘wild west’ culture, which again can leave clients vulnerable to claims of greenwashing, albeit unintentionally.

THIRD PARTY VERIFICATION

PAS2060 was relaunched in the UK in June 2021, with both BSI (British Standards Institution) & NQA (National Quality Assurance) as verifiers of UKAS, as accredited certification bodies, together with several professional consultancies including Auditel, working with them as Associate Partners & Consultants to the only internationally recognised standard available. It could be argued that this was the game changer. Now that an official standard has been set, it does leave spurious claims and practices open to criticism and debate. A benchmark has now been established.

The UK government are currently regulating the industry with both legislation and taxation. In July 2021 PPN/0621 stipulated that public sector tenders in excess of £5M in value will no longer accept bids from companies without a credible carbon reduction plan. It is also rumoured that this figure is due to be reduced on a constantly reviewed basis to include more businesses at a lower value of work. The critical difference with third party verification is the robust process that has to be adhered to in compliance with PAS2060 to achieve carbon neutrality. Organisations can purchase the documentation themselves, follow the process, then go to a verification body to achieve the standard. There is also help available to assist organisations through this process if the knowledge and experience does not exist in house through professional services such as Auditel.

The benefits with PAS2060 are clarity, consistency and transparency, leaving no threat to claims of greenwashing. The cost to benefit analysis can be examined to establish the true value that is both required and can be afforded by the business. The cost of doing nothing just yet can also be quantified and calculated. The cost of either a self, independent, or third party process is quite straight forward, looking at the availability and cost of internal resources, versus a tendering process of outside help based on the quality and value of service. The cost of doing nothing will evolve over the short to medium term leading to investor concerns, staff disengagement, increased taxation, and non-compliance. We firmly believe that carbon neutrality does not have to cost the earth.

NQA – WHAT IS PAS 2060?

To minimise the effects of climate change, countries need to significantly reduce their reliance on fossil fuels and their total greenhouse gas emissions. A large proportion of which comes from commercial and industrial activities; therefore businesses must bear the responsibility for minimising emissions and overall environmental protection. To show their commitment to protecting the environment, companies often claim to be carbon neutral, or that their emissions do not contribute to a net increase in global emission levels. PAS 2060 is an internationally recognised standard designed to verify the accuracy of these claims and help companies achieve true carbon neutrality through earnest means. Developed by the British Standards Institution and implemented in 2010, PAS  2060 presents four key stages to carbon neutrality — measurement, reduction, offsetting and documentation. At the end of the process, businesses can pursue verification with an independent third party like NQA. Although the standard does allow companies to purchase carbon credits as part of the process, it’s important to note that offsets must meet certain criteria, and companies cannot receive PAS 2060 verification using offsetting alone.

The standard builds on existing environmental standards such as ISO 14001 and PAS 2050, which deal with the emissions of products throughout their lifespans. No matter what sector you operate in, your organisation can use the PAS 2060 standard to strengthen relationships with customers and contribute to the long-term stability of life on Earth.

BSI – WHAT IS CARBON NEUTRALITY AND PAS 2060?

Carbon neutrality means not adding new greenhouse gas (GHG) emissions to the atmosphere. Where emissions continue, they must be offset by absorbing an equivalent amount from the atmosphere, for example through carbon capture and reforestation that is supported by carbon credit schemes. Governments are increasingly insisting on carbon neutrality. The UK government, for example, has set a target for all businesses to become carbon neutral – or achieve ‘net zero’ GHG emissions – by 2050. In addition, carbon neutrality is a key objective for organisations wishing to:

  • Help combat climate change
  • Enhance their sustainability credentials and increase their resilience
  • Align with the United Nations Sustainable Development Goals (UNSDGs)
  • Gain a competitive edge by offering customers greener products and services
  • Improve business efficiency by cutting energy costs

BSI can provide verification to PAS 2060, the internationally applicable specification for the demonstration of carbon neutrality. Verification to this standard will substantiate claims you make that your business is carbon neutral. Claims by organisations that they are ‘carbon neutral’ are not always valid and may be met with scepticism. BSI verification to PAS 2060 provides a recognised method of substantiating claims that are genuine. BSI verification to PAS 2060 applies to organisations of all sizes and sectors. You can use it to demonstrate the carbon neutrality of your entire business or to any uniquely identified subject, such as specific activities, products, services, buildings, projects, or events.

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