Our thinking

The mystery of scope X

26 November, 2021

While the urgency around carbon reduction feels more pressing than ever, there’s a tension in the net zero narrative that isn’t yet resolved, and it’s becomingly increasingly problematic. 

Up until now, net zero was (at best) a vaguely defined term. Is it the same as carbon neutral? Is committing to net zero more ambitious than committing to an absolute reduction in emissions? Is net zero compatible with business growth?  

In October, the Science Based Targets Initiative (SBTi) launched the SBTi Net Zero standard, which provides real clarity on how to understand net zero. An SBTi-approved net zero target requires a reduction in absolute emissions of between 90-95% across scope 1 and 2 to claim net zero. This raises the bar significantly, and means that net zero and carbon neutral are no longer synonymous (the latter can be achieved through much lower reductions and a significant amount of offsetting). Like many, we welcome the clarity this brings.  

However, there’s a serious question around what this means for the next generation of businesses who are trying to be part of the solution. Current carbon accounting and carbon reduction target setting is at odds with premise that radical scale up of innovative cleantech and renewable solutions will be essential in successfully reaching net zero. Carbon emissions in our current economy are unavoidable, so how can (and indeed should) we differentiate between a tonne of carbon emitted by the scale up of cleantech businesses that will remove (or avoid) many more tonnes of carbon in our net zero future? The current system risks favouring established companies with huge opportunities to reduce throughout their value chain, and penalising innovators that are built on ‘green foundations’ and which are essential to accelerating the societal transition to net zero.  

There also isn’t yet a universally agreed method for calculating and communicating carbon emissions that are avoided as a direct result of business activities (otherwise known as ‘scope x’). How do we measure, monitor and report on these avoided emissions and how can these businesses that are supporting the net zero transition tell their carbon reduction story in a consistent and transparent way to investors and other stakeholders? 

Defining scope x is the next big challenge in the race to net zero, and this is already something we’re working on with our some of our clients. If this resonates, get in touch.  

By Jennie Mitchell