Moving Beyond Net-Zero: Why Becoming Carbon Positive is Essential for Corporate Systemic Responsibility

Carbon neutrality is the equilibrium between emitting carbon and absorbing carbon emissions from carbon sinks, such as forests, soils, and oceans. To become carbon-neutral, companies can either reduce their carbon emissions to net-zero or balance their emissions through offsetting and the purchase of carbon credits. Offsetting involves investing in low-carbon technologies. Companies need to calculate their carbon footprint, minimize their carbon emissions and then offset what remains to become carbon-neutral. Climate-positive implies surpassing the attainment of net-zero carbon emissions to create an environmental advantage by removing additional carbon dioxide from the atmosphere.

In today's world where climate change has become a significant global concern, companies have initiated efforts to lessen their carbon footprint. More than a third (34%) of the world’s largest corporations are now committed to Net Zero by 2030 (United Nations Global Compact, 2021) but is that adequate? According to the UN Emissions Gap Report 2020, current pledges under the Paris Agreement are insufficient and would result in a temperature rise of 3.2°C above pre-industrial levels by 2100. This is where the concept of becoming carbon positive comes in. Becoming carbon positive entails surpassing net-zero and actively removing more carbon from the atmosphere than the company emits. This is achieved through various measures such as investing in renewable energy, using carbon capture technology, promoting reforestation and adopting regenerative agriculture. It is vital for companies to become carbon positive rather than just achieving net-zero, as it is crucial to take decisive actions to mitigate climate change and prevent irreversible harm to our planet. Experts such as Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA), have also warned of this urgency (Birol, 2021).

Companies must recognize that they have a vital role to play in achieving a sustainable future and it is their responsibility to take necessary steps towards becoming carbon positive. Not only for the global good, there are also strategic reasons to do so. Companies such as Nestle and Danone, who have already launched carbon-positive practices, are being perceived as leaders in the new green economy, giving them a competitive advantage. Both companies have pledged to achieve net-zero emissions by 2050 (Nestle, 2020; Danone, 2020).

Scope 3 emissions refer to all the indirect emissions that occur in a company's value chain (Carbon Trust, 2017). These emissions include those from the supply chain, transportation, use and end-of-life phases. By accounting for Scope 3 emissions, companies can identify their entire carbon footprint, leading to more comprehensive and accurate carbon management strategies. Moreover, reducing Scope 3 emissions not only assists companies to lower their CO2 emissions in absolute terms but also in relative terms as it involves collaboration with suppliers and partners to enhance their sustainability performance, leading to a more sustainable and resilient supply chain.

Regenerative Agriculture: A Catalyst for Carbon Positive Procurement Practices

Regenerative agriculture is a set of agronomic practices aimed at restoring the quality of agricultural soils through reasoned cultivation and breeding methods. The Rodale Institute's white paper on regenerative agriculture provides a comprehensive overview of this approach (Rodale Institute, 2014). Key practices include minimizing soil disturbance (reducing tillage and plowing), crop rotation, planting hedges to prevent soil erosion and reducing the use of pesticides and fertilizers. This approach makes agriculture more resilient to environmental hazards, significantly decarbonizes the sector and sequesters atmospheric carbon, which contributes to the fight against climate change. The “4 per 1000” Initiative could play a significant role in the reduction of CO2 emissions by encouraging stakeholders to adopt regenerative agriculture practices, thereby improving soil health and enhancing carbon sequestration.

Companies should assess double materiality to respond to stakeholder demands for corporate transparency and to identify both financially material concerns and major external impacts. The concept of double materiality, introduced by the European Union Non-Financial Reporting Directive (EU NFRD, 2014), acknowledges that a company should report on sustainability matters that are financially material in influencing business value and material to the market, the environment and people. For example Microsoft’s 2020 Sustainability Report utilized double materiality to disclose both their financial risks and social impact (Microsoft, 2020). This enables companies to develop an effective management strategy and report on both internal and external issues to various stakeholders in a relevant manner while supporting sustainable development. Additionally, incorporating current and upcoming policies in a double materiality assessment allows companies to stay on top of changes that might have a major impact on the business. It's important as it helps in identifying potential risks and opportunities related to climate change and allows companies to align their strategies towards sustainable growth.

InclusEO, driven by the belief that social and environmental responsibility is an innovation driver, a competitiveness factor and a key condition for sustainable business operations, can significantly contribute to this transition. Our work involves developing inclusive and regenerative business practices at multiple levels including companies, their ecosystems and civil society actors. We assist companies in integrating social inclusion and environmental respect into their daily practices, strategies and operational processes.

Through efforts such as the creation of impact funds, impact measurement and co-creation of projects with concerned stakeholders, InclusEO offers comprehensive services that address a broad range of needs. We have been working especially on Regenerative Agriculture deployment strategy by providing to our client benchmark on companies practices and approaches, financing mechanism to support the transition, pilot design with relevant stakeholders.

In conclusion, achieving carbon neutrality is a critical step towards mitigating climate change, but becoming carbon positive is the goal for companies looking to make a meaningful contribution to reducing greenhouse gas emissions. By surpassing net-zero emissions and actively removing more carbon from the atmosphere than they emit, companies can play a significant role in creating a more sustainable future. Accounting for Scope 3 emissions and adopting regenerative agriculture practices can further enhance a company's carbon management strategies and improve the resilience of their supply chain.

Ultimately, the importance of taking decisive actions to address climate change cannot be overstated, and companies must prioritize their role in achieving a sustainable future for all. As demonstrated by pioneers like Nestle and Danone, early adoption and creation of best practices can generate a strategic advantage for companies in the medium to long run, compared to competitors who are late to adapt. It is becoming increasingly clear that by 2030, 2040 or 2050 every company will need to become sustainable. Early movers in this transition will be leading the charge and have a strategic advantage in the business of tomorrow. With these concerted efforts we can work together towards our shared goal of combating climate change and ensuring a sustainable future.

References:

• Birol, F. (2021). The global energy sector must be at the heart of the post-COVID recovery. International Energy Agency (IEA).
• Carbon Trust (2017). Scope 3 emissions and the supply chain.
• EU NFRD (2014). European Union Non-Financial Reporting Directive 2014/95/EU.
• Microsoft (2020). Microsoft Sustainability Report 2020.
• Rodale Institute (2014). Regenerative Organic Agriculture and Climate Change: A Down-to-Earth Solution to Global Warming.
• United Nations Global Compact (2021). Business Ambition for 1.5 C.
• United Nations Environment Programme (2020). Emissions Gap Report 2020.
• Nestle (2020). Nestle’s Net Zero Roadmap.
• Danone (2020). Danone’s Climate Policy.