Etude

“Net-Zero” Debunked

Deloitte & Earth on Board, a field guide for Board and C-Suite executives to respond effectively to the climate emergency

Global alignment to Net-Zero greenhouse gases (GHG) emissions is imperative. Climate change science cannot be clearer: environmental conditions in a world with a global warming beyond +2°C would seriously reduce our living standards. Radical change is needed to meet the more ambitious +1.5°C that many governments are aiming for. Governments, companies, and individuals face the choice of preparing and building a Net-Zero world or facing the increasingly significant consequences of climate change. Neither is easy, but the economic cost of the former is disproportionate.

The aim of this report is to understand the implications and signification of the term ‘Net-Zero’, and to go further by proposing milestones of truly ambitious climate strategies, relevant and consistent with a carbon neutrality at the planetary level. This document is written for private actors in France and internationally. The double expertise Earth On Board and Deloitte allows us to formulate practical recommendations for respectively administration boards and executive committees.

Global alignment to net-zero greenhouse gases (GHG) emissions is imperative. Climate change science cannot be clearer: environmental conditions in a world with a global warming beyond +2°C would seriously reduce our living standards. Radical change is needed to meet the more ambitious +1.5°C that many actors are aiming for. The economic and social environment upon which they depend will change radically, whether it be because of actions to mitigate climate change or because of its effects.

The actual question that should be addressed by businesses is how they would operate in a net-zero emission world. In this framework, companies’ carbon neutrality announcements are, at best, steps which can in no way justify deterring or deferring bold contributions to the collective global Net-Zero journey.

Net-Zero is flourishing for companies striving for leadership

Our research shows a great increase in companies’ announcements of Net-Zero objectives over various time horizons, recognising their responsibility and showing positivity about the role they can play to accomplish the goals of the Paris Agreement.

Looking into the details of these announcements, we acknowledge that the concept is not yet stabilised, with corporations differing in their scopes, time horizons, transformative pathways and emission reduction efforts, thus showing that this apparently simple concept drives a lot of questions and implications.

Net-Zero debunked

The concept was first scientifically defined at the global level and calls for a global transformation of our economies. However, it has no scientific reality at the company level. Companies are confronted with the following issues: they don’t know at which scale to apply the Net-Zero formula, nor to what extent they can rely on compensation for their efforts. This situation has negative consequences: corporate announcements of their goals lack clarity or are even misleading. 

They don’t accurately portray how companies may be best suited to a Net-Zero global economy, which is the question that really matters for the company. It is also possible that these claims do not maximise climate action and certainly do not answer climate urgency.

Companies need to look beyond Net-Zero to the climate-change horizon

The economic and social environment upon which they depend will change radically. Understanding the implications of climate change and what a Net-Zero world means for the existence of your sector and company is the only starting point. Compensating the emissions of a business’s activities and ecosystem is a laudable residual action but can in no way justify deterring or deferring bold contributions to the collective global Net-Zero journey.

An ambitious climate strategy is possible when the company is preparing, across its value chain and stakeholders, for a Net-Zero world, has taken full stock of what this means, and has assessed which activities in its portfolio must be expanded, ceased or transformed. 

We help businesses to think about their climate strategies

We propose a conceptual framework that will be broken down between a practical summary for Boards written by Earth on Board and an operational checklist illustrated by Deloitte with existing best practices. We hope that this tailored field guide will help clarify what Net-Zero is and help your business to capture opportunities and thrive in a Net-Zero world. 

"Net-Zero" Debunked, Deloitte & Earth on Board

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A field guide for Board and C-suite executives to respond effectively to the climate emergency

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