Net Zero Guidelines – A new ISO certification?

One of the more positive announcements to come out of COP27 is the release of the latest ISO standard titles Net Zero Guidelines.

This document outlines the necessity for, and pathway towards net zero that all institutions must reach the end of. It provides guidance to all entities, from Governments to organisations, to limit warming to 1.5°C. Whilst the standard is predominantly environmentally focused, it highlights the need to account for wider societal and governance issues. This further emphasises the importance of ESG in today’s corporate landscape.

The key points of IWA 42 are:

• Greenhouse gases emissions must be reduced by 50% by 2030 (2018 baseline)
• We must globally achieve net zero emissions by 2050 at the latest
• Organisations and territories with greater ability, historic emissions and therefore responsibility to achieve net zero should do so well before 2050
• Those in a position to help others less able to achieve net zero should do so
• The transition to net zero must be just, fair and inclusive, considering social and economic factors in decision making
• Interim targets should be set every 2 to 5 years
• Provides an outline of the steps that must be taken to claim achievement of net zero target

Overview

This guidance builds on established concepts and reporting methods such as the Greenhouse Gas Protocol and SBTi.

The main guiding principles of IWA 42 cover key expectations that organisations must meet. For example, targets must cover all three emissions scopes, with scope 3 reporting broken down further into the 15 categories laid out in the Greenhouse Gas Protocol’s scope 3 guidance. It encourages a risk-based approach to be taken, which weights up the risks of taking action against the risks of not taking action. The guidance also highlights the responsibility of those in leadership positions to ensure that appropriate action is taken, and that they provide their organisation the best possible chance of meeting their net zero goals.

The guidance acknowledges that different sectors have unique challenges in meeting their net zero target, and for some complete emissions reduction is unachievable. Where this is the case, sector specific 2050 emission reduction targets are provided. There was also a call to action to phase out fossil fuels in alignment with net zero 2050, something that wasn’t achieved at COP27.

The guidance also outlines a number of criteria that must be met to credibly claim achievement of its net zero target. An important criterion is that removals or offsets can only be used to counterbalance residual emissions, which shouldn’t excess 5-10% of the baseline emissions.

A just transition and wider impact

A key issue covered in the guidance is that of a just transition. All targets must consider inclusivity, fair share and equity when being set.

One way for a fair transition to be achieved is for those organisations with high current or historical emissions, or a high-capacity to act do so much faster than the global average. These organisations have a responsibility to take more ambitious climate action and even go beyond net zero. Conversely, those in territories with limited ability to act should consider the need to balance action towards net zero with the need to protect communities, society and the economy. For their net zero goals to be met, they must be helped by those with more resources and responsibility.

This highlights the importance of support, which is currently completely inadequate. The agreement of developed nations to provide $100 billion a year in climate finance by 2020 to developing nations hasn’t come to fruition. Even if the target was met, it’s inadequate as its thought developing nations need hundreds of billions of dollars annually to adapt to climate change. Though at COP27 an agreement to provide loss and damage funding to vulnerable countries was reached, it’s a vague agreement, and was most likely done to claim ‘progress’. Most probably, the best hope for sufficient climate finance comes from the private sector in developed countries who will provide external support once their own goals are reached.

Scope 2 accounting

With regard to scope 2 emissions, organisation’s main focus should be on improving efficiency and ensuring that by 2030 there is a significant increase in the procurement of low carbon or renewable energy. Importantly, organisations should specify how procurement of renewables supports additional renewable production. This is important as without increased renewable capacity, renewable energy is only being rerouted and not generated, meaning no overall reduction in carbon emissions is being achieved. Issues such as this with the market-based approach may be why the guidance recommends that the location-based method should be used, with the option to dual report.

Other remarks

The guidance also provides information on a number of best practises for example how to report progress towards net zero, as well as how to ensure offsets and removals are of good quality. Possible actions to take to reduce emissions from all scopes were listed as well as how to appropriately monitor and measure emissions.

IWA 42 offers another progressive and robust set of guidelines to achieving net zero 2050 in line with warming of no more than 1.5°C. The next step is for a certification based on the guidance to be developed, which would further incentivise compliance.