Every business can take climate action by becoming carbon neutral, yet very few know where to start.
The good news: you don’t need to be a sustainability expert to become carbon neutral. Just follow this step-by-step guide and bring in the right tools, people and partners along the way!
Before we jump in, let’s define ‘carbon neutral’.
You achieve 'carbon neutrality' when all of the emissions (Scopes 1, 2 and 3) produced by your organisation are equal to or ‘neutralised’ by the emissions avoided or removed from the atmosphere through the use of carbon offsets (also known as carbon credits). For every tonne of CO2 produced, a business needs to buy one verified carbon credit to consider those emissions offset.
Carbon neutrality is an achievable short-term goal for any business.We consider it to be the first step in a company’s journey to net-zero emissions. To reach net-zero, a business needs to reduce or avoid most of its emissions before they’re created, reducing the need for carbon offsets.
Learn more:
How is becoming carbon neutral different to reaching net zero?
Note: You may come across carbon neutral certification standards that define specific rules for how to measure and offset your emissions in order to qualify. However, the high-level definition of carbon neutral as it’s described above is widely accepted by experts.
There are three key steps to becoming carbon neutral.
You’re likely familiar with the saying, “You can’t manage what you can’t measure” - and managing your carbon emissions is no exception. Measuring something as intangible as GHG (greenhouse gas) emissions can be tricky. If you can’t see them, how can you measure them?
Greenhouse gas emissions (primarily carbon emissions) are a by-product of almost all of the operations your business undertakes. This includes the energy you use, the waste you create, the emissions associated with travel and the emissions of your suppliers.
To calculate the volume of emissions you’re producing, you need to capture data points like how much energy you use and waste you produce, and how often and how far you travel for business. This data is referred to as your ‘activity rate’ - in other words, how often you do something (or use energy) that produces emissions.
All the activity data you collect is used in the next step – calculating your carbon footprint!
Take a deeper look at Trace's data collection process
Now you have the data on the emissions-producing activities of your business, it’s time to use this data to calculate your carbon footprint.
To do this, the data you collect in Step 1 about your business activities is multiplied by the associated ‘emissions factor’ to calculate the volume of emissions produced by that activity.
An emissions factor is the quantity of CO2 released into the atmosphere for a specific activity based on scientific evidence.
Here’s an example of how your data could be used in this equation:
This calculation is repeated across all major areas of your business until you’ve accounted for the vast majority of your emissions-producing activities. The combined total of each calculation produces your final carbon footprint calculation. You might hear different terms like carbon inventory, carbon footprint or carbon assessment; these generally all refer to the same thing.
See below for an example of what this looks like in the Trace platform.
The final step to make your business carbon neutral is to use carbon credits (also referred to as carbon offsets) to offset your emissions.
You can think about carbon neutrality like you’re using a set of balance scales. Imagine your business’s emissions (tonnes of CO2e) on one side, which need to be 'balanced out' by carbon credits on the other side.
Carbon offsets are created through the development of climate projects that verifiably help sequester or avoid carbon being released into the atmosphere. The purchase of carbon offsets by companies, governments or individuals who want to ‘neutralise’ their carbon emissions helps finance these projects which would otherwise not have existed (and so the carbon would not have been removed/ avoided).
Because every carbon credit represents one tonne of CO2 removed from the atmosphere or avoided, you need one credit for every tonne of CO2 your business produces to ‘balance the scales’ and become carbon neutral.
You can purchase carbon credits through a range of platforms or partner organisations, but no matter how you decide to purchase offsets, it’s important to ensure they’re credible. At Trace, we use a range of criteria when choosing carbon credits for our portfolio, so our customers can feel confident they're buying the best available.
It’s important to note that offsetting isn't a standalone solution. Using the information gathered through the process of becoming carbon neutral, every company should be developing a strategy to reduce emissions today and then shift their focus to the longer term goal of a transition to net-zero.
The cost to become carbon neutral usually consists of three key components, some of which might be bundled together depending on your approach/ selected partners. These include:
The final cost can vary widely, depending on the following factors:
For an indication of costs to become carbon neutral with Trace as compared to under Climate Active, take a look at the comparison table below.
For a service-based business with 100 FTE based in Australia, becoming carbon neutral with Trace would cost approximately $10,000 (AUD) a year. To gain Climate Active certification with the help of an external consultant, the cost would be more like $23,000.
Not sure whether Trace or Climate Active is right for your business? Read through this deep-dive on the differences, and how the two can complement one another.