How to make your business net zero

A step-by-step guide

You’ve probably heard of the concept of setting a net zero target, or achieving global net zero by 2050, but if you’re unsure about what this means for your business, you’re not alone! 

This guide will help outline the basic steps any business (but particularly SMEs) need to take in order to reach net zero in line with the timeframe climate scientists believe is necessary to avoid dangerous climate change.

What does it mean for a business to reach net zero?

Achieving ‘net zero’, or net zero emissions, means reaching the point at which an organisation is producing less emissions than it removes from the atmosphere, or is releasing no additional emissions into the atmosphere overall.

A business’ net-zero target is based on a baseline emissions year and is considered to have reached net-zero when it has reduced emissions from that baseline by 90-95%. The remaining emissions (<10% of the baseline) are then compensated for using carbon credits - meaning in total, there are no incremental or additional emissions being released into the atmosphere that are not accounted for. 

A net zero target is the metric a business sets for itself to determine when it will achieve net zero emissions. 

A net zero target should include:

  • Scope - which emissions sources are included in the company’s measurements (usually Scopes 1 and 2 at a minimum), and
  • Time frame - the year the company intends to reach net zero

Most reputable net zero targets are underpinned by the concept of science-based targets (SBTis). Targets are considered “science-based” if they are in line with the level of decarbonisation required to keep global temperature increase below 2°C compared to preindustrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).

SBTis particularly help define the shorter-term targets a company must hit to ensure it is on track to meet its net zero commitments and that it is decarbonising at the speed required to meet the IPCC’s goal.

Science-based targets also include additional details around:

  • Ambition - a specific commitment to how fast a company intends to decarbonise (i.e. the slope of the emissions reduction curve), and
  • Type - whether the company is intending to reduce its absolute emissions, its emissions intensity (volume of emissions relative to operational metrics), or both

‍The Science Based Targets initiative is a non-for-profit organisation set up by reputable organisations such as the WWF and the United Nations Global Compact to help organisations set actionable, realistic, and achievable targets. They have developed a consistent standard for all companies to meet in order to make net zero claims and provide public validation for companies that successfully meet these standards. Check out the SBTi website to learn more about how your company can get involved.

How quickly do we need to decarbonise & reach net zero?

Net zero is not something that will happen overnight, but it is a goal we need to progress towards globally - with urgency. 


This comes down to the concept of a ‘carbon budget’ - that is, the maximum amount of GHG emissions (or the carbon dioxide equivalent) that scientists believe we can emit, within a certain timeframe, in order to limit global warming to below 2 degrees celsius (and ideally 1.5 degrees) by 2050. 

The IPCC’s Sixth Assessment Report released in 2021 estimates that for a 50% chance to limit warming to 1.5C, our remaining global carbon budget is approximately 460bn tonnes of CO2 (GtCO2) – or just 11.5 years at 2020 emissions levels. The point at which we expend this carbon budget and exceed 1.5C global warming is where more damaging, irreversible effects of the climate crisis start to become apparent. 

With this in mind, it’s everyone’s job - from governments to businesses to individuals - to ensure we remain within this budget as a global community. While the largest emitters have the largest responsibility, it’s also up to smaller contributors (including SMEs!) to reduce their emissions in line with their size and scale – collectively, we can all make a difference!

What are the steps to reach net zero?

There are six key steps to achieving net zero emissions as a business.

Step 1: Measure your baseline

Before you can set any targets or put strategies in place, you need to know where you’re starting from. This is referred to establishing your baseline emissions scenario and involves measuring your emissions from the previous year (or several years to increase the accuracy of your data).

This will require gathering data about all business operations that produce emissions, including activities like electricity consumption, business travel, employee commute, direct emissions from fuel use,  waste production, and purchased goods and services expenditure. Your net-zero strategy baseline should account for Scope 1, 2, and 3 emissions so that reduction targets are based on the most comprehensive set of data. 

To accompany the emissions data for your base year, you will also gather the following information:

  • Base year operating data
  • e.g. # of employees, $ revenue
  • Forecast changes  
  • i.e. how much do you anticipate your business will grow over the next 5 - 10 years?
  • Sector classification
  • Identify which sector your business falls under according to the GRI Sector Classification. This will help set benchmarks for setting targets that are relevant to your industry.

Trace can help you measure your business’ emissions in less than 1 week, providing you with a breakdown of your emissions profile across all scopes and key categories - all of which will be essential information for step 2!

Step 2: Set science-based targets (short & long-term)

Once you have your baseline, the next question is, how quickly can (and should!) you reduce your emissions? 

You should define at least two key targets:

  1. When you aim to reach net zero, and 
  2. When you aim to at least halve your emissions.

There are also different types of targets. Whichever you use will depend on how the target will be measured and/or benchmarked over time. The two most common approaches include: ‘Absolute’ and ‘Intensity’ targets. However, if you’re just starting out, we’d recommend using ‘Absolute’ targets as a starting point.

Here’s an example Absolute net zero target:

[Company X]  commits to reduce absolute scope 1 and 2 GHG emissions 47% by 2030 from a 2019 base year. [Company X] also commits to reduce absolute scope 3 GHG emissions from purchased goods and services 47% by 2030 from a 2019 base year.

Step 3: Commit & share your ambition

Now you’ve got your targets set, it’s time to share them. Just like any other business target, it’s important you share your target with your team, including your board and investors. These groups are all key stakeholders in these net-zero plans as they will be responsible for putting your target to work. Sharing your target with your team can also be incredibly motivating and promote employee engagement (and in turn, retention!), especially for those who are passionate about taking climate action.

💡Did you know... 78% of employees agree with the statement “businesses need to take full responsibility for their environmental impact“?*

*Atlassian Return On Action Report, 2021

Whether you decide to share your net zero targets publicly is up to the leadership team of your business. However we recommend announcing your targets in the spirit of transparency with your customers. Sharing  your targets publicly also holds your team accountable to a wider audience, enforces action towards your reduction goals, and limits the potential for unintentional greenwashing.

If you choose to align your targets to the Science Based Targets Initiative criteria, it is a requirement to announce your targets publicly within 24 months (ideally 16 months) of your stated baseline year. 

There are three components to your public reporting with SBTi:

  1. Announcing your commitment to set science-based targets - your company logo is placed on the SBTi website
  2. Announcing your targets.
  3. Annual reporting of your emissions and progress towards your targets.

Step 4: Plan out your decarbonisation strategy

Now you’ve got your targets and you’ve rallied your team around a unified set of goals, it’s time to develop a plan on how you will achieve your targets.

Identifying the best ways to start decarbonising your business will depend on:

  1. Which emissions category/scope currently contribute the most to your overall footprint (i.e. where is the greatest opportunity for impact?), and
  2. Your capability and willingness to invest resources (financial & expertise) to implement emissions reduction initiatives

There may be some reduction strategies that result in almost immediate reductions (e.g. switching to a renewable energy retailer), while others may require investment now for longer-term payoff (e.g. switching to more energy efficient offices or manufacturing facilities).

Some of the easiest ways most businesses can begin to reduce their emissions include:

  • Significantly reducing air and car travel for business purposes
  • Switching to a carbon neutral or renewable energy retailer for all offices/ facilities
  • Choosing carbon neutral suppliers
  • Reducing waste produced in your offices/facilities by avoiding single-use products and recycling where at all possible.

We’ve written a list of over 70 ways you can reduce your office carbon footprint when you’re ready to get started.

Step 5: Review, report & adjust targets (if necessary)

Reporting on your progress is an essential part of your net zero strategy. The main way to do this is to conduct an annual carbon emissions assessment so you can track your YOY progress. 

In the interim, you can also track your progress on key emissions reduction initiatives. For example, if one of your initiatives is to switch to renewable energy across all your office locations by a certain date, you may wish to report monthly or quarterly on how you’re progressing towards that goal (e.g. 50% complete, or on track/off track).

There are select cases where you may find you need to adjust your original targets, including:

  1. The nature of your business changes significantly, rendering your original targets as irrelevant to your industry or operations. 

E.g. if your main product line or service offering changes.

  1. You find you’re significantly outperforming your interim targets and therefore realise your initial targets were not ambitious enough.
  2. Intensity targets used (e.g. level of production/ output) no longer accurately reflect the way your business is operating, meaning the relationship of these targets to emissions reductions are largely meaningless. 

E.g.  Your original targets tracked revenue produced from a certain product/service but you later significantly changed your prices.

While changing your targets will make tracking progress overtime more difficult, inappropriate targets aren’t useful for achieving the ultimate goal of minimising your business’ impact on the planet, so don’t be afraid to change them if any of the above scenarios apply to you. Just be sure to clearly communicate your changes to all stakeholders to maintain transparency and credibility!

Step 6: Offset your remaining emissions

Once you have reduced your business emissions as much as possible (by 90 - 95%), you can use carbon offsets to compensate for the remaining emissions in order to officially achieve net zero emissions.

Is it possible to achieve net zero without offsets?

At this stage, it is highly unlikely most businesses will be able to achieve net zero emissions without the use of some carbon credits. In fact, it is most likely that there will continue to be a low level of emissions produced from human activities indefinitely, but the goal is that the volume of these emissions is within the range that allows the Earth’s natural carbon cycle to maintain global temperatures at a safe level.

With the technologies available to us today, it is possible for most businesses to reduce their emissions by at least 90% within the decade. However in order to reach true net zero, certified carbon credits can be used to make up the difference.

Even before you have reached net zero (which may take several years), offsets are a mechanism for taking responsibility for your business’ emissions as you continue the reduction process, having an immediate impact, and reflecting the cost of the emissions your company produces on your company balance sheet. 

By offsetting all of your unavoidable emissions even before you reach net zero, your business can be considered ‘carbon neutral’ as you implement your reduction strategies. Chat to the Trace team about how to make your business carbon neutral in less than one week and start your journey to net zero.

What’s an example of a ‘bad’ net zero target?

A good net zero target will have the following qualities:

  • A clear timeframe for achievement that includes short AND long term milestones
  • Easy to comprehend rationality behind how and why the target will lead to the expected reductions 
  • Any assumptions around measurement (scopes & emissions boundaries) are clearly stated

Common downfalls of net zero targets include:

  • Targets to reduce emissions by a specified mass of GHGs. e.g. “to reduce emissions by 5 million tonnes by 2030”), because this doesn’t provide transparency about the company’s actual, overall emissions performance.
  • Targets that benchmark performance against sector average values. Sector-benchmarked targets may change over time with changes in sector performance, reducing the ability to track long-term changes in performance.
  • Targets that rely heavily on carbon offsets (i.e. more than 5 - 10% of emissions reductions)

Learn more

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