Climate change is upon us. Large net zero companies should be in pole position in the sustainability race.
But are they doing their eco-friendly homework?
This article will assess six giant corporations and unveil their climate actions so far.
Net zero is a buzzing word going viral nowadays. And it’s not the only one. Carbon neutral, climate positive, you name it.
So, first let’s try to clean the air from the confusing carbon clouds.
What is Net Zero?
You achieve net zero when you have a balance between greenhouse gas (GHG) emissions (not just CO₂ but also methane for instance) released in the atmosphere and those removed from the air.
Rather, if you wanted to have zero emissions, you should not release any CO₂ at all.
The Paris agreement imposed countries worldwide to reach net zero carbon emissions by 2050. This would prevent the planet temperature from increasing more than 2 (ideally 1.5) °C.
Many nations, cities and businesses across the warming globe have already set their net zero commitments.
Net zero vs carbon neutral vs climate positive
Right, we unlocked the net zero mystery.
What about carbon neutral?
As per the IPCC definition, net zero turns into carbon neutral if you swap GHGs with CO₂.
Some companies have misinterpreted carbon neutrality. They often touted themselves as carbon neutral by relying on carbon credits. But purchasing low-quality (non-additional) carbon allowances doesn't remove any emissions from the air.
Instead, if you sustainably walk the extra mile, you can be climate positive (or carbon negative, depending on the point of view).
In this case, the amount of CO₂ you remove from the air is higher than your carbon dioxide emissions. So, rather than breaking even (neutrality), you would achieve a positive balance for the climate (i.e. a negative balance for the carbon in the atmosphere).
An insight on emissions
Based on the Global Protocol for Community-Scale (GPC) Greenhouse Gas Emission Inventories, a business’ carbon footprint falls within three different scopes:
- Scope 1: emissions that a business can directly control (e.g. in-house vehicles used for transport of goods, use of a boiler).
- Scope 2: indirect emissions “owned” by the business, like the electricity used on site to turn on lights and power other devices.
- Scope 3: any other indirect emissions (“not owned”) that are part of the company’s value chain, like business travel or suppliers carbon footprint.
Except for brand new start-ups, a net zero company should ideally compensate for all its historic emissions. As the name suggests, these include all the GHGs released by a business since it was founded. Though, removing a company’s lifetime footprint is not a requirement for achieving net zero.
As defined by IPCC, you achieve net zero only by removing emissions from the atmosphere. There’s been a bit of confusion on how a company can accomplish that. Let’s try to clarify this point by comparing carbon offset (credit purchase) and carbon removal projects.
Carbon Offset vs Carbon Removal
An individual or a business can buy carbon credits to compensate for emissions generated anywhere else in the world.
But does this type of carbon offset work?
Trading carbon credits is not ideal as you don’t actually remove emissions from the air. Rather, you only prevent potential future emissions from happening.
However, a more effective way to offset carbon emissions is by investing in eco-friendly projects that directly remove carbon from the atmosphere.
Examples of carbon dioxide removal (CDR) techniques include:
- direct air capture (DAC) and storage (technological).
- reforestation (natural).
- bioenergy with carbon capture and storage (BECCS) (hybrid).
While carbon removal helps reduce the GHGs level in the atmosphere, it shouldn’t be an excuse to keep generating more emissions.
What does net zero mean for a company?
A net zero company is a business who has pledged to meet their net zero carbon emissions targets by 2050 (if not earlier).
Although a net zero company should ideally balance all its emissions (scope 1 to 3), they could also achieve their net zero target for only one of the emission scopes.
In 2019, the Science Based Targets (SBTi) published a paper to provide guidelines for corporates working towards their net zero commitments. They defined the following principles:
- The business model should have a net zero impact on the climate.
- The mitigating actions implemented by the company should allow meeting the 1.5-degree global warming target with no or limited overshoot.
- The transition to net zero should minimise any climate-related risks for the corporation.
- The company’s net zero strategy should include long-term plans and investments to make their model viable in a net-zero economy.
Right, hopefully we have clarified the technical jargon.
Let’s dive into the net zero strategies six big corporations are implementing to meet their climate-friendly emissions targets.
Comparing the climate action of six big companies
| Microsoft | Stripe | Shopify | Amazon | UPS | ||
|---|---|---|---|---|---|---|
| Carbon credits | ✅ | ✅ | ✅ | ✅ | ✅ | ✅ |
| Emissions reductions | ✅ | ✅ | ➖ | ➖ | ✅ | ❌ |
| Net-zero all scopes | ✅ | ✅ | ✅ | ✅ | ✅ | ❌ |
| Year of completion (net-zero) | 2030 | 2030 | unclear | unclear | 2040 | - |
| Carbon negative | ✅ | ❌ | ✅ | ❌ | ❌ | ❌ |
| Net-zero historic all scopes | ✅ | ➖ | ➖ | ➖ | ❌ | ❌ |
| Technological removal | ✅ | ❌ | ✅ | ✅ | ➖ | ❌ |
| Nature-based removal | ✅ | ✅ | ✅ | ✅ | ✅ | ❌ |
1. Microsoft
Net Zero Target
Microsoft's net zero strategy will make the company carbon negative by 2030. That’s what they announced in a blog post in January 2020. To add to that, the company is planning to remove all their historical emissions by 2050.
Emissions scopes
Until last year, Microsoft had not tackled their scope 3 emissions, which account for ca. 75% of the company's carbon footprint (16 million metric tons of carbon in 2020).
However, they now committed to reduce their emissions across all three scopes. On top of that, they have extended the application of their internal carbon tax on all of their scope 3 emissions.
Technologies
So far, Microsoft has purchased carbon credits to avoid emissions. Yet, the company will build a portfolio of negative emission technologies (NET). These may include afforestation, reforestation, soil carbon sequestration, BECCs and DAC.
Bill Gates' brainchild has also set aside a $1 billion Climate Innovation Fund to boost the development and scale-up of carbon removal and other climate technologies.
✅ Carbon credits - purchases carbon credits
✅ Emission reductions - aims to reduce emissions for all scopes
✅ Net-zero all scopes - aims to achieve net-zero emissions for all scopes
✅ Carbon negative - aims to achieve net-negative emissions
✅ Net-zero historic all scopes - aims to achieve net-zero historic emissions for all scopes
✅ Technological removal - uses technological carbon removal methods
✅ Nature-based removal - uses nature-based carbon removal methods
2. Google
Net Zero Target
The world’s leading search engine is aiming even higher than Microsoft.
If you’ll google "carbon" in 2030, you might not get any results.
In fact, Google claims it will be carbon-free by 2030, which would mean zero emissions.
According to Google’s CEO, the company has already compensated for their carbon legacy since 1998 by purchasing high-quality offsets. However, someone should tell him that buying carbon credits doesn’t mean becoming net zero.
Emissions scopes
Based on the company 2019 environmental report, Google’s efforts have focused on reducing scopes 1 and 2 carbon footprint so far. However, they’re also driving down scope 3 emissions by making their supply chain energy-efficient and low-carbon.
Technologies
To erase emissions from its near future, Google is shifting to zero-carbon energy generation and storage technologies. The aim is to power their data centers with round-the-clock clean energy.
But how will they fill the gap left by renewables intermittency?
- Investing in multi-source and multitechnology blended (e.g. batteries, solar and wind) power purchase agreements (PPAs).
- Working with energy suppliers for a more accessible and cheaper clean power.
- Sharing their clean energy surplus with other users.
Plus, the company is looking into more innovative tools for storing energy, such as advanced nuclear, enhanced geothermal, green hydrogen.
✅ Carbon credits - purchases carbon credits
✅ Emission reductions - aims to reduce emissions for all scopes
✅ Net-zero all scopes - aims to achieve net-zero emissions for all scopes
❌ Carbon negative - does not aim to achieve net-negative emissions
➖ Net-zero historic all scopes - does not aim to achieve net-zero historic emissions for all scopes (though using offset)
❌ Technological removal - does not use technological carbon removal methods
✅ Nature-based removal - uses nature-based carbon removal methods
3. Stripe
Net Zero Target
After ending its carbon neutral journey, Stripe is now tripping along the negative route.
As part of its Negative Emissions Commitment, they are ready to spend big money on carbon removal techniques. Twice as much as they invest in offset, starting from $1M a year.
The company set a series of carbon removal targets to be met by 2040.
Although relatively younger than Microsoft and Google, Stripe has not openly committed to remove their lifetime carbon footprint yet.
Emissions scopes
Besides reducing scope 1 and 2 emissions, Stripe committed to address their scope 3 carbon footprint as much as possible.
Technologies
Stripe’s net zero approach has so far included additional carbon offsets and carbon allowances (credits).
However, the company is now focusing its money on two groups of carbon removal technologies:
Carbon storage in the biosphere (e.g. tree planting, soil sequestration) Carbon storage outside of the biosphere (e.g. DAC).
As of today, they have already funded four carbon capture and storage projects.
✅ Carbon credits - purchases carbon credits
➖ Emission reductions - aims to reduce emissions for some scopes
✅ Net-zero all scopes - aims to achieve net-zero emissions for all scopes
✅ Carbon negative - aims to achieve net-negative emissions
➖ Net-zero historic all scopes - does not aim to achieve net-zero historic emissions for all scopes, is a very young company having relatively small historic emissions though
✅ Technological removal - uses technological carbon removal methods
✅ Nature-based removal - uses nature-based carbon removal methods
4. Shopify
Net Zero Target
After switching off their fossil fuels-guzzling servers and turning to Google Cloud, Shopify’s platform is now carbon neutral. Shopify followed Google’s bad example by stating they purchased enough green energy carbon offsets to cancel out all their historical emissions. Again, that’s not the way you go net zero.
Although Shopify mentioned about a carbon negative commitment, the company has not disclosed any time-bound net zero target.
Emissions scopes
The company seems to be active on all their emissions scopes. They are creating green offices to reduce their premises emissions (scope 1). As for scope 2 (e.g. energy supply) and scope 3 (e.g. business travel) the king of ecommerce has got carbon offsets on its shopping list.
Technologies
Through their Sustainability Fund, Shopify will spend at least $5 million per year on carbon removal technologies. This should pave the way to their carbon negative path.
Their funds split between frontier (75%) and evergreen (25%) clitech, with biofuels and DAC altogether accounting for ca. 50% of their annual investments.
As claimed in one of their press releases, Shopify’s investments in DAC currently outweigh everyone else’s.
✅ Carbon credits - purchases carbon credits
➖ Emission reductions - aims to reduce emissions for some scopes (though they use offset to compensate scope 3 emissions)
✅ Net-zero all scopes - aims to achieve net-zero emissions for all scopes
❌ Carbon negative - does not aim to achieve net-negative emissions
➖ Net-zero historic all scopes - does not aim to achieve net-zero historic emissions for all scopes (though using offset)
✅ Technological removal - uses technological carbon removal methods
✅ Nature-based removal - uses nature-based carbon removal methods
5. Amazon
Net Zero Target
In 2019, the world's largest online marketplace committed to reach net zero carbon across its business by 2040.
Amazon has also set two early targets: renewables-powered operations by 2025 and 50% net zero shipments by 2030.
Although Amazon boasted “it's time to make carbon history” on their website, it’s not clear whether they will remove their historical emissions.
Emissions scopes
In its 2020 sustainability report, Amazon measured its overall carbon footprint, including a scope breakdown. Their carbon reduction plan covers emissions from all three scopes.
Technologies
Amazon is planning to purchase a fleet of 100,000 electric vehicles (EVs) for its deliveries.
After signing the Climate Pledge, Bezos’ corporation has invested $2 billion to support companies across different sectors (transportation and logistics, energy generation and storage, circular economy) that create low-carbon innovations.
Also, the company is spending $100 million in nature-based technologies such as reforestation, urban greening and improved land management projects.
✅ Carbon credits - purchases carbon credits
✅ Emission reductions - aims to reduce emissions for all scopes
✅ Net-zero all scopes - aims to achieve net-zero emissions for all scopes
❌ Carbon negative - does not aim to achieve net-negative emissions
❌ Net-zero historic all scopes - does not aim to achieve net-zero historic emissions for all scopes
➖ Technological removal - Not clear. They will support companies developing climate technologies
✅ Nature-based removal - uses nature-based carbon removal methods
6. UPS
Net Zero Target
Compared to the previous corporations’ goals, UPS’ targets seem to be less ambitious. The global logistic leader committed to a 12% reduction of their ground operational emissions by 2025.
Clearly, UPS is miles away from reaching a net zero target, not to mention from removing its historical emissions.
Emissions scopes
As per its 2019 sustainability report, UPS has measured only scope 1 and scope 2 emissions.
Technologies
To achieve their decarbonisation targets, UPS is taking the following steps:
25% of their annual vehicles will use alternative fuel and advanced technology (e.g. all-electric, hybrid electric) 25% of their electricity demand will come from renewable energy sources (i.e. solar) by 2025 40% of their ground fuel will use low-carbon or alternative fuels (i.e. renewable natural gas (RNG) or biomethane) by 2025.
➖ Carbon credits - does not purchase carbon credits themselves however gives the option to their customers
➖ Emission reductions - does not aims to reduce emissions for all scopes (only Scopes 1 and 2)
❌ Net-zero all scopes - does not aim to achieve net-zero emissions for all scopes
❌ Carbon negative - does not aim to achieve net-negative emissions
❌ Net-zero historic all scopes - does not aim to achieve net-zero historic emissions for all scopes
❌ Technological removal - does not use technological carbon removal methods
❌ Nature-based removal - does not use nature-based carbon removal methods
And the climate champion is...
So, how are these six giants stacking up in the race to net zero?
Our climate action screening shows UPS lagging behind all the others.
Shopify, Stripe and Amazon appear to be at a similar stage along their low-carbon journey.
Although Google boasts to become carbon free within the next decade, they aren’t actually removing any of their historic emissions.
Overall, Microsoft seems to be ahead of the carbon extinction game and deserves the climate champion title. Besides investing big money in carbon removal technologies to get rid of their lifetime carbon footprint, they set the earliest and most ambitious target.
