Net-zero emissions
Conducting business almost always releases greenhouse gas (GHG) emissions into the atmosphere. Electricity or natural gas are needed for your building, paper and plastic are necessary for office activities, machines and trucks use energy, and fuel is required for business travel and product delivery.
But businesses can also decrease their GHG emissions through various activities. If you reduce the energy use of your building, electrify your vehicle fleet, or invest in maximizing your equipment efficiency, for example, you’ll reduce your GHG emissions. Achieving net-zero emissions also involves purchasing carbon offsets and, in some cases, can also involve investing in carbon capture and storage technologies.
After reducing your GHG emissions to a minimum, if they are equal to the amount of GHG emissions your company is offsetting, it has achieved net zero. If your emissions are below that amount, you are in a net-positive position.
Pierre-Olivier Brodeur, Director, Sustainability and Social Impact at BDC, explains how businesses get to net-zero emissions.
“At its core, net zero means that a business will reduce its GHG emissions to the smallest amount possible. It will then offset the remainder, which are the residual emissions they have not been able to eliminate.”
“So, if you add the GHGs that the organization or company emits and then you deduct from that total the amount of GHGs that are compensated for—known as offsets—you end up with a total of 0 GHGs or less.”
At its core, net zero means that a business will reduce its GHG emissions to the smallest amount possible. It will then offset the remainder, which are the residual emissions they have not been able to eliminate.
Pierre-Olivier Brodeur
Director, Sustainability and Social Impact, BDC
What is a net-zero business?
A net-zero business has a plan to reach a state where its activities don’t add any GHG emissions to the atmosphere. While it may still contribute some carbon emissions, carbon offsets would balance those out. The business is net-zero once the plan has been implemented.
Isabelle Bouchard, Senior Advisor, Sustainability and ESG at BDC, says becoming a net-zero business could help your company stand out. “You have committed to balancing all emissions from your activities. You’ve decided to measure what you emit and take action to remove it.”
She says a true net-zero plan must be integrated into your business plan and ingrained in the value of the product you bring to the market.
“The reason we talk about achieving net zero is because that's what's necessary to limit global warming to 1.5° C, which was set out in the Paris Agreement.”
A construction company aiming to become net-zero
Construction company Chandos is working to make its business net zero.
In 2020, the Alberta-based and employee-owned business announced a net-zero target for 2040. Since then, Chandos has been reducing the environmental impact of its operations, shifting from diesel to electric equipment and vehicles, and transitioning to clean energy at its job sites.
Jen Hancock, VP of Collaborative Construction at Chandos, outlines the challenge for the company, which has been working to decrease its GHG emissions.
“You’re having to figure out all of the things that are emitting GHG, through the use of diesel, gas and electricity, so it was a big job to tackle.”
The net-zero plan reaches beyond its operations to include emissions from materials it purchases and uses in its construction projects.
The changes appear to have boosted the company’s image in the eyes of those on the commissioning end.
“There is no question that we have secured jobs that we normally would not have been considered for,” says Hancock, who credits the company’s climate change actions.
The company says this commitment has also improved its recruitment and retention efforts.
You have committed to balancing all emissions from your activities. You’ve decided to measure what you emit and take action to remove it.
Isabelle Bouchard
Senior Advisor, Sustainability & ESG
How is net zero calculated?
Calculating your GHG emissions is the first step in creating your net zero plan. It involves looking at your Scope 1, 2, and 3 emissions that categorize different sources of emissions associated with your company’s operations. Note that not all scope 3 elements are relevant for every company.
You can use BDC’s free GHG calculator toolkit to get started.
“Once you quantify how much you emit, then you can look at how you can cut down on those emissions,” Bouchard says. “You’ll want to take steps to avoid, to reduce and to make your business more efficient,” she says. Only when you have a clear path to reduce your emissions should you be buying offset credits on the market.
“Then you simply do the equation to make sure that what you offset is equal to what you emit.”
At that point, you can register with The Global Network for Zero, which certifies your calculation. You could also join the Canadian Net-Zero Challenge, which can help you get public recognition for your efforts.
How to make your business net zero
The first step in making your business net zero is to know how much GHG your company emits. This exercise, known as a GHG inventory, will allow a business to gain a precise picture and identify how it can reduce emissions.
“For example, you can reduce emissions by switching from a gas heating system to one run on electricity heating system, or by replacing traditional vehicles with EVs, in regions where the electricity is produced from renewable energy,” says Brodeur.
He says that a robust GHG reduction plan must be reviewed annually to ensure that the business’s targets are met.
Practical examples of actions to reduce emissions in your business
Buildings and equipment
Quick wins
- Turn off and unplug unused appliances.
- Adjust thermostats and turn off lights when space is unoccupied.
- Keep blinds closed to keep heat in or out (depending on the season).
- Install LED light bulbs and motion sensors for lighting.
Long-term projects
- Switch to energy-efficient equipment.
- Improve insulation by replacing windows, doors and roofing.
- Replace your HVAC system with energy-efficient heat pumps.
- Install insulation or waste-heat recovery systems on your equipment.
- Install solar panels.
Vehicles and transportation
Quick wins
- Promote carpooling, public transportation, biking and remote work for employees.
- Offer training for drivers on environmental driving techniques and implement a no-idling policy.
Long-term projects
- Install charging stations for your customers or employees.
- Switch to electrical vehicles or low-emission business vehicles.
- Switch to smaller and more efficient vehicles.
- Streamline logistic routes using software and optimize truck loading through consolidated shipping.
Procurement and waste
Quick wins
- Donate leftover food to food banks and community non-profits.
- Compost food waste and unused materials from your offices and facilities.
Long-term projects
- Prioritize suppliers with a commitment to the environment.
Climate leadership and certification
Quick wins
- Adopt an environmental policy with a focus on emissions reduction.
- Provide training on climate change and best practices to employees.
- Estimate your emissions, then draw up an action plan to reduce them.
Long-term projects
- Get an environmental management certification.
- Get a green certification for your products or building.
Why net-zero businesses are important for entrepreneurs
According to Statistics Canada, businesses with 1-99 employees represent 98% of all Canadian businesses and emit around 40% of the country’s GHGs.
For Bouchard, that points to a critical mass of power and the potential to bring about positive change.
“It’s such a large share of our economy. And if entrepreneurs get involved and take action, it creates demand and change for our society, innovations for the climate and a more conscious consumer.”
She adds that this is far from an altruistic exercise for businesses, as lowering your emissions can attract more consumers while helping you run a more efficient company. “At the end of the day, because you have less waste, you’re more profitable.”
What is the Corporate Net-Zero Standard?
The Corporate Net-Zero Standard is a framework developed by the Science Based Targets initiative (SBTi) to help companies set and achieve ambitious climate targets. It provides guidance on how organizations can plan and implement strategies to reduce their emissions in accordance with climate science.
Key components include:
- Setting targets
- Reducing emissions
- Being transparent and accountable
- Being inclusive with suppliers
The standard aims to provide a robust and consistent approach to corporate climate action, driving meaningful change and accountability in the fight against climate change.
Bouchard says that because of the rigour of the science-based targets, many SMEs may not be ready to subject themselves to this level of scrutiny.
“If you do use science-based targets, you’ll need somebody specialized in sustainability to be on your team.”
The concept of net-zero requires that you first reduce your business’s GHG emissions as much as possible before compensating with offsets.
Pierre-Olivier Brodeur
Director, Sustainability and Social Impact, BDC
Canada’s net-zero legislation
Canada has put its commitment to achieving net-zero emissions into law. In 2021, it enacted the Canadian Net-Zero Emissions Accountability Act, which commits the country to becoming a net-zero nation by 2050. It also created the Net-Zero Advisory Body to engage Canadians and provide independent advice to the Minister of Environment and Climate Change in the push to achieve Canada’s target of net-zero emissions.
Is net zero the same as carbon neutral?
Net zero and carbon neutral are two similar concepts, but they differ slightly.
“When we talk about carbon neutrality, we are simply saying the amount emitted by an organization is equal to the amount that’s compensated, without the business needing to reduce its emissions,” explains Brodeur.
“The concept of net zero, however, requires that you first reduce your business’s GHG emissions as much as possible before compensating with offsets.”
He says net zero is more robust and rooted in science than carbon neutral.
“That’s because it requires you to reduce emissions. It also falls in line with international science-based targets like those of the Paris Agreement, which calls for the limiting of global warming to 1.5°C.”
Next step
The key to achieving net zero is cutting your business’s emissions. Discover how you can start by downloading BDC’s free guide, Reducing Greenhouse Gas (GHG) Emissions.