Achieving net zero: challenges and best practices
For both businesses and customers, reducing environmental impact is quickly becoming a top priority. A key part of this involves cutting down on the amount of greenhouse gas emissions released into the atmosphere.
The term 'net zero' is used as a shorthand for these decarbonisation targets. Yet, to turn net zero from ambitious goals into reality, manufacturers need to get to grips with what it means and put strategies in place to make it possible.
This article will outline the net zero challenges these manufacturers face. Plus, it will set out some best practices to overcome them and continue delivering for customers. We’ll cover:
- What does net zero mean?
- What is the difference between carbon neutral and net zero?
- Why is net zero a focus for manufacturing?
- What net zero challenges are manufacturers facing?
- How are manufacturers overcoming these challenges?
- What part is technology playing in manufacturers' net zero strategy?
- What will the benefits of achieving net zero be?
What does net zero mean?
Net zero is now widely defined as cutting greenhouse gas emissions to as close to zero as possible, with any remaining emissions re-absorbed or removed from the atmosphere, such as through oceans or carbon capture and storage.
However, note the word ‘net’ before the word ‘zero’. It is about achieving a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere (by for example carbon capture and storage).
This means that there are two routes that can be taken towards achieving net zero. Firstly, reducing current emissions and secondly, to actively remove any residual greenhouse gases.
When the total carbon emissions produced have been cancelled out by the amount removed, net zero will have been achieved. Naturally, the lower the emissions, the easier this is to achieve.
The aim is to limit global warming to 1.5ºC This level has been determined by scientists as one which can be reached before the planet begins to experience the worst effects of climate change.
Based on this limit, the required volume of emissions reduction can be determined for each company. Globally, net-zero targets amount to reducing emissions by around half by 2030 and releasing zero emissions from 2050 onwards.
What is the difference between carbon neutral and net zero?
Though they are used interchangeably in conversations about climate change, there are some key differences between the terms carbon neutral vs net zero.
One of the main differences is that carbon neutrality usually only refers to carbon emissions while net zero takes all greenhouse gas emissions into account. This includes methane, nitrous oxide and hydrofluorocarbons. As a result, businesses aiming to achieve carbon neutrality only need to measure their carbon dioxide emissions.
Similarly, an organisation can become carbon neutral by simply offsetting the carbon emissions they're producing. This doesn't mean they have to directly reduce carbon emissions within their own business but can offset them via external projects. These projects can either reduce or remove carbon from the atmosphere. Tree planting, land restoration and cycling-to-work schemes are some examples.
In contrast, the Science Based Targets net zero standard can only be achieved when at least 90% of an organisation's greenhouse gas emissions have been removed from its value chain, and any remaining emissions neutralised. Though any remaining emissions can be counterbalanced by carbon removal solutions, these must be directly linked to the business's operations or functions. For example, by storing the carbon released by a production line.
In short, carbon neutrality means offsetting any carbon emissions produced, while reaching net zero means directly removing greenhouse gas emissions from a business's functions and operations by balancing with emissions removed from the atmosphere.
Why is net zero a focus for manufacturing?
As governments develop their own frameworks for achieving net zero emissions, the manufacturing industry is under scrutiny as one of the largest producers of greenhouse gas emissions. As of March 2021, the industry produced 16% of the UK's emissions. So, if countries are going to meet their net zero targets, the actions of manufacturers are going to be crucial.
Alongside pressure from legislators and governments, customers are becoming ever more aware of their carbon footprint. This doesn't just mean they want to clearly understand the environmental impact of the products they buy, but the footprint of their entire value chain. So, in order to stay competitive, businesses need to be able to establish and report on their net zero commitments and progress.
What net zero challenges are manufacturers facing?
Reaching a more sustainable future is going to take more than improving energy efficiency or avoiding the use of fossil fuels. To truly reach net zero, organisations will have to bring about wholesale change in their functions and operations. This presents manufacturing businesses with a unique set of challenges.
Net zero's complexity
To truly become net zero, a business must be able to track, analyse and eradicate almost all the greenhouse gases they currently produce. This doesn't just mean reducing the emissions released from production processes, but the operations of their suppliers and the end use of their products.
This impact needs to be measured and reported too. So, if a business is operating globally with thousands of products and various routes to market, getting a full picture of net zero emissions is going to be a challenge. As is understanding the aspects to prioritise to reach a net zero target.
Everchanging regulatory landscapes
Although the UN’s definition of net zero is now widely accepted. Different global bodies and governments have created their own frameworks and plans on how to achieve net zero.
This becomes complex for businesses operating in several countries. Plus, alongside different standards come various methods of reporting. There are no global standards for reporting on net zero emissions yet, and each business has its own targets. This requires manufacturers to have significant capability available to complete different reports accurately.
Accurately measuring emissions
To set and execute emissions targets, manufacturers first need to gain visibility over the amount of greenhouse gases they're producing. This means having the infrastructure and processes in place to track and report on this data with accuracy and timeliness. For example, if operations in different countries are on various reporting cycles, this can make timely reviews of data difficult.
Reducing value chain emissions
Net zero doesn't just take direct emissions into account, but those of the value chain too. For example, original equipment manufacturers (OEMs) rely on other suppliers for transportation, distribution and business support services.
Yet manufacturers can often have little to no visibility or control over how their third-party emissions data is collected and analysed. In fact, they're reliant on their value chain partners being transparent and accurate with their data. This can be particularly challenging if a partner hasn't started their own transition towards net zero.
Meeting customer requirements
Customers will increasingly be asking for detailed and timely data about manufacturers' products and operations. They may want to understand the carbon footprint of each product they're ordering so they can meet their own regulatory requirement or to simply ensure they are also reducing their carbon footprint. To do this, a manufacturer needs to conduct a lifecycle analysis for each product and communicate this data back to customers in a clear, transparent way.
Answering each individual customer's needs regardless of their market, choice of products or specific data requirements is a complex challenge.
How are manufacturers overcoming these challenges?
Although there are huge challenges to reaching net zero emissions, some manufacturers are developing best practices that are helping to overcome them. More than this, they're bringing unexpected advantages and developments to their business and customers.
Developing an emissions inventory and transition plan
Developing a comprehensive emissions inventory is helping organisations to break down the complexities of net zero, prioritise the most relevant business areas and set out an appropriate plan to reduce emissions. This helps organisations break down the different areas of its operations and consider which ones have the most material impact on their emissions.
Manufacturers such as Essentra Components have managed to screen and categorise their emissions to understand where the most material impacts are, and then set out reduction activities in a specific transition plan.
As Jennifer Spence, Head of Sustainability Strategy explains: "By developing our emissions inventory for scopes 1, 2 and 3, we were able to identify that the key areas for us are material usage and transport. Specifically, what we make our products out of and how we get them to customers. From here, we can develop our transition plan to focus on our key activities that will make the biggest difference."
Using science-based targets
With their Corporate Net Zero Standard rapidly becoming the industry benchmark, more manufacturers are working with Science-Based Targets to set the exact amount of emissions they need to reduce. SBTi ensures that companies’ net-zero targets translate into action that is consistent with achieving a net-zero world by no later than 2050, and limiting global warming to 1.5ºC.
Essentra is one of these organisations. As Jennifer explains, "We have committed to SBTi and are currently developing our targets for validation. Once we have the targets in place, they'll guide the amount of emission reductions we need to make each year. Fully validated and in line with the goals of the Paris Agreement, having these net zero emissions targets in place will offer a new level of ambition and focus.
Building internal engagement
With such wholesale change and complexity being addressed within net zero strategies, buy-in needs to be established at all levels of a business to reach net zero emissions successfully. This will ensure these targets are prioritised within the organisation.
When plans, priorities and investments are driven from the top, teams will be able to understand exactly how they can work to achieve net zero emissions within their own role. For example, setting the internal processes for calculating Scope 1 and 2 direct emissions and communicating their importance will ensure each individual knows how to make net zero happen on-site.
"Sustainability is now built into our purpose," Jennifer explains Essentra's approach. "We have an acknowledgement of the importance of net zero at the top level of our organisation. The board understands that reaching net zero emissions is a key part of our future as an organisation"
Working closely with suppliers
Achieving net zero emissions doesn't just mean dealing with direct operations emissions, but those of the value chain too. This requires buy-in from external as well as internal stakeholders. By working closely with suppliers, distributors and original equipment manufacturers to understand their emissions reductions plan, manufacturers gain the visibility they need to meet their net-zero pledges.
As Jennifer explains, "It's important that suppliers know exactly what's required and when. Whether it's in terms of reporting or organisational changes. This means maintaining open and transparent communication with those you need to share information with.”
"Essentra now has a person employed internally to work on understanding Scope 3 emissions, and people throughout the business have been receiving role specific training on how they can influence emissions reduction. By building this capability in-house, we have put a real focus on working together with stakeholders to reach net zero emissions. To achieve a net zero value chain requires collaboration. This means talking to the whole supply chain and collaborating to meet all our net zero pledges."
Building robust ESG governance
By having high standards for environmental, social and corporate governance (ESG) in place, manufacturing businesses will have an established approach to dealing with changes in the market or legislation.
This gives a framework for making decisions in the best interest of the business, its stakeholders and the environment, helping maintain preparedness and resilience even under changing or complex regulations.
Emma Reid, Company Secretary explains that Essentra’s approach involves, "Actively horizon scanning to maintain compliance and quality across all operations. We prioritise identifying upcoming legislation and work with the business to put in place practical steps at the right time. This way, everyone in the business feels prepared and able to manage changes in the landscape".
What part is technology playing in manufacturers' net zero strategy?
As more manufacturers start to put net-zero strategies in place, new technologies will start to emerge as essential to achieving a sustainable future.
Data systems and automation are already enabling manufacturers to communicate with other parts of the supply chain and customers more effectively. By automating processes, systems from different stakeholders can send data to each other easily, reducing the need for a manual, spreadsheet-driven operation.
Other technologies, like artificial intelligence (AI), are still being scoped out for their advantages in reducing net zero emissions. However, taking a considered approach to the integration of these technologies will ensure manufacturers select the right tools with their specific goals and transition plans in mind.
"It's amazing how the need for change can be a catalyst for innovation," says Jennifer. "Before COVID-19 we didn't realise how useful the QR code could be, for example. To reach net zero, we need to thoroughly understand new technologies, what they mean and how best we can integrate them to help us reach our goals."
What will the benefits of achieving net zero be?
Alongside limiting the impact of global warming, reaching net zero emissions will bring about wholesale changes within the structures, processes and operations of manufacturing businesses. These changes won't just focus on improving the efficiency of an organisation, but better meeting the needs of customers too.
With a diverse customer base in different markets, there are huge variations in the types of requirements Essentra is expected to meet. However, by working hard to understand exactly what customers need and finding the commonalities, the team is aiming to deliver better products and services while also prioritising sustainability.
As Jennifer explains, "Sustainability is an opportunity. It's synonymous with efficiency. You can save costs and improve operations by focusing on reducing energy use, for example. We also want to deliver more sustainable products for our customers.
That's why we've developed our Centre of Excellence. Here we can trial new materials and design products in different ways. We can make them more sustainable by using recycled content or more efficient designs. Plus, we can ensure they still benefit customers with the added advantage of a lower carbon footprint. In short, establishing a plan to reach net zero emissions is a great opportunity for everyone."