Net Zero Strategy: Know the Involved Risks and Benefits

Posted by Cresco Group on June 22nd, 2022

A good number of countries and companies are said to have come up with net-zero pledges. This is only likely to encourage others to follow the pursuit. For corporate and governments alike, net-zero seems to be the new standard. But the question that many tend to ask is will net-zero be sufficient enough to address the concerns arising from climate change! It does come with certain benefits and limitations both of which should be understood. 

What does Net-Zero offer?

According to the experts, Net Zero Strategy sets a goal to achieve accounting system and climate stability. It helps measure the progress made towards achieving this goal. It can even be stated to be a platform over which expanding players can stay committed. Shareholders can derive climate-risk abatement without facing abrupt disruptions and near-term returns. Organizations climate-conscious businesses or customers can enjoy reputational benefits. 

Limitations faced

  • Verifiability:  Reported reductions are verified while offset pledges are executed. This represents complex challenges that are fast increasing, thereby opening schemes for further manipulation. 

  • Definitional completeness/consistency:  Varied net-zero accounting implementations combined with multiple standards help create room to undertake manipulations. Also is misrepresented pace of progress. Pledges, for instance, targeting a subset of activities only make heavy-emitting industries to become net-zero. 

  • Delayed impact:  Do take into consideration nature-based offsets like afforestation schemes as they take a good amount of time for realizing their impact. Short-term imbalances might take place if the offset gets credited. This is when it yields its full benefits, thereby leading to climate deterioration. 

  • Decarbonization postponement:  Carbon offsets tend to offer an ‘easy solution’, thereby delaying or distracting organizations from more permanent and meaningful work to diminish own carbon emissions. Proper monitoring will be desired to ensure the objectives are met. 

  • Leakage:  Trying to diminish emissions at a particular location is likely to only shift to another place. Here, it might be uncounted or uncontrolled. A carbon offset program, to protect a particular area in the Amazon rainforest from clear-cutting could cause clear-cutting perhaps in the Congo Basin rainforest area. 

  • Permanence:  Proper stewardship would be essential to maintain carbon offsets to sustain impacts. An acre in a forest area for instance that is sold as carbon offset this year could get destroyed the following year. It could be due to fire, neglect, etc. 

  • Voluntarism:  All countries' companies need to come together to become net-zero to achieve a net-zero planet. However, its elective basis is likely to lead inevitably to partial participation. Here, the biggest emitters need to commit the least incentive and face intractable challenges. 

  • Economic viability:  Today, pledges have been made at future date for carbon neutrality. These are stated to be effective commitments that need to be made to purchase offsets. The near future is likely to witness an increase in carbon offset price resulting from increased demand and constrained supply. 

Overcoming limitations

Being aware of the limitations will be vital to knowing how to overcome them. The world needs to be a safe place and it is the duty and responsibility of every organization to do its bit to protect the planet.

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Cresco Group
Joined: June 22nd, 2022
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