Net Zero Emissions: What It Is And Why Businesses Should Care

Achieving net-zero carbon emissions sounds like a tall order – it is, but not impossible. Companies/businesses can do more than just cut their carbon footprint in half with the right approach. They can create an enduring paradigm shift for sustainable operations that also brings measurable results for the bottom line. 

Today we dive into how to achieve net-zero carbon emissions, what it is, and why businesses should care. Here are different sustainable approaches brought into bite-size pieces. 

planting more trees

What are Net Zero Emissions?

You’ll probably hear the term “net-zero emissions” a lot this year in every newsletter you’ve subscribed to about sustainability. Government leaders and CEOs are pressed to explain how companies and businesses intend to lessen the impact of their operations’ carbon footprint on the environment. Amazon, for example, just revealed that about 200 companies have signed on to its Climate Pledge, committing to achieving net-zero emissions by 2040. 

But what exactly does “net-zero emissions” mean?

“Zero emissions” – without the word “net” – refers to the absence of greenhouse gas emissions.

“Net-zero emissions” have more leeway. It’s more like balancing an accounting ledger. The country or company reduces most of its emissions through efficiency and clean energy, then compensates for the rest by clearing the atmosphere of carbon dioxide or eliminating emissions in other places.

One example is, that trees take in carbon dioxide from the atmosphere, so they’re often considered “negative emissions.” So you probably hear your favorite mall going green by planting more trees, but really, it’s a step into net-zero business strategy. 

The small Himalayan kingdom of Bhutan can declare net-zero emissions because they have vast amounts of hydropower, and its forests sequester approximately three times the carbon dioxide being produced by their vehicles, companies, and other human activities. 

Businesses also have another option for claiming net-zero emissions – they can purchase carbon credits to benefit from other people’s carbon reductions. For instance, a US corporation may pay to protect forests in South America and then deduct the harmful emissions from its own to claim “net-zero” emissions. Other carbon credits are used to fund sustainable development projects, such as wind and solar energy installations in developing nations.

wind and solar energy installations in developing nations

However, relying on carbon credits attracts criticism because it enables those industries to continue producing greenhouse gases. Additionally, some projects would continue with their operation anyway, the emissions reductions may not be permanent or even verifiable, or they may be double-counted by many entities. Certain activities, such as tree planting, may take years to pay off in terms of carbon reductions, while businesses that purchase forests to offset their emissions continue to emit greenhouse gases.

Carbon Neutral vs. Net-Zero: What’s the Difference?

People frequently use the terms’ carbon neutral’ and ‘net zero’ interchangeably, as if they mean the same thing, although there is a tiny distinction between them. For example, if you run a carbon-neutral firm, you’re balancing the carbon emissions that you generate, either through planting trees or funding renewable energy initiatives.

This does not imply that you are net zero, as you may reduce carbon emissions rather than offset them. As previously said, net zero is all about reducing greenhouse gases already present in the Earth’s atmosphere to zero (compared to 1990 levels).

Why Does Net Zero Matter for Your Business?

Taking a stance on climate change will assist businesses to grow, seize new opportunities, create new employment, attracts investment, and adapt to the challenges of a changing planet.

The trend also suggests that by reducing emissions, businesses will be able to:

  • Reduce their operating costs – and thereby save money.
  • Entice new investors and customers.
  • Continue to enjoy a competitive advantage, both locally and internationally.
  • Eligible for tax benefits.
  • Build a more efficient and environmentally friendly supply chain.

Whether they are large or little, businesses of all sizes generate carbon emissions through their operations, vehicles, or supply chain.

However, achieving net zero requires more than merely balancing carbon emissions. What’s really at stake here is bringing about a sea of change in the way businesses of all sizes conduct their commercial operations.

3 Factors That Help Industries Attain Net-Zero – While Staying Profitable

Transitioning to net zero is a demanding job, businesses frequently believe it is impossible to accomplish while retaining profit margins. This results in many companies focusing on low-hanging fruit and short-term solutions: they offload emissions onto others by divesting high-carbon emitting businesses such as mining minerals, processing meat, or financing oil companies, or they create “islands of green” within their organization – for example, sourcing out electricity from renewable sources.

greenhouse gases 1

We discovered a growing body of data suggesting firms can move to net-zero business models while still making a profit, particularly when compared to doing nothing. Companies that ignore or postpone taking advantage of these opportunities may find themselves caught off guard as customers, investors, and policymakers increasingly demand that they reduce their carbon emissions. Here are three major practices we’ve seen to help:

1. Decrease Emissions Throughout the Value Chain

For many businesses, most of their emissions – as well as their opportunity for climate action – are contained within scope 3 assets. Although they are not owned or controlled by the reporting organization, they contribute indirectly to its value chain. To successfully reduce emissions, businesses must address these scope 3 emissions.

One food and beverage manufacturer that we spoke with, for example, is investing in thousands of net-zero dairy farms across the country. A mining business provides steelmakers with ore blends that use less energy in the blast furnace, saving money on energy costs. One fiber-optic cable company has made a real investment to broaden the scope of its operation from cable manufacturing to include the entire value chain of electrification.

2. Address the Underlying Causes

The locations of major emissions are frequently not the most effective locations for action. We discovered that businesses measure emissions and then adapt to decrease, either inside their operations or throughout the value chain. 

In one case, a parcel delivery company reduces emissions in package delivery through fleet electrification and routing optimization–and it also provides better information and control to the people who receive packages, allowing them to anticipate and redirect deliveries, ultimately cutting down on the number of delivery attempts.

For AI and Cloud deployments, big tech companies evaluate power efficiency down to the code level. They collaborate with chip manufacturers to reduce energy usage during the use of their products.

3. Don’t Automatically Defund Businesses That Generate a Lot of Carbon

Investors are enticed to expand their portfolio of low-carbon operations merely by adjusting their capital allocation.

However, a more successful strategy for really motivating reduction is to engage in activities that decrease significant amounts of carbon dioxide while outlining a clear and urgent path to change. 


The reality is that our society will not reach its net-zero pledge until it transforms its economy and the companies/industries therein. With regulatory requirements moving in lockstep with investor demand, corporations increasingly make net-zero commitments. Others will be forced to do so, in some form or another, as governments strive to deliver on their obligations and customers increase their demands for such action. 

The achievement of this goal will not be judged merely based on carbon reductions; instead, governments and corporations will be required to provide a “fair transition” for the sectors, regions, and communities that will bear the brunt of the transformation.

All of us, whether we are business owners or individuals, must work together to protect the environment. An eco-friendly lifestyle begins with these guides.

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