Net Zero Business: What Is Net Zero and What Does It Mean for Businesses?
Updated: Oct 8
If your business is starting to think more seriously about sustainability, you've probably come across the term net zero.
It can sound like a huge goal, particularly if you're only just beginning to understand your organisation's carbon footprint.
You might be wondering which emissions you need to measure, how much data you need or whether becoming a net zero business means somehow eliminating every emission your organisation produces.
The good news is that you don't need to have all of those answers before you begin.
Understanding what is net zero in practical terms starts with something much more manageable: finding out where your business is today.
By measuring your current emissions, identifying where they come from and gradually improving the information behind your carbon footprint, you can start making more informed decisions about where reductions could be made.
In this guide, we'll explain what net zero means, what net zero for business looks like in practice and how organisations can begin working towards it without needing to become sustainability experts first.
What Is Net Zero?
To understand what net zero could mean for your business, it helps to begin with a simple question: what is net zero, and what does it actually involve?
Net zero describes a state where greenhouse gas emissions have been reduced as far as possible, with residual emissions balanced by removals from the atmosphere.
The ISO Net Zero Guidelines provide a common reference for organisations and other actors working towards net-zero greenhouse gas emissions.
The important part of that definition is reducing emissions.
Net zero isn't simply about continuing to produce the same level of greenhouse gas emissions and trying to balance them elsewhere. A credible approach involves reducing emissions throughout your organisation and value chain, while addressing residual emissions that remain.
For a business, that means looking at the greenhouse gas emissions associated with the way your organisation operates and considering how those emissions could be reduced over time.
This might include obvious areas such as fuel and electricity, but your footprint can also include business travel, purchased goods, transport, waste and activities throughout your supply chain.
If that already sounds like a lot to consider, don't worry. You don't need to measure everything perfectly on day one.
The first step is simply starting to understand your footprint.
What Is a Net Zero Business?
A net zero business is generally understood as an organisation working towards substantially reducing greenhouse gas emissions across its operations and value chain, with residual emissions ultimately balanced through appropriate removals.
That doesn't mean setting a distant target and then waiting for 2050 to arrive.
Meaningful progress requires businesses to understand their current emissions, identify significant sources, look for realistic opportunities to reduce them and keep measuring what happens over time.
This is where carbon tracking becomes important.
Without understanding your starting point, it can be difficult to know whether the changes you're making are actually reducing your carbon footprint.
Some organisations also choose to follow formal target-setting frameworks. The Science Based Targets initiative's Corporate Net-Zero Standard, for example, provides companies with a framework for setting science-based net-zero targets.
If your organisation isn't anywhere near that stage yet, that's okay.
You don't need a fully developed sustainability programme before you can start measuring your emissions. Building an initial understanding of your carbon footprint can give you a much more useful foundation for whatever comes next.
What Does Net Zero for Business Actually Mean?
Understanding net zero for business means bringing a broad climate goal down to the level of your own organisation.
In practice, that leads to a much simpler question:
Where are our greenhouse gas emissions coming from, and what can we realistically do to reduce them?
The answer won't be the same for every organisation.
An office-based business might find that electricity, employee travel and purchased goods contribute significantly to its footprint, while a manufacturing business could have substantial emissions associated with energy, fuel, materials and production.
Businesses that regularly organise events may also need to think about venues, attendee travel, accommodation, catering, production and event suppliers alongside their day-to-day organisational footprint.
There isn't one universal route to net zero for businesses because every organisation operates differently.
That's why businesses don't necessarily need to begin by copying a list of sustainability actions from somebody else.
A more useful starting point is understanding your own emissions.
Once you know where they're coming from, you can make better-informed decisions about which areas deserve your attention.
Which Emissions Should Businesses Consider?
Business greenhouse gas emissions are commonly organised into Scope 1, Scope 2 and Scope 3 emissions under the Greenhouse Gas Protocol.
If those terms are completely new to you, they are simply a way of grouping different sources of business emissions.
Scope 1 emissions are direct emissions from sources your organisation owns or controls. This could include fuel burned in company-owned vehicles or gas used in buildings and equipment.
Scope 2 emissions relate to purchased or acquired electricity, steam, heat and cooling consumed by your organisation. You can explore this area in more detail in our guide to Scope 2 emissions.
Scope 3 emissions are other indirect emissions occurring throughout your value chain. Depending on your organisation, these could include purchased goods and services, business travel, employee commuting, transport, waste and supplier activities.
Scope 3 can feel particularly challenging because much of the information needed to understand these emissions may sit with suppliers, employees or other organisations.
If you're new to these categories, our guide to Scope 1, Scope 2 and Scope 3 carbon emissions provides a beginner-friendly introduction, while our dedicated guide to Scope 3 emissions explains the wider value chain in more detail.
Most importantly, don't let Scope 3 data gaps stop you from starting altogether.
You can begin with the information you have today and improve your carbon data as your reporting develops.
Why Does Measuring Your Carbon Footprint Matter for Net Zero?
It's difficult to understand whether you're making progress towards net zero without knowing where you're starting from.
Calculating your carbon footprint helps you understand the greenhouse gas emissions associated with your organisation across the activities included within your reporting boundary.
That information can then help you:
Understand where emissions are coming from
Identify significant emission sources
Establish a carbon baseline
Prioritise areas for further investigation
Make more informed reduction decisions
Compare emissions between reporting periods
Monitor whether changes are having an impact
Improve the quality of your carbon data over time
Your net-zero ambitions and carbon reporting therefore shouldn't exist separately.
Your goal tells you where you want to go. Your carbon footprint helps you understand where you are today.
If you're not sure what data you need to begin, you may already have more information than you realise. Utility bills, fuel records, travel systems, expense information and supplier invoices can all provide useful starting points, as we explain in our guide to five carbon data sources most businesses already have.
Ready to See What Your Current Footprint Looks Like?
You don't need to wait until every piece of carbon data is perfect before you begin measuring.
Once you've gathered the information available, you can use Scope's free business carbon calculator to start turning that data into an initial picture of your organisation's carbon footprint.
Your first calculation can help you see what information you already have, where the gaps are and which areas might be worth exploring in more detail.
How to Achieve Net Zero: Where Can Businesses Start?
If you've been searching for how to achieve net zero, it's worth knowing that there isn't one universal checklist that every business can follow.
Organisations have different buildings, employees, suppliers, operations and emissions profiles, so the route towards net zero will look different from one business to another.
However, there are some practical stages that can make the process feel much more manageable.
1. Start With the Carbon Data You Already Have
Before worrying about everything you don't know, look at what your business already has.
Information about electricity, gas, fuel, business travel, company vehicles, waste, procurement and suppliers may already exist across your finance, facilities, operations and travel systems.
Bringing that information together gives you somewhere to start.
If there are gaps, that doesn't necessarily mean you need to stop. Our guide to estimating carbon emissions explains how estimates can sometimes provide a useful starting point when exact activity data isn't yet available.
2. Calculate Your Business Carbon Footprint
Once you've gathered the information available, you can begin converting your business activity into greenhouse gas emissions.
Carbon calculations generally involve taking activity data, such as kilowatt-hours of electricity, litres of fuel or miles travelled, and applying an appropriate emission factor to calculate the associated carbon dioxide equivalent, or CO2e.
If you'd like to understand what happens behind those calculations, our guide to emission factors explains how everyday business information is converted into carbon emissions.
You don't have to work through every calculation manually, though.
Scope's free business carbon calculator can help you start calculating your business carbon footprint using the activity data you already have, giving you a practical first picture of where your emissions currently stand.
3. Establish a Carbon Baseline
Once you've calculated your emissions, establishing a baseline gives you a consistent starting point against which future changes can be compared.
This matters because one carbon footprint only tells you what your emissions looked like during one reporting period.
A carbon baseline gives you something to compare future results against, helping you understand whether emissions are increasing, decreasing or changing in particular areas of the business.
4. Identify Your Most Significant Emission Sources
Once you can see where your emissions are coming from, you can begin identifying which areas deserve the most attention.
For one organisation, electricity consumption might be significant. For another, purchased goods, transport or business travel could have a much greater impact.
This is one of the reasons measuring before acting can be so useful.
Instead of assuming which sustainability initiatives will make the biggest difference, your own carbon data can help show you where your biggest sources of emissions actually sit.
5. Look for Practical Reduction Opportunities
Once you've identified significant emission sources, you can begin exploring realistic ways to reduce them.
Depending on what your carbon footprint shows, this could involve improving energy efficiency, reviewing business travel, changing transport arrangements, reducing waste, reconsidering purchased goods or working more closely with suppliers.
Some changes may be relatively straightforward, while others could require longer-term changes to suppliers, infrastructure or the way your organisation operates.
You don't have to change everything at once.
A more manageable approach is to use your carbon data to identify where action could have the greatest impact and build from there.
6. Set Appropriate Targets
Once you have a clearer understanding of your footprint and reduction opportunities, you can begin thinking about the targets your organisation wants to work towards.
Businesses choosing to make formal net-zero or science-based commitments should follow the requirements of the framework they're using rather than creating their own definition of what qualifies as net zero.
For organisations considering formal science-based targets, the SBTi Corporate Net-Zero Standard provides the relevant framework and current information about its standards.
7. Keep Measuring and Improving
Learning how to achieve net zero isn't really about reaching the end of a seven-step checklist.
Progress happens over time, which means businesses need to keep collecting information and comparing emissions between reporting periods to understand whether the actions they're taking are making a difference.
Your data can improve as you go, too.
You might replace estimated information with actual activity data, receive better information from suppliers or begin measuring emissions sources that weren't included in your first footprint.
Our guide to improving your carbon data over time explores practical ways to make your reporting stronger as your organisation's approach develops.
Do Businesses Need Perfect Carbon Data Before Working Towards Net Zero?
Businesses don't need perfect carbon data to work towards net zero, and this is particularly important for businesses that are only just getting started.
It's very common to discover that some information is missing when you begin calculating a carbon footprint, especially when you start looking at Scope 3 emissions.
That shouldn't automatically stop you from beginning.
Where estimates are appropriate, businesses can document what has been estimated, understand the limitations of that information and work towards replacing it with better-quality data.
Your first carbon footprint doesn't have to be your final one.
What matters is creating a process that allows your organisation to keep learning and improving.
Does Every UK Business Have to Be Net Zero by 2050?
The UK has a legally binding national target to reach net zero greenhouse gas emissions by 2050.
Under the Climate Change Act framework, the UK's 2050 target was amended in 2019 to require at least a 100% reduction in net UK greenhouse gas emissions compared with 1990 levels.
However, that national target shouldn't be interpreted as meaning that every individual UK business automatically has an identical standalone legal requirement to become net zero by 2050.
The requirements applying to a particular organisation can depend on its size, sector, activities and the regulations, contracts or reporting frameworks relevant to it.
Businesses can also encounter sustainability expectations through customers, investors, procurement processes and supply chains even when a particular reporting requirement doesn't apply directly to them.
The important thing is understanding what applies to your organisation, rather than assuming every business has exactly the same obligations.
Is Net Zero the Same as Carbon Neutral?
Net zero and carbon neutral are related ideas, but they aren't necessarily interchangeable.
Both involve understanding and addressing greenhouse gas emissions, while net-zero approaches place significant emphasis on emissions reductions and addressing residual emissions that remain. The ISO Net Zero Guidelines provide further guidance around net-zero terminology and approaches.
For more information, check out our guide on the difference between carbon neutral vs net zero.
Why Is Carbon Tracking Important for Net Zero for Businesses?
When we talk about net zero for businesses, it's important to remember that progress happens over years rather than through a single carbon calculation.
As your reporting develops, you may need to keep track of energy consumption, fuel, travel, waste, purchased goods, supplier information and other emissions sources across different reporting periods.
Trying to manage all of that through disconnected files and spreadsheets can become difficult as the amount of information grows.
Our guide to why spreadsheets could be limiting your carbon reporting looks at some of the challenges businesses can encounter as their reporting becomes more established.
A dedicated carbon tracking platform can help bring that information together so you can see how your footprint is changing and keep the data behind your emissions organised.
This is particularly useful when you're working towards a longer-term goal because your organisation can continue improving its data while monitoring whether emissions are actually moving in the right direction.
Net Zero Business FAQs
What Is Net Zero?
Net zero is a state where greenhouse gas emissions have been reduced as far as possible, with residual emissions balanced by removals from the atmosphere. For businesses, the journey begins with understanding emissions across their operations and value chain and looking for ways to reduce them over time.
What Does Net Zero for Business Mean?
Net zero for business means understanding and substantially reducing the greenhouse gas emissions associated with an organisation's operations and value chain, while ultimately addressing residual emissions that remain. The exact pathway will depend on the organisation and any formal framework it chooses to follow.
How Can a Business Start Working Towards Net Zero?
A practical starting point is understanding your current emissions. Gather the business data you already have, calculate an initial carbon footprint, establish a baseline and identify the emission sources that deserve the most attention. From there, you can begin looking for reduction opportunities and tracking how your footprint changes over time.
What Emissions Should Businesses Measure for Net Zero?
Businesses should understand relevant Scope 1, Scope 2 and Scope 3 emissions associated with their operations and value chain. The most significant sources will vary between organisations, which is why measuring your own footprint is so useful.
How Do Businesses Achieve Net Zero?
If you're trying to understand how to achieve net zero, measuring your current footprint is an important place to begin. From there, businesses can identify significant emission sources, establish appropriate targets, take action to reduce emissions and monitor progress over time.
Do UK Businesses Have to Reach Net Zero by 2050?
The UK has a legally binding national target to reach net zero by 2050, but that doesn't automatically create an identical standalone legal obligation for every individual business. Organisations should establish which regulations, procurement requirements, contractual obligations and voluntary commitments apply to them.
Start With Where Your Business Is Today
Working towards net zero can feel like a distant goal when your business is only just starting to measure its environmental impact.
You don't need to have every reduction mapped out before you begin.
A much more manageable first step is understanding where your emissions are coming from today.
By bringing together the information you already have, calculating your carbon footprint and identifying your most significant emission sources, you can start building the foundations for better decisions in the future.
If you're ready to take that first step, Scope's free business carbon calculator can help you turn the activity data you already have into an initial picture of your organisation's emissions.
From there, Scope can help you bring your carbon data together, improve its quality and track how your business footprint changes over time.
Create your free Scope account and start building a clearer picture of your business carbon footprint.
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