Net zero: What does it mean to your organization

LEED Fellow Geoffrey Brock shares his reflections on how "net zero" means different things to different organizations.

Depending on the nature and location of a company's business, the goals of net zero can represent very different priorities, even for seemingly similar operations. Materiality assessments are meant to help organizations focus efforts where they will have the most significant impact, but what happens when certain operations are composed of multiple organizations, whose exact roles may vary based on the nature of the program or project? Is it naive to think we can have actual "apples to apples" comparisons between companies within sectors, especially when they are increasingly using their net zero goals as differentiators in business development?

What the industry needs to always be aware of is that the easiest way to limit emissions is to leave them out of the equation. Many net zero commitments only focus on Scope 1 and 2 emissions, placing Scope 3 goals farther down the timeline or excluding them altogether. While that is logical within the context of "starting first with what you can control" (versus what is "upstream" or "downstream" or being external to the physical facility), there are inconsistencies when applying the same boundary parameters across sectors, or even within organizations.

Scope 3, "purchased goods and services," can frequently become a dumping ground for many things just because an intermediate vendor is involved. Even distinctions like "operational control" can mean something different from an accounting perspective compared to the true nature of operations.

This may be more straightforward for organizations with relatively consistent operations and settings, like a professional services company (e.g., a law firm or architecture firm) working in an office building, or even a manufacturing facility with relatively consistent output, but what about more complex and dynamic operations such as those within the construction management industry? Projects come and go; some are within a single reporting year, while others overlap multiple years (how absolute reduction targets account for business fluctuation or growth is its own separate conundrum).

If using the rule that Scope 1 and 2 emissions are only based on the transactions in a company's name, it is standard practice for a construction company to exclude, for example, construction site electricity bills paid directly by the owner (that would technically be the owner's Scope 2 emissions) or fuel used by subcontractors (that would technically be the subcontractor's Scope 1 emissions), regardless of whether they are even reported by those entities.

However, if that same construction manager happens to build a greenfield site and holds the account for the temporary electric service before switching it to the owner's name, or self-performs specific tasks requiring fuel (e.g., mobile equipment or a temporary generator) instead of subcontracting it out, then all of a sudden, the same exact activities required for the execution of a project are now contributing significant Scope 1 and 2 emissions for the construction manager, all based on the administrative structure of the project team.

The difference between adding Scope 1 and 2 emissions from even a portion of construction operations versus only measuring trailer and office use can create a considerable sway in what is considered "material" for that company. That dramatically impacts how companies prioritize and invest in reduction strategies, how many RECs they need to purchase, how the company is perceived to the public as a GHG emitter, and how lofty their reduction goals need to be.

The solution to this complexity is for companies to simply be transparent and map out their unique situations uniformly, resulting in more accurate and fair comparisons. IPS-Integrated Project Services (IPS) developed its own mapping tool to assist in this process, while also better defining emissions for the sake of the "Good/Better/Best" tier structure of the Contractor's Commitment (an industry-led effort of best practices that goes beyond just carbon accounting, by the Sustainable Construction Leaders peer network of BuildingGreen).

Even with guidance from standard frameworks like GHG protocol, GRI and SBTi, variations between companies still exist to the extent that the onus should be on the companies that are reporting to be more proactively forthcoming and transparent about their reporting boundaries-before they publicize and celebrate claims of reaching net zero for Scope 1 and 2. That is not to say that the quick wins aren't essential steps on a long journey. Still, knowing how Scope 3 emissions typically dominate the materiality of most organizations, we should be more transparent in the emissions categorized in Scope 3 that we actually have more control over. This means relying not solely on materiality from an accounting perspective, but also from an impact perspective.

In conclusion, it should not be a surprise that there is no one-size-fits-all approach to net zero (just like there is not just one approach for green building certifications like LEED). As global frameworks are still defining (and refining) industry-specific frameworks, the earth's ecosystem isn't sitting around on pause waiting to be cared for. We must take action in parallel to refining our strategies.

This can look messy as targets move and goals adjust. However, the goal isn't to craft a perfect strategy to demonstrate a perfect score at a single point-the goal is to have a positive impact as quickly as possible. That means living in the growing pains of collective understanding. In that case, our response should be as transparent as possible and take part in defining success while we simultaneously push forward.

Comments

Related articles