In this two-part series, we explore the decarbonization efforts of Climate Neutral companies that completed certification in 2022. Part I detailed observations from 2022 carbon offsetting, as well as our recommendations for 2023. Part II here focuses on the range of reduction actions Climate Neutral certifying brands committed to in 2022.
We’re all here because we’re committed to long-term decarbonization. And in 2022, Climate Neutral certified brands stepped up to the plate. They completed an extraordinary amount of work measuring their footprints. They demonstrated that internal decarbonization work is creative, complex, and innovative. It requires new approaches—even undeveloped materials. Supplier collaboration is critical. And companies that think critically about operational processes and external partnerships find the greatest success.
It’s been a pleasure watching our certifying businesses develop and collaborate on truly creative and novel reduction solutions. By the end of 2022, Climate Neutral companies had completed hundreds of short-term reduction actions and set 66 science-aligned reduction targets for 2030.
Successful corporate decarbonization is crucial to meet global targets to reduce emissions 50% by 2030.
Congratulations to all of our certified brands who added reduction work to their list of 2022 accomplishments. We love seeing how their work contributes to the net-zero movement more broadly.
To those working on reductions of their own, we’re excited to share our 2022 insights below. We’ll detail which reduction actions tend to be most successful in our certified brand community, and the areas that proved to be more challenging. We’ll also share thoughts on how companies can set up the most successful reduction strategies. We hope it will help you accelerate your reduction actions.
According to the Climate Neutral Standard, certifying brands with over $100M in annual revenues must set science-aligned targets. Many businesses in this group come to Climate Neutral with these targets already in place, which is great! They bring a lot of valuable experience to our community.
Last year, Climate Neutral introduced dedicated resources for brands of all sizes to set science-aligned targets. To meet science-aligned targets, brands commit to reducing emissions 50% by 2030. We hoped this would reduce barriers and encourage more companies to set reduction targets. And it worked. In 2022, we saw many companies below $100m in revenues set science-aligned targets for the first time using the Climate Neutral process to map out their decarbonization plan. This decision to set optional targets is an encouraging theme.
In sum: 66 businesses disclosed science-aligned targets through Climate Neutral’s certification process last year. 12 of these were required by the Standard, and 54 were set voluntarily.
Our Standard also requires companies with over $5M in annual revenues to focus one of two mandatory reduction actions on their supply chain emissions. We were pleasantly surprised to see our certified brands far exceeded this requirement. In our final 2022 dataset, over 80% of targets focused on supply chain actions.
80% is a big number. It again means businesses are choosing to go above and beyond to decarbonize their supply chains. And for consumer brands that make physical products, a majority of their emissions come from the supply chain. They include emissions from raw materials, packaging choices, how a product is shipped, company business travel, and much more. So taking ownership of Scope 3 emissions is often the most meaningful way for these companies to really make progress towards net-zero goals.
Of course, we hope the Standard is serving as an effective incentive to decarbonize. But it is possible Climate Neutral Certified brands are also becoming more informed about their greatest source of emissions because of the great work they’re doing during the measurement phase of certification. We’re happy to see this high commitment to supply chain decarbonization.
On average, the most successful Reduction Action Plans from 2021 related to business travel and employee commuting, software and servers, and packaging. Many of these reduction actions require setting an internal policy or swapping out one product with another. With the right budget, these actions can be a lower lift.
We saw the lowest rates of completion for reduction actions focused on supply chain energy use and raw material actions. These reductions are often more integrated into operational processes or require collaboration with suppliers. They can be more complex, so it makes sense these would be more difficult to implement on a two year timeframe.
All Climate Neutral Certified companies are required to set reduction actions that they’ll complete in 1-2 years. However, we’re seeing the rate of completion appears to be more related to the type of target that’s set rather than the year that it’s set. In other words, completion rates for packaging targets were high across the board, and raw materials targets were low across the board.
It’s wise to take more time to think through the steps of reduction action plans. You may need to split more complex targets into smaller components in order to accomplish them on the target timeline. Which leads us to our next observation…
You’re not alone if your company has had to pivot mid-reduction action. Remaining agile and iterative is important. Because so much of supply chain decarbonization work is reliant on diverse suppliers and partners, it can be a challenge to map out the best course of action on the first try. Your partners may also have different priorities that interfere with the success of your plan.
We often see brands submit new steps in existing reduction action plans in subsequent certification years. Sometimes it's because the first round of an action failed or proved to be more complex than expected. Other times, it’s because someone unlocked new information that demonstrated an additional step was necessary.
This recommendation is built into Climate Neutral’s certification program for a specific reason. The past couple of decades have illustrated setting long-term climate goals without intermediate steps is rarely—if ever—successful. Using short-term goals as stepping stones helps your organization both evaluate if your target is feasible and set a realistic plan to meet it. One step at a time.
Breaking down a longer-term target into achievable steps will also give your business the opportunity to measure and evaluate progress at regular intervals. You won’t get to 2030 and realize you aren’t on track. You’ll have the ability to gauge your progress and collect valuable metrics much sooner.
Certain reduction actions will inevitably be easier for your company to tackle. It’s great to do those first! This low-hanging fruit can progress global targets, but also give your business more time to map out complex supply chain reductions that may require more research and planning.
Quick-win reductions will also reduce both your company’s footprint and reliance on offsets right off the bat. Your annual offset bill will decrease, and your organization’s overall decarbonization efforts can focus more and more on internal actions.
Reduction work can be challenging because it typically involves many people and departments. You may be exploring how to integrate new materials or packaging into your products, where to source new materials, or how to ship your products more efficiently. Or, maybe you’re experimenting with new strategies to convince your suppliers to switch to renewable energy or to grow their materials without pesticides. No matter the task, you’ll need to build in time for research, pivoting, and yes, even failure.
The last three years have shown us how political, economic, and state-of-the-world circumstances can affect markets and supply chains. Reduction actions may be delayed or derailed because of variables outside of your control.
Different departments and partners may also have competing priorities that interfere with your reduction success. For your reduction actions to truly be ingrained within your operational processes or supplier relationships, you’ll need buy-in early and often from members across the organization.
We work with many sustainability teams who face the same roadblocks and challenges. We hear questions such as: How do I transition to renewable energy in a facility that I don’t control? As a small business, how do I influence my suppliers to adopt sustainable practices? How will I possibly reduce emissions while my business grows?
You aren’t alone. And in many cases, you aren’t solving this problem for the first time. Consider trade groups, mentors, networks, etc. that allow you to share lessons learned, learn from each other’s mistakes, and make moves faster.
When you join our certified brand community, you also join our growing network of experts who work daily to solve these exact problems. We’ve seen how their collaboration helps businesses find problem-solving resources more quickly, enhance bargaining power, and avoid preliminary hurdles that many early-stage projects face. We should all be learning from each other rather than reinventing the wheel constantly.
It’s never too early to start making reduction plans.
Is 2023 the year you set a science-aligned target or a 2 year plan? If you’re not sure where to start, share your story with us here. We recently improved our reduction resources to help brands like yours collaborate, connect, and set better quantitative targets. We also established a peer-led reduction workshop series, reduction recommendations, and target-setting tools to help companies set better, more realistic targets. We look forward to hearing more about your work!
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