Glossary term
Net Zero
Subject: Sustainability and ESG, Climate Risk
Also known as: Net-zero emissions
Net zero means cutting greenhouse gas emissions as far as possible and balancing any that remain with an equal amount of permanent removals, so that net additions to the atmosphere come to zero.
Explanation
The term can apply to the world, a country or a company. Globally, the aim is to reach it around mid-century to hold warming near 1.5 degrees Celsius. For a company, credible approaches expect deep cuts, commonly around 90% or more, across the whole value chain, with removals limited to the small residual that cannot be avoided. Targets are set for a near term, such as 2030, as well as for the end date, and are often checked against climate science by bodies such as the Science Based Targets initiative. The word "net" carries the meaning: it does not mean no emissions, only no net emissions after removals. Pledges without interim steps or a funded plan draw scepticism. Governments, banks and corporations now measure their climate commitments against this yardstick.
Example
A bank announces a net zero goal for 2050 covering its financed emissions, with a 2030 interim target to cut emissions from its power sector lending by half. It publishes the baseline, the method used and the sectors covered, and promises yearly progress updates. Investors compare these details against its actual lending decisions.
Not to be confused with
- Carbon Neutrality
- Carbon neutrality balances emissions mostly with offsets. Net zero requires deep cuts first, with only residual emissions balanced by removals.