How Businesses Can Become Climate-Neutral

Today, when you pick up a bread bag, shampoo bottle or train ticket, you'll increasingly find a promise from the company that its products and services are climate-neutral. But what exactly do these corporate neutrality targets mean? Are targets set internally by companies ambitious enough or even realistic? And what role does purchasing carbon credits play? In its Zukunftsimpuls paper on "Climate Neutrality in Business", the Wuppertal Institute seeks to answer these questions and offers recommendations.

The climate targets set by individual companies are often difficult to compare and are sometimes also hard for consumers to grasp. As Nicolas Kreibich, Senior Researcher in the Global Climate Governance Research Unit at the Wuppertal Institute, points out, "It's only by communicating neutrality targets transparently and in such a way that they can be compared and their fulfilment assessed that this information can support consumers in taking greater account of climate protection considerations. Otherwise, neutrality targets can lead to decisions that have a negative impact on the climate – for example, if a flight wrongly marketed as climate-neutral is chosen over a train journey." One of the recommendations advocated by the authors is that neutrality targets should be developed on the basis of robust data. They also underscore the requirements that need to be met in terms of transparent communication and clarify the role that offsetting should play – that is to say, companies purchasing carbon credits and counting them towards their own neutrality targets.

Offsetting recommendations

Since very few companies can eliminate all their emissions completely or in the short to medium term, the authors believe that financing offsetting projects will continue to play a key role in the future. These projects include, for example, the distribution of efficient cooking stoves in rural areas of Africa. In most cases, projects like these not only help to protect the climate but also have further positive effects on sustainability. For instance, efficient stoves produce fewer gases that are harmful to human health than are released when cooking over an open fire, and their use can also reduce deforestation. Investments in such projects can thus achieve a significant impact on sustainability.

Volume 20 of Zukunftsimpuls, entitled "Climate Neutrality in Business", is available via the following link.