A closer look at net-zero carbon emissions pledges (and Ethic's own decarbonization efforts)
The United Nations’ twenty-sixth Conference of the Parties, also known as COP26, is currently underway in Glasgow. This summit, the largest and arguably most consequential international meeting on climate change to date, has articulated that its mitigation goal is to “secure global net zero [carbon emissions] and keep 1.5 degrees within reach.”
We’ll dive into what this means shortly, but chances are you have heard a lot of talk about “net-zero pledges” in the run-up to, and throughout, COP26. To date, more than 135 national governments have publicly committed to reducing their emissions and attaining net-zero status by 2050, with more expected to follow suit. However, with the effects of climate change already visible, experts have warned that more ambitious efforts are needed to avert environmental disaster and maintain a habitable planet for future generations. It’s clear to us that public policy efforts must be bolstered by the participation of the private sector.
With that in mind, we’re proud to be working with our impact partners Prince Harry and Meghan, The Duke and Duchess of Sussex—and by extension their organization, Archewell—as they embark upon their own net-zero journey. We applaud their decision to pursue decarbonization in line with science-based targets, and look forward to collaborating with the entire Archewell team as they devise a robust, informed strategy for limiting emissions across their value chain.
What is net zero?
Put simply, net zero describes the point at which the amount of carbon dioxide emitted and the amount removed from the atmosphere (via carbon sinks) is in equilibrium. Successful net-zero efforts necessitate a multipronged approach that, above all else, seeks to drastically curb carbon emissions by as much as 95 percent. Since it’s likely that even the most aggressive reductions will still result in some emissions, organizations can then seek to offset their surplus by investing in projects that either remove carbon from the atmosphere or prevent it from being released in the first place.
Why is net-zero important?
For the 2015 Paris Climate Accords, 196 countries came together and signed a legally binding treaty to jointly tackle climate change. As part of this landmark agreement, nations collectively agreed to engage in efforts designed to keep global warming “well below” 2℃—but ideally 1.5℃— as compared to pre-Industrial Revolution averages.
The United Nations (UN) had indicated that, in order to meet these targets, the world must be on track to reach net-zero emissions by mid-century. However, the most recent report from the UN’s Intergovernmental Panel on Climate Change (IPCC) provided a somber confirmation that we need to accelerate that trajectory significantly in order to avoid the most catastrophic effects of global warming. In short, the next decade is mission critical for efforts to mitigate climate change and define humanity’s future.
Ethic’s own decarbonization efforts
At Ethic, we are constantly thinking about how to make a difference. Our work to date has centered on helping investors understand the social and environmental impacts of their portfolios, enabling them to leverage their dollars and shareholder votes in support of people and the planet. But we recognize that there’s always more to be done.
Earlier this year, Ethic underwent an independent audit of all its carbon emissions since the firm's inception. This was conducted by a carbon advisory firm that helps businesses and leaders to drive action on climate and sustainability.
Pursuant to this process, Ethic has now offset 100 percent of its historical emissions.* This encompasses those generated by our business activities and energy usage, as well as estimated Scope 3 emissions, which are those generated throughout our supply chain (e.g., business travel and energy usage from servers). We have achieved this offsetting through investments in three vital projects that seek to not only reduce greenhouse gas emissions but also improve the livelihoods and wellbeing of communities worldwide. These projects include:
- A Gold Standard-certified water borehole project in Eritrea
- A Verra-certified improved cookstove program in India
- A Verra-certified renewable wind energy project in Costa Rica
Although the above initiatives are calculated to provide offsets equivalent to 100 percent of our estimated emissions to date, we wanted to go a step further. Having already selected the highest-quality projects we could find, with both positive social and climate impacts, we chose to purchase carbon removal credits equivalent to a further 50 percent of our firm’s historic emissions. For this, we engaged with a data-driven forest carbon marketplace that makes it possible for companies to support local offset projects with immediate, verifiable impact.
While carbon offsets offer a practical mechanism to help us address our footprint to date, we recognize they are not a panacea in the fight against climate change. That’s why we are highly focused on taking meaningful steps to reduce future emissions and will be establishing absolute reduction targets, i.e., those that do not rely on removals and offsetting, by year end. Among other initiatives, our efforts to bring carbon emissions in line with the necessary global targets will involve a switch to 100 percent renewable energy sourcing through participation in community solar programs.
We look forward to sharing additional updates and milestones as we double down on our own decarbonization initiatives, but recognize that we are just one piece of a complex puzzle. The transition to a low-carbon economy will necessitate sustained, bold, collaborative action across various sectors and stakeholder groups. We’re proud to work with impact-driven partners that share our vision for a more sustainable, prosperous world—will you join us on this journey, too?
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*estimated CO2-equivalent emissions from 2016-2021