A guide to becoming a net zero business

Portrait of Sophie Vellam
Campaign Executive
Responsible business
Aerial view of green trees in forest

The UK was the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target requires the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels.

While we all know the importance of a net zero future for the planet, what benefits does it hold for you, as a business? As well as cost savings, a net zero economy can bring greater resilience and help you build a stronger brand reputation with your customers and supply chain.

So, let’s take a look at the road to becoming a net zero business.

What is net zero?

The net zero definition in simple terms is the balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere. We reach net zero when we’re no longer adding new emissions to the environment.

Climate science tells us that achieving net zero is a must in order for global temperatures to stabilise. The way to achieve it is by reducing emissions as much as possible. Then, if there are any ‘residual’ emissions that are too difficult to eliminate, greenhouse gas removals (like planting trees) are used to compensate for them by taking an equivalent amount out of the atmosphere.  

What’s the difference between carbon neutral and net zero?

Carbon neutrality means offsetting the emissions you produce by supporting carbon reduction projects elsewhere, without having to make emissions reductions first. Net zero, on the other hand, means making deep emissions reductions before offsetting any remaining emissions through carbon removal projects that permanently take carbon from the atmosphere.

Tips for becoming a net zero business

Many businesses are prioritising sustainability and moving towards a greener future, but how do you become a net zero business and why is it important? Here are some tips to help you get started.

See it as an opportunity

Getting to net zero may seem a daunting task for companies, especially in the wake of the Covid-19 pandemic. But it’s also a big business opportunity, offering significant benefits such as:

  • Saving money by improving efficiencies
  • Gaining a competitive advantage as consumer demand for sustainable products grows. Large companies are also under pressure to decarbonise their supply chains, so if you’re a sustainable supplier you could win more business   
  • Attracting and retaining employees, who are also becoming increasingly environmentally conscious


By treating net zero as an opportunity and communicating it in a positive way to your stakeholders, you’ll be setting yourself up for success.


Measure your emissions

Calculating your carbon footprint is an important first step in your net zero journey. You need to understand where your emissions come from in order to effectively reduce them.

The Greenhouse Gas Protocol Corporate Standard, the international framework for businesses to measure and manage their emissions, splits a company’s emissions into three ‘scopes’:

Scope 1: direct emissions produced by sources that your company owns or controls – for example, buildings, vehicles, and equipment.

Scope 2: indirect emissions resulting from the use of purchased electricity, steam, heat, or cooling.

Scope 3: all other indirect emissions within your company’s value chain. Scope 3 is likely to account for the majority of your carbon footprint, as it includes emissions from your supply chain, product usage by customers, business travel, employee commuting, and waste disposal. 

Measuring your footprint will involve identifying the business activities that release emissions, collecting data for each of these activities, then converting the data.

Gathering information for scopes 1 and 2 should be fairly straightforward, as much of it is likely to come from readily available sources. For example, you may use electricity bills to see the total kilowatt hours used, or receipts for how many litres of fuel you’ve purchased.

Measuring Scope 3 is more difficult, as you’re reliant on external parties like suppliers to provide data.

If you want to learn more, read this small business user guide by DEFRA.


Set targets and develop a net zero strategy

Once you’ve calculated your emissions, you can then start setting targets. For your overarching goal, you should either match the UK net zero target or look at an earlier deadline than 2050, if feasible. Being ambitious but realistic is key. You’ll also want to set interim emission-reduction targets, against which you can monitor your progress.

If you need help with target-setting and want to demonstrate your commitment to net zero, the Science Based Targets initiative (SBTi) enables businesses to set credible, verified targets in line with climate science and now offers a streamlined route for SMEs.

Your net zero goals should be fully integrated into your overall business strategy. The roadmap to net zero will vary widely from business to business, but here are some example measures that could form part of a company’s plan:

  • Switch to a 100% renewable energy tariff or, if possible, install on-site renewable energy
  • Transition to electric or hybrid vehicles
  • Upgrade to energy-efficient equipment
  • Ensure office buildings are well insulated
  • Educate employees on the importance of reducing energy usage
  • Introduce flexible ways of working and incentivise employees to use public transport or walk/cycle
  • Collaborate with suppliers and encourage them to manage their own emissions



Get support

Developing and implementing a comprehensive net zero strategy can be difficult, so getting advice is key. Some of the measures you need to take to reach net zero may also require a large upfront investment.

Our finance can help businesses in Wales invest in becoming more sustainable and support their transition to becoming carbon neutral. We can also provide loans and equity for companies developing and providing innovative green products and services in Wales.

We support our customers to improve and reduce their environmental impact by working closely with Business Wales. Their specialist sustainability advisers offer support on grants, renewable energy, environmental sustainability, and the Green Growth Pledge.

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