Blueprint to an Organization’s Governance Structure for Net Zero Targets

Article Highlights

• Focus on five elements - plan, reporting mechanism, dialogue, equity and accountability.

• Regularly review and adjust strategies to stay on track to achieve net zero targets.

• Continuously receive and incorporate feedback from stakeholders.

To establish a good governance structure for net zero targets, an organization should focus on five elements - plan, reporting mechanism, dialogue, equity and accountability.

The Plan

An entity’s plan is a technical document that outlines steps to attain targets. It is typically provided to the public for stakeholder review. A detailed plan will include one or more emission reduction targets, steps to obtain each target, binding reviews and updates to the process.

The steps towards a target will include the related emission scopes. The plan will include all emissions scopes that are covered by each step and a timeline (i.e. switch 50% fleet vehicles from gas to electric within X years and 100% of fleet vehicles from gas to electric in Y years). The plan will also schedule a regular review of the measurements for each step.

The plan should be regularly reviewed and updated i.e. every six months, annually, etc.

The Reporting Mechanism

Through an entity’s public reporting mechanism, information is provided on the progress towards targets and frequency of reporting.The entity should aim to communicate results and obtain feedback from stakeholders. Examples of ways to report progress include public distribution of the entity’s plan and reporting CO2 emissions through CDP (formerly Carbon Disclosure Project).

Dialogue

Internal and external dialogue mechanisms allow the entity to obtain input and adjust targets. A continuous feedback loop between the entity and stakeholders allows the entity to stay on top of trends (i.e. water issues, geo-political issues etc.) and adjust strategies to obtain the net zero targets.

For external feedback, the entity can set up a mechanism to receive and respond to feedback from stakeholders. Feedback can be obtained in various ways such as pulse surveys, focus meetings with each specific stakeholder, etc.

For upstream supply chains, the entity can survey suppliers to evaluate supplier best practices and determine potential alignment. GHG emissions from upstream supply chains are associated with mining, production, transmission, process systems, distribution and storage of carbon based materials (i.e. fossil fuels). Upstream supply chains start with the extraction of carbon based materials and end with the delivery of the carbon based materials at the site of use.

For downstream supply chains, the entity can engage with users of the product and/or service and make adjustments to product and service design and behavior adjustments. GHG emissions from downstream emissions are associated with the product or service once it is no longer in control and/or owned by the company.

Equity

Each net zero target should explain how it provides a fair and equitable contribution to tackling climate change. Examples of equitable statements include statements regarding the entity’s share in global emails and equity considerations relating to different societal groups.

Accountability

Targets are established to hold corporate entities accountable for delivering progress on the targets. Accountability measures include various institutions, mechanisms and incentives.

Key Takeaways

Tasks to help you prepare

• Set net zero targets based on science based targets.

• Incorporate the five above elements into your entity’s strategy - plan, reporting mechanism, dialogue, equity and accountability.