Nestle Gets Real about Net Zero
Other Companies Should Follow Suit
This week’s newsletter is co-written with my friend Peter Ebsen. To read our earlier primers on how nature-based carbon removal projects can accelerate climate progress in a progressive way, see here and here, and for our primer on climate disclosures, see here.
Many readers are asking what we think about Nestle’s recent statements that they are moving away from carbon neutrality.
Specifically, Nestle said that they will:
no longer rely on avoided-emission carbon offset projects to achieve net zero;
stop using claims of carbon neutrality for brands like Kit Kats;
prioritize direct emission reduction; and
when they do use carbon removal credits (they can’t get all the way to net zero otherwise), they will only use projects sourced from the company’s value chain.
We think this is all positive, and we hope that these plans serve as a model for other net zero-pledging companies.
Here are 4 specific lessons we draw from Nestle’s statements:
Commit to total transparency. Ambiguous goals, glitzy ESG reports, and vague accountability are common but they are obstacles to progress. Instead, companies should announce unambiguous annual milestones for emission reductions, report against these targets annually, explain what works and what doesn’t, disclose fully what carbon removal credits they are using, and identify the costs of both removals and emission reductions. As this newsletter has explained before, “The Truth Shall Set You Free.”
(This advice applies to Nestle too. They have not yet updated their formal net-zero plan to reflect their recent announcements. We recommend that they do so right away.)
Opt for “insetting.” If you are going to use carbon removal projects, prioritize ones in your company’s value chain, aka insetting. This should allow you to more carefully oversee carbon projects to ensure they are high quality. Nestle’s business mix should let them rely solely on carbon removal projects from their supply chain — projects like planting trees, restoring forests and peatlands, and adopting more sustainable agriculture practices. But not all companies will be able to do this. Those that can’t will have to work harder to ensure that they are only using carbon credits with high integrity. All participants in the carbon markets should expect and welcome extensive scrutiny and healthy skepticism. Carbon credit users need to demonstrate that their projects are sound.
Drop carbon “neutral” claims. Too often, companies use phrases like this sloppily. And these terms mean different things to different people. Usually when an organization refers to carbon “neutrality,” they mean (but don’t say) that emissions are being offset with low-cost carbon projects that seek to avoid emissions that would otherwise likely occur. This is where most of the controversy about carbon credits happens. But we now live in a world committed to reaching net zero, so we can move past this. There are no longer any good reasons to organize efforts around carbon neutrality. Nestle deserves credit for dropping its claim that the KitKat bar is carbon neutral. Getting to net zero should be the priority for all organizations.
Support nature conservation projects that protect ecosystems and likely avoid future emissions. Nestle says they will do this. That’s great. We should all want to see ecosystems like rainforests, mangroves, and grasslands protected. Doing so bolsters biodiversity, protects watersheds, benefits local communities, and achieves important climate outcomes. Just don’t credit any of that toward net-zero claims.
Nestle’s plan to advance their climate goals by shifting away from carbon neutrality toward net-zero and prioritizing carbon removal projects in its value chain is good news. Combining all of that with complete transparency will allow for strong progress to net zero and full understanding by stakeholders. It’s good for Nestle, and it’s a good game plan for other companies too.
Onward,
