onsemi has committed to achieving net-zero emissions by 2040 and we are implementing an aggressive strategy to reach this goal. But what does net zero mean? How does this compare to what our competitors and other companies are doing around climate change?
Not all climate pledges are created equally. You have likely seen companies commit to being carbon neutral or net zero, but what is the difference?
- Carbon neutral allows a company to continue their business-as-usual practices if they purchase enough carbon offsets to negate their emission activities. Carbon neutral commitments do not require companies to eliminate any present or future emission from their operations. Carbon neutral pledges are not aligned with the Paris Agreement.
- Net-zero emissions require an ambitious 1.5°C aligned science-based target for emission reductions across its full value chain before purchasing carbon offsets equal to the emissions that cannot be avoided. This means that the company ensures direct emission will not contribute to a global temperature rise exceeding 1.5°C above pre-industrial times. Net-zero pledges align with the Paris Agreement.
With this commitment, we have set the most ambitious goal among our competitors and will surpass the Paris Agreement’s goal by a full decade. Our strategy has been developed in partnership with BSR, a global nonprofit organization that works with its network of more than 250 member companies to develop sustainable business strategies and solutions through consulting, research and cross-sector collaboration. Our strategy is broken down into three pillars:
- Capitalize on efficiency – Every ton of carbon dioxide (CO₂) avoided is a ton we do not need to eliminate or offset. Our employees have already demonstrated their innovative abilities to create such efficiencies. We reduced our emissions by 12,101 metric tons of CO₂ in 2020 through 49 projects centered on increased energy efficiencies. Investments in facilities, processes and equipment to increase energy efficiency can reduce our greenhouse gas footprint by as much as 15% by 2040. We will also be focusing on our process gas usage as there is substantial opportunity for efficiency in this area.
- Renewable energy – To achieve net zero, companies need to invest in renewable energy equal to the emissions associated with their energy consumption. Offsets cannot be used for electricity-related emission in a net-zero model. We will transition to an emissions-free renewable energy portfolio to achieve this goal. We plan to use 50% renewable energy by 2030 and 100% by 2040. We will engage with energy providers to identify power purchase agreements (PPAs) in locations where it is feasible to to recoup investment costs in long-term agreements. To assist in our shift to renewable energy, we will be joining the Renewable Energy Buyers Alliance to ensure a rapid transition to a cleaner zero-carbon energy future.
- Offsets and influence – For non-electricity emissions that cannot be eliminated, we will purchase certified carbon offsets equal to their amount. Green-E and Gold Standard certified offsets are the most credible and will be prioritized in our strategy. Science-based targets also require goals for reducing emissions in the supply chain. We will leverage our Responsible Business Alliance membership to engage suppliers on emissions reduction.
The corporate social responsibility (CSR) team will work closely with the environmental health and safety, and facilities teams to ensure processes and frameworks are in place to measure our progress against our net-zero goal. Our CSR Report will be a key resource for anyone wanting to see our progress. You will notice that we report our emissions on a scope 1, 2 and 3 basis. The scope of the emissions tells us what kind of emission they are and how they relate to our business operations:
- Scope 1 emissions are direct emissions from company-owned and -controlled resources. Some examples of scope 1 emissions include emissions from company-owned vehicles, emissions from fuels used in heating or furnaces and process emissions from process chemicals used in industrial processes. Within our net-zero strategy, we will eliminate and/or offset our scope 1 emissions through capitalizing on efficiencies and offsets and influence.
- Scope 2 emissions are indirect emissions from the generation of purchased energy. For our purposes, this means our purchased electricity. Within our net-zero strategy, we will eliminate and/or offset our scope 2 emissions through renewable energy.
- Scope 3 emissions are indirect emission that occur in the value chain of the company, including both upstream and downstream emissions (see graphic below for details). Some examples of scope 3 emissions include business travel, emissions our suppliers create making the products we purchase, employees commuting and emissions from the transportation of our products to the end-user. Within our net-zero strategy, we will eliminate and/or offset our scope 3 emissions through offsets and by encouraging our suppliers to implement their own emission reduction targets. In 2020, we started tracking business travel. As the journey continues, we’ll build the rest of scope 3 emissions into our reporting.
All of our emissions data is verified by a third-party company, Trucost. Trucost, a subsidiary of S&P Global, is a leader in carbon and environmental data and risk analysis. You can read our assurance statement on pages 47-48 of our 2020 CSR Report.
While there is going to be some learning around our net-zero goal and it might take time to see results, we will measure our progress and we will do better. We have a plan and are dedicated to its execution from the top down. Committing to net-zero is the right thing to do.
Please visit the onsemi Climate and Sustainability Web page to read more about how the company is committed to a greener tomorrow.