Climate change is real, but what can business leaders do about it? After years of avoiding clear definitions of how industry could get to Net Zero, the latest version of the Net Zero standard, currently launched for public consultation, makes this goal impossible.
The Net Zero story understandably began by focusing on the negative, encouraging businesses to cut their direct and indirect energy use (Scope 1 and Scope 2), and the emissions upstream in their supply chain and downstream in their value chain (Scope 3).
However, this ignores the fact that some companies also have a beneficial impact, by helping reduce the carbon footprint of customers.
This was a challenge taken up by the AES Engineering group, including the AESSEAL and AVT companies and all our global assets. It was a pioneering and costly effort to make industry's contribution to combatting climate change fully transparent and we are proud that this has been recognised by numerous awards.
In January 2023, BSI published its case study of AES Engineering Ltd group's Net Zero journey, promoting us as a manufacturing exemplar. Last year, the group was also awarded a King's Award for Enterprise in the sustainable development category.
In our personal Net Zero journey, carbon created, minus carbon saved as a result of our products helping customers be greener and more efficient, were both carefully calculated. The calculations were audited and verified by the standards body BSI. We concluded that since environmental savings by customers hugely outstripped the carbon penalty of our supply chain and direct activities, that we had met and gone beyond the Net Zero standard.
AES Engineering's approach was a reasonable interpretation of the Net Zero ethos - is the planet better or worse off as a result of our business activities? But in the absence of any usable mechanism, we had to fill in the dots.
This approach was consistent with the information available at the time, and was verified by BSI, the same standards body that is now co-developing the new ISO standard that changes the position.
When we began this journey, no authoritative body - GHG Protocol, SBTi, ISO, or WBCSD - provided clear operational guidance on how to quantify and report avoided emissions by organisations. This meant that companies working at the frontier of sustainability practice were operating in a methodological vacuum on the reporting side. We had to come up with new mechanisms on how to calculate and disclose the climate benefit of products that enable customer emissions reductions.
Now ISO has launched the public consultation on the Draft International Standard 14060 which defines organisational Net Zero in detail for the first time. However, this draft standard has failure written into it from the beginning. In addition to prohibiting the use of carbon credits to demonstrate progress toward Net Zero targets it provides no mechanism for engineering businesses to report the GHG reductions their products enable in customer operations.
The rationale is that a tonne of CO2e saved in a customer's plant is the customer's Scope 1 or Scope 2 reduction. Attributing it also to the manufacturer's Net Zero balance creates double counting and inflates global mitigation claims. However, there is a structural incoherence in this framework. Under GHG Protocol Category 11 (Use of Sold Products), the customer's actual energy use from operating an engineering product is already pulled into the manufacturer's Scope 3 value chain — making the footprint larger the more product is sold.
This means that a business that helps more and more customers save energy is actually increasing their own Scope 3 penalty, while no credit whatsoever is given for the beneficial impact on the planet. Result: the manufacturer is incentivised to minimise Category 11 reporting rather than to demonstrate product-enabled savings.
In April this year AESSEAL published its annual GHG avoidance report for 2024–25. The report documents three product categories with independently verified avoided emissions: Water Saving Systems; Steam Turbine Seals, and Evaporative Processes with total avoided emissions approaching 300,000 tonnes CO₂e, which is significantly higher than the carbon penalty passed to us by our supply chain, and the carbon created in our direct business operations.
We are proud to have given a lead to other businesses and the record of AES Engineering's beneficial impact on the planet is not in any way challenged by the latest ruling. We are just going to have to describe it differently.
Based on the positive overall results over the last few years we have been flying the Net Zero flag. From next year, we will have to haul down that flag and revert to using terms such as "carbon neutral" or simply say we are compliant with a standard that most businesses will find impossible to communicate to their customers or workforce.
The whole Net Zero saga is an unfortunate conjunction of scientific precision meeting a huge communication gap. The rationale may be clear to climate scientists but they are showing an astounding ignorance of the reality that the public, and businesses need understandable goals and reachable targets.
AES Engineering and our global brands, AESSEAL and AVT will continue to do our best to encourage sustainable practices in our supply chain and water and energy saving in our customers.
We will continue to promote the concept that companies that produce beneficial savings in carbon due to their activities need to be encouraged and recognised. There are mechanisms to show the net benefit and have this verified by BSI or other responsible bodies.
We believe in Climate Change and the duty that we all have to mitigate its impacts. We will continue to promote Planet Positive efforts, even if we no longer promote Net Zero as an actionable concept.
The inconvenient truth is that Net Zero is not helping us make the case that this is worth the effort and cost involved.
It is time for responsible business organisations to take a lead and promote verifiable standards that produce actionable targets and real advantage for the planet.
