What is decarbonization?
Decarbonization is the planned lowering of greenhouse gas emissions from your operations and value chain. Your greenhouse gas inventory is the measured record of those emissions. A base year is the earlier reporting period used to test whether the total is falling.
Inventory reduction: A fall in measured emissions on a like-for-like basis, using the same companies, sites, emissions sources and calculation method.
Avoidance: An estimate of emissions that did not happen because one option replaced a higher-emitting alternative. Under the GHG Protocol Scope 3 Standard, avoided emissions outside your inventory are reported separately, not deducted.
Offsetting: The use of a credit from a reduction or removal outside the activities counted in your inventory to balance a claim. It does not erase gross emissions, meaning emissions before credits, so keep the credit and the inventory total separate.
Why does decarbonization matter to you?
A customer may not ask, “Are you decarbonizing?” It may ask for an emissions target, its base year, the parts of the business and emissions sources covered, progress to date and a transition plan. A transition plan turns the target into named actions, dates, investment, owners and dependencies.
CDP asks for this information in its 2026 full questionnaire. Question 5.2 asks about a climate transition plan in the business strategy. Question 7.53 asks whether an emissions target was active in the reporting year. Question 7.53.1 asks for absolute-target details and progress; Question 7.53.2 asks the same for intensity targets, which measure emissions per unit of output. Question 7.55.2 asks about emissions-reduction initiatives. A customer can ask only for selected questions, so start with the wording you received.
For entities using the Australian climate disclosure standard AASB S2, paragraph 14(a) asks about any transition plan and how climate targets will be achieved. Paragraphs 33-36 ask for target details and progress. First confirm whether the reporting rule applies to your entity.
How does a mid-sized company decarbonize?
Start with your current greenhouse gas inventory, then rank emissions sources by size and influence. Estimate the tonnes reduced, cost, timing and evidence for each action.
- Energy: Meter high-use equipment, remove waste, improve controls and replace inefficient assets.
- Fuel switch: Replace fossil-fuel equipment only when the alternative is practical and lowers emissions. Compare the old fuel emissions with the new fuel or electricity emissions before calling it a reduction. Check the local emission factor, which is the rate used to calculate emissions for each unit of energy.
- Electricity procurement: Reduce consumption first, then assess renewable supply contracts and keep the records needed for the reporting method you use.
- Purchasing and suppliers: Choose lower-emitting materials and logistics, ask priority suppliers for data tied to what you buy, and put emissions criteria into renewals.
State which parts of the company the target covers, along with its base year, percentage and target year. Connect each action to that target, assign an owner, fund it and compare gross emissions with the base year annually.
What mistakes should you avoid?
- Counting offsets or avoided emissions as reductions in your greenhouse gas inventory.
- Announcing a percentage target without naming the base year, boundary, covered scopes and target year.
- Using an intensity target, meaning emissions per unit of output, but claiming total emissions fell when output grew.
- Changing an emission factor or calculation method and presenting the resulting number as an operational reduction.
Does decarbonization mean zero emissions?
No. Decarbonization describes the work of reducing emissions over time. Net-zero is a separate claim that adds rules for the small remainder that cannot be eliminated. Follow the standard named in your customer request or public commitment.
Can offsets be part of a decarbonization plan?
They can support climate action outside your inventory, but they should not replace reductions in your operations and value chain. Show gross emissions, actual reductions and any offsets separately. Check the rules of the target or disclosure programme before making a claim.