As the world turns its attention to the 27th United Nations Climate Change Conference (COP27) this month, we’re focusing on the actions we can take across our business and the communities we serve, to reduce our environmental impact.

The climate crisis is affecting all of us, and every business has a role to play in supporting the transition to a net-zero economy.

At Xero, we take our responsibilities as a sustainable organisation seriously, and we’re committed to taking meaningful action on climate change. This is underpinned by our purpose to make life better for people in small business, their advisors and communities around the world.

Building on ‘Net Zero @ Xero’

We’re proud to be on a carbon reduction journey, called ‘Net Zero @ Xero’. We started our journey by offsetting 100% of Xero’s carbon emissions in 2019 and committed to doing so every year. We do this by purchasing carbon credits across certified environmental projects and conservation schemes.

One project that Xero is committed to fully sponsoring until 31 March 2024 is the Fishermans Bay Permanent Forest Sink Initiative (PFSI) on the Banks Peninsula in New Zealand. I was lucky to visit the team there last year, who are doing incredible conservation work including protecting the breeding habitat of endangered yellow-eyed penguins.

The next milestone in our journey was to receive carbon neutral certification by the Australian Government’s Climate Active program, and we’re committed to maintaining this.

We’ve now taken the next step towards net-zero emissions by setting emissions reduction targets in line with climate science. Setting these targets provides a clear direction to reduce our greenhouse gas emissions, while building on our current initiatives.

Our climate targets

Xero has set near term targets to reduce Scope 1, 2 and 3 emissions that align with the recommendations of the Science-Based Targets initiative (SBTi). These targets support the Paris Agreement goal of limiting global warming to well below 2 degrees Celsius above pre-industrial levels.

We’ve set the following targets:

• 42% reduction in Scope 1 and 2 emissions from FY20 by FY30
• 17% reduction in Scope 3 emissions from FY20 by FY30
• Net-zero* emissions no later than FY50

Scope 1 emissions cover direct emissions from a company’s owned or controlled sources. This includes the fuel burned by cars used by some of Xero’s sales teams.

Scope 2 covers indirect emissions from purchased electricity, steam, heating and cooling that we consume. This includes the energy we use in the buildings with Xero offices.

Scope 3 includes all other indirect emissions that occur in a company’s value chain. This includes cloud hosting, business travel, our people commuting to work, catering in Xero offices and at Xero events, laptops and IT equipment.

Xero will work towards achieving these targets by focusing on the areas of increased renewable energy uptake, being more strategic about business travel, and switching to more sustainable catering wherever possible.

These targets build on our existing initiatives, such as purchasing carbon neutral electricity across a number of our offices; reducing electricity consumption through things like sensor and timer lighting; and providing end-of-trip facilities in many of our offices for alternative modes of transport.

We’re also working with our biggest technology provider, Amazon Web Services (AWS), to understand our environmental impact when we build products and services. Xero’s AWS emissions will reduce over time as AWS works towards its goal of 100% renewable energy by 2025.

A team effort

Taking action against climate change is important to our people, customers, partners and shareholders. Working towards these targets will require us to more carefully consider the environmental impact of many of our actions and decisions. The journey towards net-zero is challenging us to do things differently, and I’m proud of the passion and commitment from our people to help us get there.

Like many other businesses, we’re on a journey, and look forward to sharing our progress and learnings along the way. We hope that by setting these targets and taking action to reduce our emissions, we can contribute to a more sustainable economy and inspire others to do the same.

We can all work together to make small changes that can collectively make a big impact.