These days, companies big and small are measuring, managing and reporting their carbon footprint. Even big fossil fuel companies are doing it. And it’s not just because they're concerned about their contribution to climate change.
For a start, reducing your emissions can help you spot any inefficiencies in your processes and reduce your operating costs. And everyone, from investors to customers and employees, now expects a company to be transparent about its impact on climate change.
Doing this right does take effort and dedication, but it’s a necessity, both for your business and for our future. Here are the five steps to creating a credible, meaningful climate programme.
If you want to set off in the right direction on any journey, first you need a map.
Draw up a map of how your company is organised. Then allocate which type of emissions each part of your business produces, and assign tasks and roles to individuals within each group – who approves everything, who does the reporting, and so on.
The more organised your set-up, the easier it is to see at a glance where your emissions are coming from and how you’re doing with those reduction targets (more of which later).
Next, because climate change is a collective challenge, invite staff to get to work on finding and reducing your emissions across the company. Make sure everyone from the C-Suite to the mail room is involved. Let everyone know what you’re doing and why, and inspire and incentivise them to do their bit.
You could even "gamify" your climate programme by introducing some friendly competition. A fully stocked (organic, locally sourced) beer fridge for the team who reduces the most emissions, for example, might be just the incentive people need.
Your carbon footprint doesn’t end at your factory gate or reception desk. Every activity that keeps your business running contributes, and that includes those by third parties such as suppliers and customers (see Scope 3, below). Delivering your office equipment, for example, or producing the raw materials you buy – this all counts as your carbon footprint.
Opening a dialogue with them might help them find ways to reduce their own carbon footprint – and collaborate with you on lessening your impact on the climate.
Benchmark: Apple’s supplier programme
Apple, one of the biggest companies in the world, reduced its carbon emissions by 35% in the three years to 2019 and it did this largely by going above and beyond when engaging with its suppliers. In 2015, it launched its supplier Clean Energy Program and, by 2019, 44 suppliers in 16 countries had committed to 100% renewable energy to produce the goods that Apple uses.
The next step is to measure your emissions. But to do that, first you need to work out where they come from. Emissions come under one of three scopes:
Scope 1 Direct emissions that come from sources you own or control. Say your company has a fleet of cars or your manufacturing plant is powered by a furnace. The fuel combustion emissions will come under this scope.
Scope 2 Indirect emissions that come from any electricity, steam, heating and cooling that your company purchases.
Scope 3 Everything not included in scope 1 or 2. These are either upstream or downstream: upstream emissions come from producing or transporting the goods or materials that your company purchases. Downstream emissions come from your customers using or disposing of your products.
Why measure Scope 3?
No company can afford to address scopes 1 and 2 alone. Why? Because scope 3 is likely to be where most of your emissions come from. Samsung, for example, knows that 61% of its emissions are scope 3. For Coca-Cola European Partners (CCEP) it’s 93%. That’s a lot of potential right there for reducing emissions – and at the same time improving efficiency and lowering costs.
Now you understand where your emissions come from you can start to measure them. Time to meet the carbon equation:
Activity data x emission factor = tCO2e
When it comes to measuring your emissions, there are several accounting standards around, such as the GHG Protocol, that you should follow to make sure your calculations are accurate.
And it’s a good idea to gather and enter your data on a daily or weekly basis and generate reports regularly (rather than leaving it all till your year-end report). Before you know it, it will be part of your everyday business routine.
What is net zero?
Planetary net zero is when the amount of emissions being released into the atmosphere is equal to that being removed. Emissions are removed naturally by carbon sinks such as the ocean, trees and soil, or by artificial methods, such as direct air capture.
Net zero for companies is very different. It’s when you set a date for when your emissions will match the amount of carbon you reduce or remove. But be careful about claiming to have achieved net zero for your company, given that your scope 3 emissions come from your suppliers, customers and entire value chain.
At this stage you should have a clear picture of your carbon footprint, how big it is and where it’s coming from. Now it’s time to take action. There are two things that you can do:
The key to a successful climate programme is to do both of these. Every company needs to first focus on actively reducing its emissions, and then have a carbon purchasing strategy in place. This double approach is crucial if the planet is to reach net zero by 2050.
It might be tempting just to carry on emitting as usual and compensate for it by purchasing negative carbon elsewhere. But the truth is that we'll never reach planetary net zero this way. Here are just two of the reasons why:
So it's important that we all focus on reducing our own emissions first. And then, to buy us time, we need to make contributions to climate projects, too.
The UN’s Intergovernmental Panel on Climate Change (IPCC) says that the world needs to reach net-zero by 2050 in order to limit global warming to 1.5C and reduce the impacts of climate change. So that’s the goal to align with.
The Science-Based Target initiative (SBTi) is a framework that helps you do just that. Its guidelines help you set clear, credible targets that are based on the latest science.
First, set a big, headline target for the whole company to aim for. Then you can set separate targets for different teams and parts of your business.
Just one example of a SBTi target is the one set by ENGIE. The service, business energy and regeneration company has committed to reducing its power-generation GHG emissions from scope 1 and scope 3 by 52% per kWh between 2017 and 2030. It has also committed to reducing absolute scope 3 emissions from use of sold products 34% by 2030 from a 2017 base year.
Now you’ve set your targets, all you have to do is reach them! The focus of your reduction initiatives will depend on your business and where your emission "hotspots" are. But here are three pathways you can take:
Supply chain As we’ve seen, there’s plenty of reduction potential in your supply chain. The key is to communicate and engage with your suppliers to pinpoint where emissions come from, and collaborate on reducing them.
Renewable energy Commit to using only clean energy. The holy grail of sustainability is to generate this energy yourself rather than buying it. That means becoming an equity investor in energy projects, buying long-term power purchase agreements – or building the wind farms and solar plants yourself.
Energy efficiency Monitor your energy usage across your facilities and do what you need to do help you reduce it. Replace old heating systems and repair leaks. Switch to low-carbon transport for shipping. And design any new buildings to be energy efficient.
Product design If your business involves making physical products, you can cut emissions by sourcing recycled or renewable materials, by reducing waste, and by designing them to use less material in the first place. And the longer they last, the lower their carbon footprint.
Product mix Some products are simply bad for the environment. In that case, look at switching up your product mix – from cars to a car-sharing service, for example, or from meat burgers to vegan burgers.
The last piece of the puzzle is contribution – the second key to reaching global net zero. That means making payments to projects that remove or reduce carbon emissions.
The IPCC has stated clearly that carbon removal and reduction projects are essential to limiting global warming to 1.5°C. And, as a company, no matter how hard you reduce, you won’t cut your emissions to zero – at least not within the timescale we need.
Start your contribution strategy by removing all your remaining scope 1 and 2 emissions. And then champion climate solutions, both removal and reduction, that will help us all get to net zero.
What’s in a word? Offsets vs contribution
The business community is moving away from the word “offsetting” and leaning towards “contribution”. The terminology is important, because different language shapes different approaches.
Offsetting, while well intended, can raise the wrong expectations. It implies that you can pay another company to remove their emissions, or suck carbon out of the air with a high-tech device, instead of curbing your own. And then claim you are ‘net zero’ or ‘carbon neutral’ (see above).
But when you contribute, you’re investing in solutions that tackle climate change, and contributing to global efforts to reach planetary net zero. But you’re not using it as a replacement for reduction.
A good carbon project is one that reduces, avoids or removes carbon. And that genuinely has an impact on tackling climate change.
Assess each one on its quality criteria. What is the baseline situation? What method does it use to quantify the carbon benefits? And how will the project be monitored?
A good carbon project also contributes to sustainable development. The poorest people in the world, after all, are the least responsible for climate change and yet are the first to face the consequences. Ask whether the project aligns with the UN's Sustainable Development Goals?
And, of course, decide on whether it’s a right fit for your company. Its location might matter to you, for example, or it might be a project that aligns really well with your brand values.
A good climate programme is a transparent one. You need to report your emissions according to accounting standards, and you need to show everyone, from investors to employees, how far you’ve progressed.
The most common accounting standards for emissions are aligned with ISO 14064-1, such as GHG Protocol, PAS2050 and Bilan Carbone. Do this regularly and often, and you’ll always be on top of your climate programme.
So you’ve hunted down your emissions, set your targets, and acted on your promises. Now it’s time to let everyone know about it. Publish your report and share it with stakeholders. Spread the word on social media and tell your employees to keep them engaged.
But before you do, be mindful of what you’re saying. Nowadays, consumers and investors are good at spotting greenwashing. And legislation is ramping up by the day, so make sure you’ve put in the work before you make any claims.
What’s crucial is to be open and transparent and share what knowledge we have with others in the business community. The road to net zero is, after all, a trip we’re all taking together, and it’s a long, continuous learning curve.
The best way to start a climate programme is to just do it (and the sooner the better, because before long, it will be illegal not to). We’re at a crucial turning point, and the momentum is building to figure out together how to deal with climate change before it’s too late.
It’s much better to be on the inside of the movement, where you can benefit from networks, knowledge-sharing and good will, than on the wrong side of history.
And, while cleaning up your carbon might feel like a huge (and possibly expensive) task, the long-term benefits include lower costs, a more efficient business, happier employees and happier customers. It is, quite simply, good for business.
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