GHG Emissions - August 18, 2021 - By The Energy & Climate Practice at 3Degrees
Journey to Zero: Four Key Action Areas to Achieve Net Zero Emissions
To address the growing climate crisis, more organizations are setting climate goals, such as net zero, carbon neutrality, or SBTi goals. But committing to reach net zero emissions and executing on climate goals are two very different things. In this column, we’ll discuss how organizations can embrace this climate opportunity and outline four key action areas to help companies get started on their journey to zero.
Regardless of where you are in your journey, the question at the heart of your net zero strategy should be: What is your organization’s climate opportunity?
While short-term, programmatic goals are important, it’s critical to determine how you can leverage your company’s superpowers to help create a net zero world and thrive in it. While the climate emergency requires organizations to implement rapid and deep decarbonization initiatives across all three scopes of emissions, it also presents a unique opportunity for them to innovate around products and services that can support faster decarbonization, creating real value for customers, employees, and shareholders.
Your organization’s climate superpowers may not be immediately apparent. Creating programmatic goals can help illuminate your unique climate opportunity, while also taking immediate action to reduce your greenhouse gas (GHG) emissions. Let’s take a deeper look at each of the following key action areas:
- Business Strategy Integration
- Operational Reductions
- Value Chain Reductions
- Remaining Emissions
Business Strategy Integration
Like any important business initiative, an organization’s decarbonization efforts should be fully integrated into its existing business strategy. Getting started will require climate intelligence on topics such as:
- Benchmarking competitive actions and goals
- Climate reporting and disclosures
- Customer and other stakeholders’ expectations
- Annual greenhouse gas (GHG) inventory
Cumulatively, these pieces of information can help you clearly articulate your business case for action, which needs to be supported by emissions data and shared in the language of your most important stakeholders.
A common starting place is benchmarking. What are your peers doing with respect to net zero goals? How do your organization’s climate actions stack up?
Another starting point is a climate risk assessment and disclosure to investors. The most common climate risk reporting framework is the TCFD framework, which refers to the Taskforce for Climate-Related Financial Disclosures, the organization that put forth recommendations on how and what to report as part of climate risk.
Underpinning all of these efforts is a need for robust climate understanding and stakeholder education. A “climate boot camp” for stakeholders may include topics such as definitions of common climate commitments, high watermark activities of leaders, a crash course in greenhouse gas accounting, and identification of your climate risks and opportunities.
Finally, any foundational work needs to include an annual GHG emissions inventory. Including important data on key emissions hotspots is required in order to set a meaningful strategy.
The most effective climate strategies take all these actions together and weave them into an organization’s current business strategy to complement and support its mission, vision, and values.
Operational reductions refer to actions an organization can take to address its emissions from activities such as electricity purchased to operate office and manufacturing facilities, and direct burning of fossil fuels.
These operational emissions, known as Scope 1 and 2 emissions, are a common starting point for reductions. Many companies also consider some Scope 3 emissions, such as those from employee commuting and company travel, as part of their operational boundaries.
To accomplish these emissions reductions, companies often find quick wins from energy efficiency projects, installing rooftop solar, and purchasing renewable energy. Renewable technology can be a valuable source of near-term action since companies have direct control over their electricity procurement.
Value Chain Reductions
Most companies will find that their value chain — or Scope 3 — emissions are responsible for the majority of their GHG emissions. Value chain emissions are derived from sources outside of your organization’s operational boundary, but are still within your scope of influence. More specifically, supply chain emissions within the value chain commonly represent the biggest share of a company’s emissions footprint. For example, a consumer packaged goods company might discover that a significant amount of their emissions are generated by fertilizer used during the manufacturing of their food products, which emits the powerful warming gas nitrous oxide.
Tackling value chain emissions can be somewhat complex and requires robust planning — and the carbon reduction impact is typically significant. For this reason, a plan to address Scope 3 value chain emissions is a critical component to any climate strategy. Common steps in a value chain action plan include:
- Conducting a Scope 3 emissions screen and hotspot analysis or a product-level life cycle analysis (LCA) which maps all sources of emissions from a specific product
- Developing a strategy to engage suppliers in carbon reduction initiatives, such as converting to renewable energy use
- Creating a system of recognition and/or rewards for suppliers who are successful in their GHG reduction efforts
Last but not least, an organization’s net zero strategy is not complete without a plan to address the emissions that remain after all other internal reduction measures have been implemented. Even companies that are highly successful in reducing their GHG footprint across all three emissions scopes will have some remaining emissions that need to be addressed in order to reach their climate goal. This is where carbon credits — also known as carbon offsets or verified emissions reductions or removals (VERs) — come in. Incorporating carbon credits into a larger GHG reduction effort enables organizations to compensate for their unabated Scope 1 and 3 emissions today, while making progress towards longer term goals like net zero.
It’s not always easy for companies to determine the best path forward with respect to carbon credits. The carbon market is evolving quickly and there is not yet a standard for exactly how carbon removals will be used to meet long-term net zero goals (though one is currently being developed). While there are differing opinions on the role of carbon credits in achieving climate goals, there’s common consensus that a corporate-level net zero claim must balance all residual emissions with removals from the atmosphere or ocean.
As a result, many buyers are starting to shift towards carbon removal versus avoided emissions projects, and removals tend to be front and center in the dialogue around the future state of net zero. That said, carbon removal technology is still relatively nascent and there is a fair bit of uncertainty: What will be considered an appropriate carbon removal credit to meet the still-being-crafted standard? How should organizations think about projects that offer short-term versus long-term durability?
Given this evolving landscape, a company can begin to integrate investments in carbon removal projects today as a small part of its current portfolio, alongside carbon avoidance projects. It’s important to recognize that implementing a carbon credit strategy is not a replacement for doing the hard work of emissions reductions, but should be a complement to a longer-term internal reduction strategy, and supporting high-quality, third-party verified carbon projects that avoid emissions in the near term is an important tool on an organization’s path towards longer-term climate goals.
Prioritizing net zero efforts
Together, these four action areas form a comprehensive framework of corporate action. Keep in mind that these efforts should overlay with bigger-picture thinking about understanding the climate crisis and the role your company can play in shaping and supporting a net zero economy on a global scale. Which brings us full circle to the original question: What’s your company’s climate opportunity?
3Degrees makes it possible for businesses and their customers to take urgent action on climate change. As a certified B Corporation, we help Fortune 500 companies, utilities, and other organizations around the world achieve renewable energy and decarbonization goals. Learn more at 3degrees.com or follow us on LinkedIn and Twitter.
Share this valuable information with your colleagues using the buttons below:« Back to Columns
- All Roads Lead to Green Leasing
- Larry Fink’s 2021 letter to CEOs
- How EVs will re-energize the energy sector
- Decarbonizing New York’s Inefficient Buildings
- Charting a Path for Voluntary Renewable Energy Buyers as States Set 100% Clean Energy Targets
- Journey to Zero: Four Key Action Areas to Achieve Net Zero Emissions