ESG Metric: GHG Scope 2 emissions
Ease of implementation: Medium
Suitable for: SMEs with (or planning to transition to) electric fleets
Suggested functional lead: Facility manager and finance department
Summary
Science-based Targets initiative (SBTi) launched new net-zero emissions standards which companies are adopting in Net Zero strategies to help tackle global climate change. To set up a Net Zero strategy, you must initially appoint a Low Carbon team and set out a clear policy outlining your goals to reduce carbon emissions. It is crucial to calculate your current carbon footprint and determine a baseline to set your targets to. With the newly collected carbon footprint data, set Net Zero targets and identify the main areas and opportunities to achieve them. Develop a clear and robust plan with short-term goals to ensure success. To help you achieve the targets, we suggest building commitment from upper management and verifying your data collection, monitoring and reporting by a third party.
Background Information
Current commitment to reduce GHG emissions puts the planet on track for 2.7oC warming, which is significantly higher than the 1.5oC target set out in the Paris Agreement. This projection of warming ncludes 70% of the world economies and their carbon neutral or net zero objectives. It is thus crucial that all businesses set out a net zero strategy to contribute to decreasing the projected warming by 2050.
Following COP26, the Science-based Targets initiative (SBTi) launched new net-zero emissions standards to comply with the Paris Agreement. It sets out standards for deep decarbonization of 90-95% emissions by 2050 for businesses. The standards include near and long-term targets for the whole value chain. It includes requirements to remove carbon from the atmosphere and sequester it in carbon sinks. In addition, businesses are encouraged to invest in offsetting projects, however, not solely be used to account for their carbon emissions.
Implementation Steps
Set up a Low Carbon Policy and team
Set up a low carbon team from various departments and levels of your business. They should set up a Low Carbon Policy to provide succinct overview of your business’ commitment to drive change throughout. Ensure the policy aligns with company strategies already set in place.
Calculate current carbon footprint
Use the KEY ESG platform to calculate your carbon footprint.
Decide on a baseline
Decide which year you want to use as your baseline to compare your future emissions to. This is usually a 12-month period as a historic point of comparison. We suggest using 2019 as a baseline year to avoid any sudden change in emission due to the pandemic.
Identify carbon reduction opportunities
Identify low carbon opportunities from your carbon footprint data. These can include energy and resource efficiency, generation of low carbon energy, and change is assets. Note that carbon offsetting opportunities should be considered as a last implementation step and is not an emission reduction method.
Set Net Zero Targets
Science-based Target initiatives (SBTi) launched net-zero emission standards which you must follow in a Net Zero Strategy. You are required to set near-term targets for the next 5-10 years to roughly half emissions by 2030. Long-term targets should aim for 90-95% emission reduction by 2050, however does vary from sector to sector. The remaining 5-10% of emissions should be removed from the atmosphere and sequester. It is also encouraged to include offsetting schemes to reduce emission outside of your value chain.
Develop clear and robust carbon reduction goals with intermediate targets
Create concrete plans to lead the path towards your net zero strategy. When developing a road map to net zero, consider investment requirements, in-house innovation and design, expected technological advances and projected business growth.
Build commitment from upper management
Support is required from the top level as they can drive the most change. Ensure upper management is committed to the overarching goals of achieving net zero and reducing your business carbon footprint.
Verify carbon credentials by a third party
Many businesses will consider external verification of calculating historic and current carbon footprint as well as the strategy to net zero. The third-party can provide recommendation on improvements in calculation methods, data and reporting.