WATCH NOW! Plus answers to some tough questions about Net Zero
If you didn't make it to the live stream, you can now catch up on everything you missed!
Q&A
In the Q&A session at the end of our most recent webinar – Mastering the Carbon Maze – participants put some really challenging questions to our expert speakers.
The questions were very wide-ranging and relevant to anyone involved in their organisation’s Net Zero plans, so we thought it would be useful to share the answers publicly. Thanks go to Carol Somper and Elinor Kershaw for these answers to just 4 of the most commonly asked questions:
Q: Why should everyone have to report scope 3 emissions? Surely if all organisations were reporting Scopes 1 and 2 emissions properly, no one would need to report Scope 3?
If everyone was reporting their Scopes 1 and 2 that wouldn't necessarily prompt organisations to take action. Manufacturers with high Scopes 1 and 2 emissions are necessarily driven by their customers, so it is important that those further down the value chain understand how their design and specification choices are impacting global emissions and start to make decisions to reduce. This is essential to drive demand for reduced emissions in high-polluting sectors currently working primarily on price. Ultimately the GHG Protocol upstream and downstream scopes relationship enables/prompts more circular economy thinking and action.
Q: It is generally acknowledged that we have already failed in limiting global warming to 1.5 deg c and that this target will be breached. So what is the corrective action to get it back on track and where is this getting discussed? If we continue on current target levels we will fail massively.
The answer to "what do we do now" is still to reduce as much as possible and for all areas of business to get their strategies in order and start making changes following a science-based trajectory. There are still many sectors and major players without any targets in place, as well as those whose targets are inadequate.
It is vital not to take a "we've already failed" position as this will reduce the engagement and capacity for action due to the psychological reaction to a cause perceived to be hopeless.
Those companies who already have commitments and want to do more, can use their contractual powers to require suppliers and partners to set, report on and meet decarbonisation targets as a condition of working with them. TCFD*-style engagement within supply chains of the costs of NOT decarbonising (such as the impacts of climate change on supply chain and operation) will help organisations to understand the material impacts and why it is neither "optional" or altruistic to develop decarbonisation (and adaptation/mitigation) strategies but a business imperative. This type of engagement is further encouraged by the development of the TNFD reporting requirements coming on-line.
Q: Does the Science Based Target initiative (SBTi) mandate the scope of your carbon footprint? In particular, the extent to which Scope 3 emissions need to be included?
"SBTi require inclusion of 95% of all scope 1 & 2 and all mandatory categories of scope 3 as defined in the GHGP Corporate Value Chain (Scope 3) standard.”
If Scope 3 is over 40% of your footprint you have to submit near-term targets that include scope 3 reductions.
Materiality (both GHG Ptotocol and SBTi) is defined based on whether its inclusion or exclusion can be seen to influence any decisions or actions taken as a result, and as a rule of thumb elements which will confidently be below 5% of the total inventory can be excluded from calculations except where it is clear that strategic decision making should include them.
As emissions are reduced from the highest emitting sources, elements which were previously defined as non-material will become a greater proportion of the over footprint and need to be reevaluated. "
Q: Is there evidence that disclosure - the fact of disclosure and the detail of the data - does indeed influence investment decisions?
Yes, very much so. Increasing numbers of major investors are requiring the businesses that they invest in to disclose their emissions, including scope 3 supply chain emissions. Norges Bank manages the Norwegian Government Pension Fund Global, managing assets worth more than 15,000 billion kroner, or about 1.4 trillion dollars. They have strict requirements for investee businesses, (see Norges Bank Climate Action Plan) as do many others like Blackrock and Blackstone. This requirement is now regulatory within the EU (see Grant Thornton Insights) and will be shortly in the US (see Sustainalytics Resource Center). As the ISSB and ESRS ESG metrics become increasingly used this way of doing business will be 'normal'.
If you have any questions regarding any of the above, or any other questions relating to Net Zero, please get in touch – info@jrpsolutions.com or call 0800 6127 567.
*Task Force on Climate-related Financial Disclosures.