Time is running out. We are on track to exceed 1.5°C warming above pre-industrial times within the next decade. With the Paris Agreement and other national net zero pledges, the message is clear: we must reduce our carbon emissions. This has translated into a huge drive towards businesses setting their own net zero strategies and science-based targets for carbon reductions. Obviously a very good thing. However, by taking a blinkered view, focusing only on internal, operational carbon reductions, we are missing a significant opportunity for collaboration and innovation. Instead of the focus being only on doing less bad, businesses should ask themselves; how can we do more good?
Almost 30% of global emissions come from the resource extraction, manufacturing, chemicals and cement industries. It is recognised that these are high emitting industries, so it makes sense that there should be a focus on carbon reductions. Yet we don’t often talk about the benefits these industries bring to society. These resources are essential to the new technology and solutions that we laud as the key to the low carbon transition. This is the side of the story that is rarely told.
Doing more good will look different from business to business, and may change over time. Once upon a time doing good simply looked at the economic benefits – the taxes you pay, the number of jobs you create. In many industries there is now a concerted effort on social benefits – the community outreach, the training schemes, the volunteering and so on. Environmental benefits have largely been neglected. Yes, businesses talk about their own carbon reductions, but that isn’t a benefit. That is a standard expectation of a responsible business.
One thing is common, it is about making a deliberate and concerted effort to enable climate benefits throughout your value chain. This may be through enabling your customers to save energy by using your product, enabling less water use in further processing, enabling the elimination of waste and many others. The innovation that we are seeing across multiple industries is the key.
We need more businesses working to push the boundary and develop large scale low carbon solutions. Business as usual will not work. Calculating the benefits of products after they leave your gate is hard, and many argue that it is simply not worth the time and effort. However, without actively taking stock of the good you are doing, it is much harder to make the business case for future innovations. Innovation generally requires investment. If you neglect to capture the benefit of your innovations how will you know where to invest next? And how will you capture your ROI?
There are other business benefits too. Enabling avoided emissions through your value chain is a recognised mitigation pathway in upcoming net zero guidance. As there is increasing pressure to set net zero strategies, having a solid view on carbon benefits will not only reduce the cost of purchasing offsets for the residual emissions, it leads to a more integrated and holistic approach which will stand up to public scrutiny.
But why is this hard?
The concern of being seen to ‘greenwash’ whilst making these public commitments is a valid risk. Although carbon benefits are not yet a standard industry expectation many businesses have already fallen into the trap of over communicating and under delivering. Over a third of businesses reporting to CDP claim that their products help customers avoid emissions. But many of these claims are vague and provide an inaccurate comparison. For example, both BHP and Anglo American claim avoided emissions from their copper being used in electric transmission and distribution, with no acknowledgement that copper is already widely used in this application – they are not specifically making things better. Similarly, there is the claim that copper is required for renewable energy technology such as offshore wind and solar. Whilst this may be the case there is no context provided on what the alternative would be. Neither claim is specifically wrong, however without additional information about how their product specifically contributes to the avoided emissions they must be called into question. If the same avoided emissions could be realised without their product, their claim would be invalid. The benefits claimed only have real value if done transparently, consistently and with a rigorous and robust methodology.
First things first, there is only limited guidance on how to calculate climate benefits. This is despite the fact that the GHG Protocol conducted a survey 6 years ago in which 79% of respondents declared that there is a need for standards in this area.
So, in the absence of clear guidance what’s the right approach?
The key thing about a benefit is that it is a comparison against something else. Businesses need a clear statement of what the benefit is, when it will arise and what you are comparing to. A generic ‘it helps’ is just not good enough. For example, we need to know that by using your high strength steel to make vehicles:
This description is the key to talking about your benefit. Quantifying that benefit is a journey. Much existing guidance calls for full, verified lifecycle assessments, which while accurate are very time and resource-intensive. This may be feasible if you have one or two flagship products. But if you have many hundreds of products or potential end-applications then a broader, high level assessment is a useful first step. This helps you identify the potential scale of your benefits across the business, to then identify where the resource should be focused.
Even for the high-level assessments there are key pieces of information needed to meet a minimum credible robustness. We need to calculate the carbon impact of the scenario that uses the comparison product, using customer data, existing lifecycle assessments or environmental product declarations. We need to calculate or estimate the carbon impact of the scenario using your own product. The comparison of these will provide a first view of what the benefit is. There are many other more detailed questions that we can then ask around who ‘owns’ the benefit, particularly if your product is contributing to the final solution. In these cases there will be a need to share the benefit with any other contributing products; for example the carbon savings associated with a more fuel efficient vehicle may be driven by a lightweight steel chassis and tyres with low rolling resistance. Each of those components will contribute to the overall carbon benefit, so the question becomes how do we share the total benefit between the contributing products?
The key principle is transparency. The more you can share of your assumptions and approach the more trustworthy your benefits claims become.
Businesses should avoid choosing a ‘best-case scenario’ for initial benefits calculations. As soon as you start making assumptions which are beneficial to your product, the entire assertion comes into question. Presenting a max/min range for the benefit is more trustworthy. Similarly, there have been businesses who have come under fire for inaccurate benefits claims due to choosing bespoke scenarios which were not communicated.
If the world is to meet the 1.5°C target in the Paris Agreement we need more businesses looking forwards and actively making the shift to lower carbon products and business models. This should be as much a core business aim as carbon reduction targets. Our work with businesses across the chemicals, manufacturing and technology space has shown that this ambition exists. Irrespective of what stage of the journey these businesses are at, where in the value chain they sit or the diversity of their product range, our approach has been tried and tested to support these ambitions.
more than a word.