What is decarbonisation? – part III.

Setting decarbonisation targets is a complex process that requires careful consideration and strategic planning. This process involves several key steps and definitions, each of which is essential to ensure the ambition and feasibility of the company's efforts in line with the broader climate goals. Below are the details:

1. Selection of the base year: The base year serves as a reference point for measuring emission reductions. This should be the last year with reliable data available to serve as a basis for setting targets.

2. Target years: Targets should be set for specific future years. Short-term goals typically range from 5 to 15 years and are focused on immediate reductions in emissions, while long-term goals aim to achieve net zero emissions by 2050.

3. Range of emissions:

– Scope 1: Direct emissions from own or controlled sources.

– Scope 2: Indirect emissions from the production of purchased electricity, steam, heating and cooling.

– Scope 3: All other indirect emissions within the company's value chain.

4. Science-Based Targets (SBTs): SBTs are emission reduction targets that are consistent with the necessary level of decarbonisation to keep global temperature increases below 2°C compared to pre-industrial times, as set out in the Paris Agreement. These goals allow companies to contribute to global climate change on a scientific basis.

5. Implementation strategies: After setting goals, businesses must develop clear implementation strategies. This includes identifying the most effective tools to reduce emissions, investing in renewable energy sources, increasing energy efficiency and engaging the entire value chain in efforts to reduce emissions.

6. Monitoring and reporting: Regular monitoring and reporting on targets ensures transparency and accountability. It allows companies to track their progress, make informed adjustments to their strategies, and inform stakeholders of their achievements.

7. Initiation and collaboration: Achieving ambitious decarbonisation goals requires collaboration across all levels of the organization and with external partners, including suppliers, customers and industry peers. Joint activities increase impact and support the wider industry shift towards sustainability.

Why is scope 3 key to decarbonisation?

In many industries, up to 90 % emissions come from scope 3 (indirect emissions). In contrast, Scope 1 and 2 typically only account for around 8 % of a company's total GHG emissions. This data suggests that to effectively reduce their emissions, companies need to focus primarily on Scope 3 emissions and across their entire supply chain. However, companies do not have direct control over their suppliers, so the question remains how they can measure their suppliers' emissions and subsequently reduce them.

What is the role of the private sector in decarbonisation?

Unfortunately, the world is currently on the wrong track when it comes to achieving the decarbonisation targets set out in the Paris Agreement. However, growth can be seen in the transformation of our economy, with governments stepping up pressure for change in the private sector. Governments are facing the challenge of decarbonisation by introducing increasingly ambitious regulations and reporting requirements for businesses. These regulations include the EU Non-Financial Reporting Directive (NFRD), the Corporate Sustainability Reporting Directive (CSRD) and the EU Sustainable Finance Disclosure Regulation (SFRD). These reporting frameworks oblige companies to reduce their carbon emissions and contribute to fostering innovation and progress in low-carbon technologies. (Co2AI)