Carbon footprint has become a popular tool in which companies measure how they are impacting the environment. It reflects the amount of carbon dioxide (CO2) emissions associated with the activities of an individual or an entity, like a business. The definition has since been expanded to include other types of greenhouse gases (GHG).
It is one thing to calculate the carbon footprint of a company, factory or product. But in order to maximize the results of the carbon footprint calculated, a carbon reduction plan needs to be formulated to help companies understand how they can decrease their environmental impact.
What exactly does a carbon reduction plan look like?
For each company, a plan would be tailored to the company's specific supply chain and goals. But overall, a carbon reduction plan should be ambitious and "science-based", on track for well-below 2°C global warming. Creating a carbon reduction plan is not a quick and simple process, but it is not a complicated task either! It is necessary for a company to get on board as soon as possible, as climate-related risks are threatening parts of the global supply chain. This article brings you a glimpse of some of the global leaders in carbon reduction and the actions they have taken for a more sustainable world.
The retailer committed to reduce scope 1 and 2 by 60% by 2025, while for its scope 3 emissions, it wants to reduce by 17% by 2030. In both cases, the base year is set in 2015-16. In addition to this, Tesco hopes to source 100% of its electricity from renewable sources by 2030 with a milestone of 65% by 2020. On top of that, the retailer also wants to remove commodity-driven deforestation from all supply chains by 2020, including supporting better climate change reporting.
What can we learn from Tesco?
Tesco declares a target for 2025 for its scope 1 and 2 emissions. However, it has also set an intermediate target as well as a longer target year in order to monitor its progress. Tesco wants to reduce absolute carbon emissions from operations by 35% in 2020 and 100% by 2050. As of the end of 2019, Tesco was able to reduce emissions by 31%. For its electricity sourcing, it was at 58% of electricity from renewable sources as of end of 2019.
Tesco is transparent about its methodologies and clearly identifies where the data is coming from. Its methodologies cover scope 1, 2 and 3 comprehensively. What the company also makes known is that the emissions it is measuring is just CO2. The interesting thing about Tesco is that the data comes from all over the world. Tesco has implemented gathering of data in each country of operations through its internet-based reporting tool. Energy consumption numbers are also available.
These SBTs were not created from thin air. The retailer took the necessary steps in identifying realistic, achievable targets, while keeping in mind associated costs. Embarking on this journey for lower emissions also helped Tesco improve its energy efficiency, even with significant floor area growth. Throughout this process, Tesco has increased its supply chain engagement and aligned its goals with climate change mitigation. There are of course challenges along the way, such as coordination and raising awareness, but overall the retailer has been very active and committed in constantly improving its efforts for tackling climate change. If Tesco can mobilize its global operations to join in, any company size can also create a carbon reduction plan!
Coca-Cola and Coca-Cola HBC
The beverage behemoth has been finding ways to “shake up” its carbon footprint impact. Its goal for 2020 is to reduce the carbon footprint of the “drink in your hand” by 25% by 2020 against a 2010 baseline. The “drink in your hand” involves the whole value chain. At the end of 2018, the company announced that it reduced its footprint by 21%. Coca-Cola tracks emission according to per liter or product sold at a system level, expressed as a ratio (grams of CO2 in relation to liters of product produced). Its scope 1 and 2 emissions deal mainly with company-owned facilities while scope 3 pertain more to bottling partner facilities.
The strategy behind Coca-Cola’s carbon reduction involves extensive teamwork and close communication. The company works closely with its bottling partners to set reduction targets through 2020. It allows flexibility across the whole value chain such as the ability to implement local programs. The Carbon Scenario Planner was also introduced in order to ensure a standardized forecasting methodology. This planner has been applied in areas like reducing GHG emission for distribution trucking fleet and sustainable packaging and designing. Coca-Cola has a separate goal for sustainable packaging which is achieve 100% recyclable packaging by 2025. The main themes for Coca-Cola’s strategy is to build climate resilience both in the capacity to recover from any potential disasters and also respond to impacts from climate-related policies.
Its key bottling partners like Coca-Cola European Partners and Coca-Cola Hellenic Bottling Company (HBC) have also joined in setting goals for 2020.
Coca-Cola HBC is a leading bottler of The Coca-Cola Company. The bottler committed to reducing scope 1 and 2 emissions by 50% per liter of produced beverage by 2020 from the base year of 2010. It is also committed to reducing emissions across total value chain in all three scopes by 25% per liter of produced beverage. Apart from being SBTi-recognized, it is also ranked 1st in the industry for sustainability in the Dow Jones Sustainability Indices.
What can we learn from Coca-Cola HBC?
The bottler didn’t start from scratch with its SBTs but used internal carbon reduction targets as its foundation. But with the SBTs, the bottler had the opportunity to be more structured and ambitious. The bottler introduced carbon and water reduction teams at both Group and country levels to ensure close communication and implementation across the value chain. In addition, by having an independent party verify its goals, this gave Coca-Cola HBC more credibility and value for customers and investors.
The automotive industry is under a lot pressure when it comes to carbon footprints, but we have seen efforts by players in the industry. PSA Group is a leading multinational automotive and motorcycle manufacturer. From its detailed 2018 climate report, the manufacturer outlined the steps being taken in order for the company to reduce average CO2 emission of vehicles sold worldwide by 55% by 2035 compared with 2012 levels. It also wants to have more than 50% of the Group’s sales be in electric, fuel cells, and hybrid vehicles with an emission-free mode.
What can we learn from PSA Group?
The company carefully divides its Ambition 2035 strategy in six distinct themes. For each theme, it reviews not just the long-term targets but also short-term and intermediate targets to see if they have been met or not. It also breaks down specifically how much percentage each activity in all three scopes takes up, e.g. 19.1% of main indirect carbon emissions for upstream activities under scope 3 comes from purchasing. The more transparent and specific PSA Group is about its performance and targets, the better it is for it to foresee any risks or opportunities that may come up in the future.
Summing up, as we enter an era in which companies are being held more accountable for their environmental footprints, we think it is better to start now than later in calculating a company’s environmental impact and setting up the right carbon reduction targets. Going in such depth can also provide companies with a better understanding of its inefficiencies and risks. We look forward to supporting more companies in achieving their environmental goals and collaborating for a better future for our planet.
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