How to Build a Holistic Climate Strategy for Your Business
Climate strategies are the new industry standard. New regulations such as the EU Corporate Sustainability Reporting Directive (CSRD) will make sustainability reporting mandatory for around 55,000 EU companies. Big investment firms such as BlackRock put sustainability at the core of their investment strategy. And 50% of buyers closely monitor the environmental performance of their suppliers and business partners.
Companies such as Microsoft, HelloFresh, Personio and many others are leading by example and have taken the first important steps towards reducing their carbon emissions and making their business more sustainable.
Your company can be next. So, how do you get started? Creating a holistic climate strategy and taking climate action requires only four simple steps:
- Analyse your carbon footprint
- Reduce and avoid emissions where possible
- Offset your remaining emissions
- Share your commitment and track your progress
Let’s dive right in!
Step 1: Analyse your carbon footprint
What is a carbon footprint?
While you have most probably heard and seen the term carbon footprint before, it can be hard to grasp what it actually entails - let’s walk you through.
A carbon footprint is the amount of greenhouse gas (GHG) emissions emitted by private or corporate activities during a given period - such as driving to work or producing and shipping a product. It includes carbon dioxide - the gas most commonly emitted by humans - and other climate-relevant gases such as methane, nitrous oxide, and fluorinated gases. For consistent scorekeeping, these gases are converted into tonnes of carbon dioxide equivalent (in short: tCO2e). So when you see your carbon footprint result in tonnes of CO2e, this means that other climate-relevant gases have also been accounted for.
To make carbon footprints more tangible, let’s look at a few examples. A return flight from London to Hong Kong produces approximately 5 tonnes of CO2e. The average carbon footprint per person in Germany is approximately 10 tonnes CO2 per year. And Mount Etna in Sicily produces a whopping 1 million tonnes of CO2e in a quiet year.
To ensure the comparability of carbon footprints, various standards have been developed over the last 20 years with ISO 14064 and the GHG Protocol Standards being the most commonly used and accepted ones.
The Three Scopes of Carbon Emissions
The Greenhouse Gas Protocol not only defines how you count carbon but also defines so-called scopes outlining what you count. The GHG Protocol differentiates between three different scopes, or categories, of emissions.
Scope 1 emissions include GHG emissions that arise from the combustion of fuels owned or controlled by the reporting organisation or institution. Examples can be driving a company-owned car that burns gasoline or burning natural gas to heat a building.
Scope 2 emissions include GHG emissions that result from the consumption of purchased or acquired energy such as electricity, heating, cooling, and steam. They are called indirect emissions because the organisation doesn’t burn the fuels directly. If your organisation, for example, purchases electricity from a local utility company, this would fall into scope 2.
Scope 3 emissions include the remainder of indirect GHG emissions which cannot be categorised as energy-related emissions in scope 2. Scope 3 emissions occur outside the organisation, e.g. in the supply chain, as well as during production, transport and distribution (by subcontractors), use and disposal of product or service, business travel, employee commuting, and waste.
Why is it important to look at all three scopes when we want to assess the carbon footprint of a company? For many companies, scope 3 emissions account for 80-90% of their total carbon footprint. Calculating their carbon footprint without accounting for scope 3 emissions would, therefore, not cover the full picture.
Measuring and reporting emissions across all three scopes used to be complex and complicated. That’s why we have created our software, the Climate Impact Manager, to make it easier than ever for companies to collect data and get actionable insights on their emissions fast so they can take immediate action.
Step 2: Reduce & avoid emissions wherever possible
In order to keep up with stakeholder expectations and emerging climate regulations as well as doing your part in fighting climate change, your company needs to reduce and avoid emissions wherever possible.
Creating transparency around your company’s carbon footprint is a fundamental and very important first step. Now it’s time to set targets and successfully implement effective and cost-efficient reduction measures.
Depending on your industry, your company will have different emission drivers and therefore take its individual path. There are, however, a few impactful areas we would like to highlight here.
Using energy from renewable sources can significantly reduce your carbon footprint. A first and very effective step would be to switch to and run your offices on green electricity - this is actually one of the biggest levers for carbon reduction.
And you don’t have to stop there. With digital technologies booming, server emissions are not to be underestimated. While most companies do not operate their own data centres and servers, you can reduce your emissions by switching to a green cloud provider.
For many companies, the majority of their carbon emissions actually come from products and services they purchase externally. Not much you can do about those suppliers? On the contrary! You can leverage your purchasing power to drive impact across your supply chain by switching to green suppliers entirely and encouraging any of your existing suppliers to also analyse and reduce their carbon footprint.
This is becoming common practice across industries. Microsoft, for example, released a detailed code of conduct that requires all suppliers to disclose their carbon emissions. So next time you want to make a new purchase, why not integrate carbon transparency into your request for proposal?
Low-Emission Employee Mobility
Now here comes one of your biggest climate impact drivers: your own employees. The way they move around, for example when commuting to the office or when going on a business trip, is also part of your corporate carbon footprint.
2020 and beyond has shown us that business trips can be significantly minimised without comprising effective working relationships. As nice as a personal meeting is, sometimes a phone or video call will do the job just fine. For any trips that cannot be avoided, introduce a travel policy that favours low-carbon means of transports such as trains wherever possible.
On top of that, employee commutes can be reduced by enabling working from home. And you can help make commuting more climate-friendly, for example by offering public transport tickets for employees or company bikes.
In Germany, about 30% of carbon emissions are generated in buildings, including commercial properties such as offices. While it can be more difficult to make your office more climate-friendly if you only rent it, there are a couple of things you can do to help create a low-carbon workplace:
- Introducing smart solutions for heating and lighting that match the working hours of employees will save energy.
- Switching from cow milk to oat milk can avoid 40.6% of carbon emissions.
- Incentivising vegan or vegetarian lunches is not only healthy but also more climate-friendly. US company WeWork, for example, only reimburses vegetarian business trip meals.
What about home office emissions, you wonder? As many of us have moved to a remote work setting and might continue to work from home, you can support your employees in creating their very own low-carbon workplace: One way of doing this is to create incentives for, or even co-finance, the switch to green electricity for all employees.
At Planetly, we will help you identify your biggest emission drivers at a glance and support you in developing effective reduction measures and your long-term reduction roadmap.
Step 3: Offset emissions that cannot yet be avoided
As much as we’d love to see companies reducing their emissions to zero, there will always be emissions that your company cannot yet fully avoid. The good news: you can support high-impact climate projects to compensate for those remaining emissions - also known as carbon offsetting.
How does that work? Carbon offsetting basically means leveling your carbon emissions with carbon credits you buy from climate projects. A carbon credit roughly translates to one tonne of CO2e. So if your remaining emissions are 100 tonnes of CO2e, you would need 100 carbon credits to offset those emissions and be carbon neutral.
You can choose to support projects with different carbon offset technologies:
- Carbon avoidance and reduction: These are projects that help avoid and reduce carbon emissions that would occur without the project being in place. This includes supporting the expansion of renewable energy.
- Carbon removal: These projects help remove CO2 from the atmosphere, either through nature-based solutions such as afforestation or rainforest protection or technical solutions such as technical carbon capture and storage (CCS).
If you’d like to learn more about carbon offsetting, make sure to check out our article. If you’re interested in technologies for our planet, watch our webinar where we spoke with ClimeWorks CEO Christoph Gebald and other experts.
Step 4: Showcase your commitment & track progress
Wherever you stand on the carbon neutrality journey, you have taken an important step worth sharing with all relevant stakeholders, including employees, customers and investors.
Share your plans, targets and achievements with your employees and encourage them to get involved in the process. Publish regular reports around your climate efforts - the more detail you provide, the better. At Planetly, we provide you with a fully GHG Protocol compliant overview and report of your carbon footprint that you can share with your stakeholders as well as your very own carbon neutral seal that you can use in your communication.
The key to build trust and credibility around your climate strategy is transparent communication. Hold yourself accountable for your climate impact and be proud of the steps you have already taken and the reduction measures you already achieved. After all, sustainability is a journey and you have the opportunity to lead by example and inspire other companies to follow your lead.
The future of corporate climate action
Expectations from employees, customers and investors make climate strategies a must-have for businesses. Taking responsibility for your actions and driving carbon reduction is therefore worth it for companies for a variety of reasons.
New tools make getting started easier and faster than ever and will enable your company to take impactful action in just a few weeks.
Are you ready to build your holistic climate strategy? Planetly can support you on this journey, helping you to introduce and automate your carbon management, from data collection to reduction strategies and offsetting measures. Reach out to us to get started.