Month: March 2018

Going beyond: top ways to start addressing your Scope 3 emissions

At a recent Innovation Summit, I had the pleasure of speaking to a group of corporate representatives on the topic of greening the supply chain. This conference was attended mostly by US based companies, so as you might imagine, the topic of addressing Scope 3 emissions was not top of mind for most attendees, as many are still grappling with how do address their Scope 1 and Scope 2 emissions.

This being said, I did have a few engaging conversations with some attendees who were beginning to think about how to move from a focus exclusively on Scope 1 and 2 emissions to incorporating efforts to address indirect operational (or Scope 3) emissions. As a reminder, Scope 3 emissions are GHG emissions that are a consequence of an organization’s activities but not owned or controlled by them. Think of air travel for business trips, emissions associated with the production of purchased goods, shipping emissions, etc. It is the indirect environmental cost of doing business.

You may be asking yourself ‘why are Scope 3 emissions so important?’  CDP reports that on average, Scope 3 emissions are four times the size of Scope 1 and Scope 2 combined. As a result, a growing number of companies (the majority being based outside the US) are measuring Scope 3 emissions, reporting those emissions, and in many cases, scoring their supply chain based on those emissions as well. Furthermore, if your organization is interested in setting a Science Based Target (SBT) and your Scope 3 emissions are 40% or more of your total carbon load, then you are actually required to set a Scope 3 target.

What remains unclear is what, if anything, is being done to reduce supply chain emissions? How would your organization even begin to address supply chain emissions reduction? What major challenges stand in the way of taking meaningful action to address Scope 3 emissions?

Tips to get you started:

Start with data

In order to set yourself up for long-term success, it’s important to start by understanding the magnitude and sources of your Scope 3 load. Comprehensive supply chain emissions data collection will have a direct influence over strategy, stakeholder alignment and the ability to measure success. You will want to get a good understanding of carbon footprints and contributing factors such as, level of spend and supplier and facility locations in order to be able to heat-map your earliest and best opportunities.

Stakeholder engagement and alignment

Another important preliminary step is building internal alignment, particularly between procurement and sustainability teams. In a recent article published by GreenBiz, it states that according to the 2017 State of Sustainable Business Report, “The procurement function was the most commonly cited functional partner to sustainability – outranking the CEO’s office, operations, product development, risk management or any other part of the company.” Creating a corporate structure that sets clear guidelines for individual roles and responsibilities will help ensure a more seamless execution of sustainability efforts and approvals.

Educate and Support

Reporting and setting targets is not enough. Find your internal champions, both internally and externally, and connect them. Ensure that you have senior level execs involved and on-board. Utilize both internal staff and retained consultants who can facilitate and educate to ensure the program(s) are supported properly with data, expertise, and resources.

Don’t try to boil the ocean

Getting started, even in the way of internal alignment or identifying low hanging fruit, creates momentum… and that is a good thing! You don’t have to, and shouldn’t, do everything at once. Early wins are important, however. You can share progress with suppliers in an effort to catalyze collaboration and motivation to build on initial success. The best place to start is to identify and engage with supply partners who are easy to work with, close to your business, and have expressed similar sustainability interests, in order to build vital collaboration and consensus on approach.

Leverage Tech and Tools

The CDP Supplier questionnaire is a great tool for collecting data. There are also third-party scorecard platforms, like Ecovadis, that can be utilized to collect data and score the supply chain. The development and distribution of purchasing guides and case studies can help arm suppliers with best practices and real world examples. And investment in online portals for suppliers to access can be beneficial for documenting goals and progress and, further, serves as a valuable communication tool.

Co-Benefits and Incentives

Reward your suppliers! Offer incentives to spur action. Things like public recognition, preferred supplier status, competitive advantage and brand enhancement can go a long way in motivating action. By including sustainability criteria in your procurement specs and then providing incentives via rankings based on sustainability scoring, you are providing proper motivation.

Breaking the inertia

In order to make any significant impact in stunting climate change we must acknowledge and address all sources of emission, both direct and indirect. So as your organization strives to take urgent action to reduce its carbon footprint and pushes forward by addressing Scope 1 and 2 emissions, don’t forget about Scope 3.

As President John F. Kennedy once stated, “There are risks and costs to action. But they are far less than the long range risks of comfortable inaction.” This sentiment certainly holds true for action on climate. It starts by getting the ball rolling, and there is no better time to act than now.

Reaction from Climate Leadership Conference 2018

Climate-leadership-conference-2018

Last week, Denver, Colorado played host to the 2018 Climate Leadership Conference (CLC). The objective of the CLC is to bring together prominent energy, climate, and sustainability leaders across business, government and academia in order to make collective progress towards building a low-carbon future.

The unofficial theme of the conference was ‘we are still in,’ which echoes the sentiment of many states, cities, and businesses in the aftermath of the United States’ decision to pull out of the Paris Agreement. This year’s event had an agreeably different tone than year’s past. For one, this is the first year the EPA elected to not sponsor the event. Bloomberg Philanthropies stepped in to organize the event and foot the bill. The result of this change only fueled the attitude of empowering private entities to take action to tackle climate change.

The conference also set the stage for the Global Climate Action Summit later this year in San Francisco. Matt Rodriquez, secretary for California’s Environmental Protection Agency, facilitated a strategy exchange to a standing room only audience on the Summit’s objective of spurring additional action at the sub-national level, creating healthy energy systems, and ensuring equity for all.

3Degrees proudly served as a CLC sponsor and sent along two representatives to absorb content and speak directly with conference attendees. During the three days of the conference, there were a few topics that kept cropping up. Here is what we heard:

The big news:

Several big corporations made waves with their new climate commitments. L’Oreal USA announced their commitment to carbon neutrality by next year. “Sustainability isn’t just what we do, it’s who we want to be.” said Danielle Zaoulay, head of CSR and sustainability and Jay Harf vice president of environment, health, safety and sustainability, who presented on behalf of L’Oreal.

Doug Sabo, Visa’s head of global corporate responsibility also made the official announcement that Visa has joined RE100 and has committed to 100 percent renewables across its global operation by the end of 2019.

“We congratulate Visa on joining RE100 with an ambitious 100 percent renewable electricity goal, and for demonstrating leadership by working with key stakeholders to build local renewable electricity markets,” said Sam Kimmins, RE100, at The Climate Group.

The big winners:

Some of the conference’s notable winners were Citigroup, that won the Organizational Leadership Award for its commitment to a $100 billion investment over 10 years to go towards facilitating low carbon initiatives. Goldman Sachs won the Innovative Partnership Certificate for its investment in a partnership to implement new energy efficient technologies for buildings. And a client of 3Degrees, Biogen, won an Excellence in Greenhouse Gas Management/Goal Setting Certificate for their ambitious goal of 35% reduction in absolute greenhouse gas by 2030. Biogen has also signed on to RE100 with a commitment to source 100% of its global electricity from renewables.

Focus on scope 1 & 3:

Purchasing carbon offsets is no longer the primary focus of industry attention and investment. This was proven by the many topics and conversations that came out of Climate Leadership Conference. Focus, instead, is being paid to answering the question, how will we eliminate Scope 1 emissions; discussing initiatives such as electrifying thermal load.

Transportation was also a significant focus of the conference. Transportation continues to be a huge source of global carbon emissions, however, relatively little has been done to address it. With the birth of Amazon Delivery Service and the rampant growth of residential delivery needs, emissions from small-scale commercial vehicles has swollen to now comprise ⅔ of total transportation carbon emissions. And the size of commercial fleets are only getting larger, which emphasizes the need for immediate action to address this critical issue.

Momentum is building:

Climate Leadership Conference served as a massive pep rally for climate leaders. More so than ever, climate leaders across business and government are banding together to make genuine progress. Like-minded organizations are partnering together for VPPA transactions, combining resources to address the carbon footprint of joint suppliers, and sharing best practices for corporate sustainability initiatives.

Gina McCarthy served as the conference keynote speaker. As former head of the EPA, McCarthy offered unique perspective into the shift towards the privatization and sub-national activation of climate leadership. “If Washington won’t lead on climate change, the American people will” said McCarthy during her stirring speech.

Many thanks to The Climate Registry, Center for Climate and Energy Solutions, and Bloomberg Philanthropies for organizing another successful conference. We are proud to be part of it and look forward to many years of continued partnership.

Why my work matters: Tyler Espinoza

tyler-espinoza

Tyler Espinoza is a manager in the 3Degrees energy and climate practice

Some of my favorite recent projects:onsite-solar-rooftop

  • For a global defense contractor, managing financial and risk analytics for a large-scale virtual power purchase agreement in the eastern US that will help it meet its sustainability goals.
  • Served as an expert external reviewer to verify the financial modeling and projected valuation of a large virtual power purchase agreement in Kansas for a major consumer products firm.
  • For a large telecom company, conducted a portfolio-based technical and financial on-site solar analysis to identify the best opportunities and most lucrative markets for investment.
  • Helping a leading high-tech firm address their scope 3 emissions by creating a tool that will allow their suppliers find the most cost effective renewable energy options available in the US and Asia.

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I love the challenge of decarbonizing the largest machine on the planet–the electric power grid.

 Special skills & expertise

onsite-solar bullshi-meter knowledge focus-on-goals
7 years of onsite solar experience in the US and Asia Valuation and risk analysis for large offsite renewable energy projects Encyclopedic knowledge of renewable energy opportunities and risks Superpower: In reams of data, can quickly tease out the key decision making criteria

 Watch Tyler’s video

Should utilities report to CDP?

wind-turbine-on-road

Last month 3Degrees hosted a webinar with CDP on the value of CDP reporting for utilities. I moderated the event and was joined by Simon Fischweicher, manager of disclosure services at CDP and Lauren Wilson, environmental policy manager at Xcel Energy.     

Here are some key aways from the webinar:

  • There are clear benefits of reporting to CDP: Xcel has been reporting to CDP for more than 10 years and despite some challenges (more on that below), Xcel views the process as beneficial to their organization. Lauren explained that the reporting process has created greater transparency around their environmental initiatives and this in turn has encouraged Xcel Energy to tell their clean energy and carbon reduction story to a broader audience.  
  • The resources required to report are not trivial: Xcel Energy has a team of eight people that meet regularly for several months to prepare their answers to the annual CDP questionnaire. They are not working on this full time, but it does take significant effort. Lauren suggested setting up a time tracking system to fully understand the time requirements. And because CDP is just one of a number of groups looking for sustainability reporting, it is important for organizations to prioritize where they invest their time. As utilities look to set science based targets (SBTs), this adds an additional layer of reporting requirements that should be fully understood as companies move forward with these initiatives.
  • CDP is working to make it easier for utilities to report: Responding to CDP for the first time can feel risky to many organizations. To address this, CDP allows first time responders a chance to submit a private response.This allows both the responder and CDP an opportunity to discuss the information and how it’s reviewed and assessed. This year, new responders can also opt for a private score.This will allow CDP to gather a broader range of information from utilities that fear their score won’t be as high as they would like. CDP has also introduced a streamlined version of their questionnaire for new  responders and is even experimenting with a shorter version of their full questionnaire.    

Toward the end of our discussion, Lauren also shared some examples of how utilities can keep their leadership focused on emission reductions:

  • Provide long term incentives to executives that are directly linked to emission reduction trends.
  • Assign an internal price to GHG emissions so that future electricity generation decisions include internalizing the cost of carbon emissions.    
  • Explicitly list climate oversight as one of the responsibilities of the utility’s board of directors.  

To learn more, listen to the full webinar.

To learn more about the services we offer for utilities, take a look at the following pages: