The combination of pressure, expectation, moral imperative, and genuine results that climate action can deliver is compelling—but it’s simply one thing to aspire to change and another thing to do it. For many organizations, the reality of climate action becomes apparent once they’re committed to building and implementing science-aligned, decarbonization strategies at scale.
“Our biggest energy and sustainability challenge in the past 12 months has been striking a balance between realistic and aspirational targets for clean energy” – Survey respondent, 2021 State of Corporate Climate Action Research.
To close this ambition gap, speed of delivery is the key. Climate action, like many transition processes, happens on an S-curve: progress is hard at the beginning, but becomes exponential after a certain breakthrough. Early achievements across decarbonization levers described below and engagement in peer-to-peer forums for best practice sharing can create loops of ambition to fuel future innovations. When your company remains agile and engaged, successful initiatives will grow rapidly when market conditions are favourable, and ideas that underperform can fail fast—leaving lessons learned for future endeavours.
Aligning and right-sizing your decarbonization levers
The decarbonization pathway is relatively straightforward; there are only so many levers an organization can pull to reach its climate action goals. However, the alignment of these levers to deliver material and timely impact requires technological, financial, organizational, and governance capacity. It also calls for an innovative mindset and the acknowledgment that the same processes that created the situation we’re in today aren’t going to work to get us out of it. Moreover, many solutions that exist today, or are in development, have the potential to create significant opportunities for companies to rethink their approaches to decarbonization.
“To meet the longest-term climate goals, companies will almost certainly need to plan to implement products and solutions that are not yet viable” – Elin Olson, Senior Sustainability Consultant, Schneider Electric.
For example, the continuously falling price of clean technologies means that organizations have the potential to make money using renewables. Distributed energy resources like microgrids, batteries, and EVs support the prosumer model, where companies can become both a consumer and a generator of energy, stabilizing energy demand in their communities and creating resilience for their business.
However, it’s all too easy to get caught up in the buzz words and flashy technology. Here’s how we break down the decarbonization pathway into practical chunks:
It starts with energy management
Energy is often a company’s largest source of GHG emissions, so it’s a logical place to start on the decarbonization journey. Emissions are classified by type, or scope, and must be addressed according to their classification:
- Scope 1 - emissions an organization is directly responsible for generating. Common examples include fleet vehicles that are owned and operated by the company or onsite sources of heat or power generation such as boilers.
- Scope 2 - emissions resulting from grid-sourced generation of power. These emissions are considered outside the direct responsibility of the organization (since it is the grid operator who determines the mix of power sources on the grid), but the company is still responsible for these emissions, as they are driven by demand.
- Scope 3 - all other indirect emissions. This broad category includes everything from the emissions generated through waste management to those generated in the value chain. For many organizations, Scope 3 emissions not only make up the highest amount of their total emissions footprint, but are also the most difficult to address. Their volume can also vary wildly based on industry-type.
Understanding the scale, scope, and make-up of your company’s energy footprint—ideally using a centralized source of data—is the essential first step in knowing which decarbonization levers to pull. Energy management is about understanding your assets and your operations. If you know what you’ve got to manage, you can develop a responsive plan to use your assets more effectively.
Build a foundation of resource efficiency
The common second step in decarbonization is optimising for efficiency. Whether to support climate action initiatives or simply for cost-savings, most companies have pursued some level of site-specific energy efficiency efforts. But to make the transformative changes required to address climate change, it’s important to maximize those efforts at the enterprise level. Establishing a strategic energy efficiency plan based on a holistic view will help your company move beyond ‘one-and-done’ efficiency projects to leverage best practices across the entire enterprise.
Address what can’t be optimized
Depending on the size and complexity of your operations, there are a number of multi-faceted solutions you can use to replace high-emission energy sources with lower-emission energy sources and balance those energy sources that can’t otherwise be replaced or reduced.
These activities include renewable electricity and cleantech procurement, most commonly through a blend of onsite generation, power purchase agreements (PPAs), and energy attribute certificates (EACs), help reduce Scope 2 emissions from electricity use. Electrification and alternative fuels, such as biogas, hydrogen and renewable natural gas, help to reduce Scope 1 emissions. But most companies will inevitably encounter unavoidable emissions that cannot (yet) be reduced or replaced. Air travel, for example, is a common category of this Scope 3 category of emissions. Energy Attribute Certificates (EACs) and carbon offsets are the most commonly used balancing mechanisms to address indirect emissions today. Although they have their critics questioning effectiveness and additionality of the projects or credibility of the many player in the heterogenous offsets market, highly credible carbon offsets are an essential building block of any climate action roadmap.
Decarbonize the value chain
Addressing the expansive and often ambiguous category of Scope 3 indirect emissions can be a daunting challenge—but one with significant decarbonization potential. True climate action depends on engaging, encouraging, and empowering your company’s suppliers and partners to reduce emissions within their own organizational scope using the same strategies discussed above.
With so many companies setting out bold climate action and carbon neutrality commitments, solving the ambition gap problem is a joined challenge. At Schneider Electric, we aim to be carbon neutral in our operations by 2025 and in our end-to-end value chain by 2040. We work together with our customers and partners to measure, save, and avoid CO2 emissions.
If you’re interested in hearing more, join Andy Dewis, Schneider Electric’s VP Energy & Sustainability Services on June 15th opening day 2 of the CBI conference: Road to Net-Zero, in the panel discussion on ‘Businesses taking action on Net-Zero’.