Growing pressures from governments, as seen through i.e. the ‘Paris Climate Agreement’ have led to the implementation more holistic and serious climate strategies across businesses. This awareness increase was partially driven by the assessment published by the Intergovernmental Panel on Climate Change (IPCC), which included scientific evidence on the existence of climate change and established human activity to be its main cause. The 2020 United Nations report reveals that to curb the effects of climate change man-made CO2 emissions must fall by about 45 percent by 2030 from 2010 levels, as this would aid reaching global net zero by 2050. In addition to governmental demands, organisations are facing increasing pressures from financial investors. Organisations are thus increasingly presenting their climate strategy through sustainability reporting’s such as TCFD and CDP, which require a more thorough analysis and disclosure of environmental performance across the entire supply chain. Businesses are seeing climate change, with its effect on resource scarcity and vulnerable ecosystems, as a more serious threat and are therefore putting a greater emphasis on sustainability issues.
A central element of successful climate management is the development of a scientifically based climate strategy that includes the needs and wishes of all stakeholders and guides the organisation to climate neutrality. It helps companies to establish a governance structure, understand its current climate impacts, to set goals, develop a plan achieving those goals and finally on how to review and communicate these. There are five steps that companies are encouraged to follow to produce a successful climate strategy: measurement and calculation of a carbon footprint; goalsetting and definition of adequate goals; avoidance and implementation of measures; compensation and finally communication.
Climate Strategy Implementation Steps
1. Measurement and Calculation of a Carbon Footprint
The first step aims to fully understand the company and thoroughly review what impact its operations are currently having on the climate. Initially this is done by calculating its carbon footprint for Scope 1, Scope 2 and Scope 3. The carbon footprint helps to sum up direct and indirect emissions, which offer a closer insight into where within the value chain one must focus to identify reduction goals and measures, and ultimately decrease the carbon footprint.
2. Goalsetting and Definition of Adequate Goals
With the carbon footprint as the base, during the next step an emission-reduction strategy is developed, and relevant goals are set, which will then have to be included into the organisations governance. During this process, the direction of the climate strategy, including its action plans and risk management will have to be reviewed and supported.
3. Avoidance and Implementation of Measures
The implementation of more effective and sustainable measures to reduce CO2 emissions helps enabling organisations to achieve higher energy and resource efficiency. This is attained through a Climate Action Plan, aligned to the individual needs of the organisation, and based on the results on the carbon footprint calculation. Climate neutrality can only be accomplished through systematic change within the organisation and its value chain and should be viewed as an opportunity to increase efficiency and encourage innovation.
4. Compensation – Becoming Climate Neutral
Non-avoidable emissions can be compensated creating a specific strategy based on the company/product and the market. It is possible to offset emissions by crediting climate projects and therefore more actively participating in international sustainable development and supporting nature-based solutions such as reforestation efforts.
The last step of the process is the climate goals disclosure, which can be published through i.e., CDP, EcoVadis or SAQ/NQC. Companies then have the possibility to receive official climate neutrality certificates, such as the one offered by DFGE.
Although the elaboration of a climate strategy can appear daunting at first, the process may result in several long-term benefits that can lead to reduced costs, improved efficiency, and increased profitability. The decision to develop a climate strategy enables an organisation to uncover previously unidentified potentials and become more forward-looking regarding risks and potentials. Additionally, the organisation could very well become more attractive to investors, and profit from competitive advantage by diversifying the business and exploring new markets.
DFGE has recently published an articel in the “Umwelt Dialog” Magazine where they explain how companies can build up a climate strategy, what what they need to pay attention to and what advantages result from it.
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