August - September 2021
MANAGEMENT
T
he New Energy Outlook (NEO) is BloombergNEF’s annual long-term scenario analysis on the future of the energy economy. Upon surveying the landscape of organizational climate commitments, it is not uncommon to hear about attention grabbing goals like committing to 100% renewable energy, setting a science-based target, going carbon neutral or even climate positive. You might be wondering: how do these organizations get started? Looking around your own organization, it may be difficult to imagine how the fragmented efforts that are taking place within different business units and on different timelines can come together to form a coherent story about the opportunity for impact and risk mitigation. The first step is establishing your carbon baseline. This is typically a one (or more) year(s’) snapshot that serve as a reference point for organizations to understand and track their changing emissions over time. Building a multi-year emissions baseline not only enables an organization to have a better understanding of its recent historical greenhouse gas (GHG) emissions trends but it also enables an organization to grasp the business trajectory and associated potential future emissions. A carbon baseline includes both direct and indirect emissions, also known as Scope 1, Scope 2 and Scope 3 emissions (see image below for detailed categories). Scope 1: Direct carbon emissions from owned or controlled sources (e.g. fuel) Scope 2: Indirect carbon emissions from consumed purchased electricity, heat 54 infrastructurenews.co.nz
How to become a successful green business If you are ready to join the many businesses reducing their emissions, the key to getting started is to establish a carbon baseline – an inventory of sources of carbon emissions from business activities
or steam Scope 3: Indirect carbon emissions from all other business activities (e.g. purchased goods and services, capital goods, production of purchase materials, transport related activities not owned or controlled by organization, waste disposal, business travel, use of sold products, etc.) Why establish a carbon baseline? Just as companies take stock of other types of resources or supplies, it is important for organizations to assess their carbon budget in order to understand which areas of business activities have the greatest opportunities for impact. Establishing a detailed carbon baseline provides
management with the ability to understand carbon emissions across different business units and make data-informed decisions, for example, by having specific fuel type information according to projected business growth, or understanding how carbon-intensive specific regions’ electric grids are going to behave in the future where the company operates. Given the likely volume of data collection and calculations, the baseline inventory data can be much easier to visualize, analyze and synthesize if it is established in a centralized software system. A secondary benefit to establishing a baseline carbon inventory is for tracking change over time. Since a
baseline carbon inventory is only a snapshot in time, organizations need to build their processes for ongoing data collection to evaluate the effectiveness of operational changes. Having a baseline carbon inventory also supports companies in conducting peer benchmarking and evaluating their market position. So you’ve built your baseline… what’s next? Establishing a carbon inventory baseline is only the first step to managing organizational GHG emissions. Once an organization undertakes the effort to put together this emissions approach to understanding its impact, the organization can extend the same
