Analysis
1 Feb 17

Global giants go green

Some of the world’s largest and best known companies have pledged to reduce their greenhouse gas emissions in support of government commitments made in the COP21 Paris Climate Agreement. With the COP22 Climate Change Conference in Marrakech being held at the end of 2016, we want to know what they have done already.

 

The vehicle fleet performance of more than 200 of the world’s largest companies is under scrutiny after the businesses pledged to reduce their global emissions of greenhouse gases. The firms have committed to support the goals of the Paris Climate Agreement, which aims to limit the planet’s temperature rise to below two degrees Celsius.

The multi-nationals, including Dell, Coca-Cola, Kellogg, Procter & Gamble, Sony, Ford, Toyota and Nissan, are all working with the Science Based Targets initiative, a partnership between CDP (formerly the Carbon Disclosure Project), World Resources Institute, World Wide Fund for Nature and the UN Global Compact, which helps companies to set ambitious emission reduction targets that are consistent with the latest climate science.

Necessity of reference


By setting science-based targets, companies gain a clearer vision of how much and how quickly they need to transform their businesses in order to be part of the low-carbon economy.

Galya Tsonkova, environment manager for Coca-Cola HBC, said, “In the past, companies would set targets without the necessary information or a solid point of reference. They would just pick a round figure and aim for cuts of 20, 30, 40 percent, with no further justification, other than generic aspirations. Now, we have a target that is reviewed and approved by external, credible experts for alignment with relevant scientific methodology. That makes a big difference, both for external stakeholders as well as to our management.”

A recent report by CDP revealed that while a majority of companies already have targets in place to reduce their carbon emissions, their current business plans do not go far enough to deliver on the world’s new low-carbon goals, set in Paris in 2015.

Third parties involved


Importantly, the 204 businesses working with the Science Based Targets initiative are looking not simply to transform their own environmental performance, but also that of their own suppliers.

Diane Holdorf, chief sustainability officer at Kellogg Company, said, “During COP21 [Paris Climate Agreement], we committed to reducing the emissions from our operations and energy use by 65 percent and to working with our suppliers to significantly reduce their emissions as well. Since then, Kellogg has asked 75 percent of our global suppliers to publicly report their emissions so that we can better measure our whole footprint.”

A significant reduction in the total greenhouse emissions of the companies working with Science Based Targets would deliver a major benefit to limiting climate change. Together, these multi-nationals produce 627 million metric tonnes of CO2 emissions per year, roughly equivalent to the annual emissions of South Korea.

Their ambitious plans to lower these emissions involve every area of their operations, from head office to manufacturing, logistics and distribution, with transport a key area of focus. The latest signatory, luxury goods group Kering, whose brands include Gucci and Saint Laurent, has committed to halve its direct emissions by 2025 compared to 2015. It will also reduce its indirect emissions from transportation and distribution, business flights, and fuel and energy use by 50% over the same timeframe, and emissions from purchased goods and services by a further 40%.

 

Dell and PostNord


For technology company Dell, achieving emission reductions from business travel now involves avoiding the journey in the first place, according to David Lear, executive director of sustainability Dell.

“We’ve embraced teleworking and other flexible work arrangements, which reduces our employees’ emissions by over 35,000 of metric tons of CO2 per year,” he said.

Dell’s experience underlines the fact that a green focus doesn’t need to lead to an increase in costs. According to We Mean Business – a coalition of organisations working with thousands of the world’s most influential businesses and investors – businesses achieve an average of 27% internal rate of return on their low-carbon investments as they bid to cut climate change.

PostNord, one of the few Science Based Targets companies with transport at its heart, accepted that money taken from its Environmental Fund to cover the anticipated costs associated with a science-based target would require a longer time to see a return on its investment.

“But in fact, the one hundred-plus projects that have been implemented so far have actually seen a better and quicker return on investment than average for our company,” said Søren Boas, PostNord’s senior sustainability and environment advisor.

PostNord delivers mail in Sweden and Denmark and is part of the DPD network for global logistics solutions, so green fleet solutions naturally lie at the heart of its environmental plans.

“We have six clear areas in which we know we need to act,” said Boas. “They are: better utilising vehicle capacity; increasing fuel efficiency; investing in electric vehicles (one third of our fleet is now electric); using more biofuels; use of trains and reducing air freight; and making our buildings more energy efficient. We are aiming for a 25% increase in energy efficiency – which will lead to a reduction in our annual energy bill of $2bn”

 

Authored by: Jonathan Manning