5 reasons why your company should address greenhouse gas emissions
June 02, 2022
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Mounting investor, consumer, and regulatory pressures are now becoming key considerations of emissions management
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In report after report, climate scientists are telling us a grim truth. We are not doing enough to curb our greenhouse gas (GHG) emissions.
The most recent unwelcomed news comes from the International Panel on Climate Change (IPCC).
In its recently published sixth assessment report, the IPCC reports that in the last decade (2010-2019), global net human generated GHG emissions were higher than any previous time in human history
The report also highlights the continued rise in GHG emissions during that time across all major sectors globally.
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As impacts of climate change mount, companies across the globe are feeling the pressure to curb their greenhouse gas emissions.
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What does this mean for our planet? It means climate change will accelerate, the Earth’s temperature will continue to warm, and humans will continue to experience the devastating impacts of climate change. Those include extreme weather, floods, drought, and wildfire.
These human impacts are also causing companies across the globe to feel the pressure to curb their GHG emissions.
We have been helping our clients to understand and manage their GHG emissions for more than a decade. Our comprehensive approach helps you quantify your GHG inventories, ensures your emissions can be audited with confidence, and supports your development and implementation of robust GHG emissions-reduction strategies.
Are you aware of all the corporate risks related to your GHG emissions? If not, here are five reasons why your company needs to address them.
" }Now more than ever, consumers favor brands that are transparent about their GHG footprint.
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Carbon costs are rising
Companies often misunderstand the actual—and rising—costs of GHG rules to their bottom line.
For example, we calculated GHG emissions for one of our clients with high emissions and estimated their carbon costs at $33 million annually.
We also forecast their future carbon costs with regulatory increases at $230 million annually in 17 years. That was without the company reducing any emissions and maintaining their current operations.
Based on this work, we provided the client with a cost-benefit analysis and developed a multiyear plan to reduce emissions and their carbon costs.
Clients also ask us about reducing their GHG footprint by purchasing carbon credits from the voluntary market. While this is a challenging area to navigate, our practitioners can support you through this process, ensuring you capitalize on your investment in carbon credits.
We can also help you look at alternatives, including Nature-based Solutions (NbS). NbS can play a vital role in helping reduce carbon emissions as part of your Environmental, Social, and Governance (ESG) program.
Regulatory agencies, investors put pressure on companies
ESG planning, programming, and reporting—including GHG emissions—are on the minds of capital markets, too.
Areas in Europe and Asia have already established rules for publicly traded companies to follow. They often follow frameworks like the Taskforce on Climate-related Financial Disclosures (TCFD). For some time now, we have been helping clients in these areas navigate requirements by security commissions to report on TCFD financial disclosures.
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The U.S. Securities and Exchange Commission recently proposed rules for companies to curb greenhouse gas emissions.
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Beyond TCFD, lenders and institutional investors are now looking closely at ESG disclosures, including direct GHG emission, to reduce their risk.
Europe is leading the charge, and has even gone so far as to include this in energy-efficient loan programs. Investors are developing their own methodologies to evaluate how companies are measuring and addressing their GHG climate-related risks, as banks factor this in their lending formulas.
SEC announces GHG proposal
Companies registered with the U.S. Securities and Exchange Commission (SEC) could come under similar reporting rules. In March of 2022, the SEC announced proposed rules for publicly traded companies to disclose climate-related information using the TCFD framework.
The SEC said in a news release that investors support climate-related disclosures because “they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions.”
Given our global TCFD experience, clients have started reaching out to us about the proposed SEC rule, asking what it means to their businesses. We can help you get started with this process and support you with implementing a compliance program.
GHG emissions can be a key part of acquisitions
Clients are engaging us to help them understand GHG emissions and climate-related risks specific to companies they may acquire or invest in.
For example, working with a large global manufacturer, we developed a corporate tool to help them evaluate the carbon neutrality of companies they were looking to acquire or merge.
We helped the client to look at Scope 1 and 2 emissions, identify priorities, develop conservation measures, and conduct a financial assessment. We were able to help the client identify related GHG emission risks and move ahead with more favorable transactions.
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Supply chains are an important consideration in GHG emissions. Companies often misunderstand the actual costs of GHG rules to their bottom line.
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Whether you are looking to acquire or merge with another company, or anticipate the reverse might be true, your understanding of GHG emissions can pave the way for a less risky transaction.
Your brand is at stake
Now more than ever, consumers favor brands that are transparent about their GHG footprint.
Consumers reward brands who act by investing in climate-positive offset, such as NbS that restore wetlands, preserve forests, and create blue-green corridors. Consumers also want companies to disclose their supply chain emissions (Scope 3) or require it for auditing purposes. In some cases, this can be 80% of a company’s total emissions.
We recently worked with a global manufacturer and their related suppliers to audit their Scope 3 emissions. By performing audits across their supply chain, we identified carbon-emission reduction opportunities and associated costs for each supplier, as well as potential funding sources to assist with the transition.
The assessment supported the company’s publicly stated promise to be one of the first net zero companies in its sector.
By understanding current and potential GHG emissions-related challenges, our comprehensive end-to-end service provides our clients with a complete understanding of GHG emissions on their organization.
Together, we can plan, implement, mitigate, and report on your actions.
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