Companies are communicating more and more about their efforts to reduce their carbon footprint and their CO2 emissions, which have become one of the most pernicious dangers of the 21st century due to their colourless and odourless nature and its catastrophic effects on the planet’s climate balance.
If the accuracy of the results is often criticized, the ambition is real and during the 26th United Nations Climate Conference in Glasgow, countries and many companies have committed to reduce or even eliminate their CO2 emissions.
According to Net Zero Tracker, which brings together NGOs and universities around the world, 136 states and 641 companies representing 90% of the world’s GDP have pledged to achieve carbon neutrality by 2050, i.e. to no longer emit more CO2 than can be absorbed by carbon sinks such as forests and soils.
To evaluate the results obtained, Charlotte Degot, Associate Director at the Boston Consulting Group, stresses the need to know the starting point, the extent of the efforts already made and those that remain to be made.
With two years of experience in calculating the carbon footprint of companies, she believes that in the vast majority of cases, it remains very complicated to correctly assess what is released into the atmosphere. A few weeks ago, the Boston Consulting Group surveyed 1,200 companies around the world regarding their CO2 emissions and it appeared that 9 out of 10 companies did not know how to calculate their emissions, and those that did try, showed a large margin of error.
This was the case, for example, for a wine and spirits company whose calculation to measure the carbon footprint of the glass used to produce the bottles showed a 45% discrepancy from the same calculation made by the consulting firm.
The director of the start-up Kayrros, Antoine Rostand, who uses satellite data to identify methane leaks, confirms that when it comes to methane emissions from the oil and gas industries, it is not uncommon to have discrepancies of 1 to 10 between the figures communicated by companies and the readings taken by satellites.
However, Charlotte Degot recognizes that it is particularly difficult to measure one’s carbon footprint, even though an international standard, the GHG Protocol, has existed since 2001, as well as a calculation methodology.
This protocol requires companies to account for their direct greenhouse gas emissions linked to the combustion of fossil fuels, called scope 1, then those linked to electricity consumption, called scope 2, and finally those indirectly induced in the value chain, called scope 3.
Juliette Decq, manager at Carbone 4, a carbon strategy consulting firm, believes that the system is no more complicated than financial accounting, but internationally few companies choose to be transparent on this subject. The Carbon Disclosure Project, the main organization that lists the carbon footprint of the world’s major companies, indicates that in 2020, out of 3,200 listed companies that responded to its questionnaires, only 15% provided information on scope 3.
For Juliette Decq, the low rate of return is explained by the lack of regulation on corporate environmental reporting. She points out that France is perhaps one of the only countries to require companies to report on their Scope 3 emissions, which are the most significant, representing approximately 80% of a company’s emissions.
For example, for oil companies, these are the emissions generated by the combustion of gasoline sold at service stations. Although France requires companies with more than 500 employees to report on all the scopes, many of them do not comply with this obligation.
The association Bilan Carbone estimates that only 30% comply and the fine, which has increased from €1,500 to €10,000 in 2019, is not a deterrent. On a global scale, of the 641 companies listed by Net Zero Tracker, most have excluded scope 3 from their intention, such as Walmart, Saudi Aramco, PetroChina or Toyota for example.
However, this data is not only useful to show the efforts made towards public authorities and citizens, it is also looked at by investors to know the carbon footprint of their portfolio, according to Aurélie Baudhuin, Director of Responsible Investment Research at Meeschaert Amilton AM, and it is necessary for the steering of emission reduction strategies.
Despite this observation, Laurent Babikian, director of the Carbon Disclosure Project, explains that companies are becoming more skilled in this area and that the rules are increasingly restrictive. Technology will also help, as satellite images can be used to account for the real emissions of the biggest polluters, particularly in the oil, cement and metallurgy industries.