Best Practice – Climate Management
“Only when decarbonisation is completed well before the end of the century, will we still have a fighting chance to limit climate warming to less than two degrees”. (Mojib Latif, GEOMAR Helmholtz Centre for Ocean Research)
Main topics: Greenhouse Gases, CO2 Balance, Scopes 1 to 3, Climate Management, Climate Strategy
Why is climate protection strategically important for companies?
- By 2050, Germany and the EU intend to reduce greenhouse gas emissions by at least 80% below 1990 levels, so regulatory requirements for companies are expected to be stricter in future – and in the CSR reporting requirement, which comes into force from 2017, companies will also be required to submit reports on their ecological impacts and measures.
- Energy and resource efficiency is often associated with CO2 savings and cuts costs across departments. Companies are thus less vulnerable to energy price increases.
- Customers and investors also consider the climate performance of companies when awarding contracts and are increasingly asking for more information.
- Due to the increasingly critical public opinion on this issue, companies risk losing their reputations if they don’t at least try to reduce the environmental effects of their business activities.
- Companies are directly affected by the negative consequences of climate change and must make adjustments that safeguard the water supply, for example, that protect against floods or compensate for rising heat during periods of hot weather.
- Climate protection measures open up new business models and are thus a driver of innovation for companies.
To achieve effective environmental management, companies should first identify and measure the main sources of emissions along their entire value chains. Carbon Accounting helps them to systematically capture greenhouse gas emissions and create a greenhouse gas balance, or a Corporate Carbon Footprint, which can be used for sustainability reporting and emission management. Companies can also use the recommendations of the Greenhouse Gas Protocol as guidelines.
To create a comprehensive climate balance, companies must provide information about their own direct emissions, which arise from processes at their sites and factories (Scope 1). These include, e.g. the burning of fuels to operate facilities, but also volatile substances that are released during the (re)filling of air conditioners or which arise during the production of concrete or chemicals.
They should also list the indirect emissions that are emitted during the generation of purchased energy (Scope 2). These include purchased electricity and district heating and cooling. They are also responsible for the indirect emissions that arise in their value chains (Scope 3). These include upstream emissions from the entire supply chain (Scope 3 upstream), which are usually caused by acquired merchandise and products, as well as downstream emissions from the use phase and the disposal of the manufactured goods (Scope 3 downstream).
The climate management of a company is incorporated in its operational climate strategy. Aligned with a higher-level climate goal, it defines the measures that companies can employ to reduce their GHG (greenhouse gas) emissions.
MAN – managing climate protection properly and integrating it strategically
The climate strategy of the vehicle manufacturer MAN focuses on the production situation at its sites, as well as the resources and climate efficiency of its products and services. The company’s climate goals are implemented by means of five different core initiatives:
1. Minus 25% CO2 emissions by 2020 at MAN sites
- Reduction of CO2 emissions through an increase in the energy efficiency use of renewable energy sources, energy generation with power-heat coupling (co-generation) and comprehensive energy management (Scopes 1 and 2).
- MAN shows how this works with its climate-neutral facility in Pinetown, South Africa, a site that was completely converted to renewable energy.
2. CO2 savings potential along the product life cycle
- To identify potential savings, MAN determines CO2 emissions along the entire product life cycle. At one point the company found that up to 90% of the emissions occurred during the use phase of products (Scope 3), so MAN now uses CO2-reducing, low-consumption technologies that make its products more efficient.
3. Efficient product portfolio
- MAN has positioned itself in its business fields with sustainable products and services, responding to the trend of rising traffic congestion and the simultaneous demand for CO2-efficient trucks, buses and ships.
4. Customer participation and dialogue
- MAN exchanges information with its customers about reducing the CO2 footprint, since many customers have already set their own targets to reduce emissions. Thanks to the optimum operation of the products, MAN’s customers can reduce fuel consumption, saving carbon dioxide. MAN’s driver training for professional truck drivers also helps to save fuel.
5. Controlling the climate strategy
- To evaluate the climate strategy, MAN defines KPIs that monitor and control the implementation of the climate strategy.
- The company reports regularly on the implementation of its climate protection measures in the MAN Sustainability Report and in the Global Compact Progress Report.
How you can manage the implementation successfully
The indirect emissions reported by a company depend on the materiality of the respective industry – so a coal-based power producer will report on the emissions caused by the extraction of the coal, while a mail order company will report on the CO2 emissions that arise during delivery to the customer.
For most companies, emissions usually occur within Scope 3. This poses tough data acquisition and emission reduction challenges for the companies, because they depend on the cooperation of suppliers and customers in this respect.
If you want to manage climate management in your company, you should consider the following steps:
- Carry out a materiality analysis to identify the major sources of emissions along your value chain. Then measure these values and create your own carbon footprint.
- Define concrete goals in a climate strategy to reduce greenhouse gases and use it to derive appropriate measures to attain your goals.
- Carry out the measures and periodically review how successful you are. You can use the annual Global Compact COP (Communication on Progress) reporting requirement to carry out an inventory. Reporting communicates your performances to the outside world and enables you to compare your carbon footprint with other companies.
The DGCN offers various webinars and coaching sessions to companies that need help with climate management support, e.g. with the topic of the ‘Corporate Carbon Footprint’. The DGCN is also planning to produce two publications on the subject at the end of the year.