3 Ways To Tell A Company Is Serious About Their Carbon Commitments
Corporations have jumped on the net zero carbon bandwagon. Most of these plans read like facts, others like fiction. Here are 3 lessons from Apple and Microsoft’s commitments to assess their credibility.
Along with COVID, 2019 also brought a tidal wave of corporate commitments to net zero carbon emissions. Corporate leaders are acknowledging the need to take drastic actions to honor the Paris Accord and divert a seemingly unstoppable climate disaster. Amazon, Apple, Alphabet, JP Morgan Chase, Mastercard, Microsoft, and P&G are just a few of the companies to announce ambitious carbon management plans in the last 18 months.
But, how can one tell greening from greenwashing?
Almost all of the S&P companies announced ambitious carbon plans in the last 18 months. Two companies that stood out in the credibility of their corporate commitments were Apple and Microsoft. Surprised? I was. Yet, they have obviously been doing their homework and it’s hard to fault their ambitions. Here are three attributes of credible carbon commitments.
The Credible Carbon Commitments
1. Scope 3 Greenhouse Gas Emissions
A company’s greenhouse gas emissions fall into three categories. Scope 1 emissions are produced by the company, Scope 2 emissions are the indirect emissions from the generation of electricity consumed by the reporting company, and Scope 3 emissions are produced in the company’s value chain — both by upstream suppliers and downstream product impacts.
The most credible plans speak to not just Scope 1 and 2 greenhouse gas emissions, they also speak to their Scope 3 emissions.
In 2020, Apple committed to zero carbon emissions by 2030, but not just Scope 1 and Scope 2 emissions, but also Scope 3 emissions. In other words, it seeks to not just change its own operations and ensure the energy it uses is from renewable resources, but it also wants to reform its suppliers and customers. As the largest publicly traded company in the world, Apple can profoundly impact carbon emissions worldwide — arguably more than most national governments. It’s just as well, as 99% of Apple’s carbon footprint is through its products, not its own operations.
2. Net Negative Emissions
What’s better than reducing carbon emissions to zero? Actually drawing out carbon from the atmosphere, which means that these companies do not seek net zero carbon emissions, but net negative emissions.
In 2020, Microsoft committed to become carbon negative by 2030, and even more ambitiously, to remove all the carbon they have emitted since 1975. And, this doesn’t seem to be just lip service. Microsoft has creative strategies to do this, including an internal carbon fee applied to their suppliers and a $1 billion climate innovation fund for new products and low carbon technologies.
3. Standard Setters and Third-Party Auditors
Companies willing to take a big leap forward do not expect to tackle these issues alone and secretively. They’re open about their efforts, successes, and failures. They report their emissions, they subscribe to standards set by groups like the Carbon Disclosure Project and the Science Based Targets Initiative, who hold their feet to the fire and share best practices. Engaging third party auditors also shows the trustworthiness of their reports. Microsoft will be using Deloitte as an auditor for their sustainability reports.
The Holy Grail: New Business Models
Truly visionary companies don’t just set targets, they rethink their business model. This is hard, as it means dropping some products and entering new markets. Some of these shifts are in adjacent businesses, such as the oil and gas companies that shift to renewables. Total, for example, bought a majority stake in solar power company, SunPower, and battery company, Saft.
Some shifts require major rethinking of what products the company is selling. Apple makes money by selling more iPhones and Microsoft makes more money selling Surface devices. Even if both companies achieve net zero or net negative carbon emissions up and down their value chains, they are still impacting the environment.
Companies have an opportunity to use the current momentum towards sustainability to think more creatively about their impacts. Apple and Microsoft are moving in this direction, but surprisingly, do not always put this on their carbon management report card. These initiatives include:
- Moving to cloud computing, which means that customers need less physical hardware in their smart devices.
- Shifting from products to services, so that revenues are not directly tied to selling more hardware.
- Moving to modularity, so that parts, such as batteries, can be replaced or repaired.
- Partnering with companies that can reintroduce retired products back into the production process.
Doing Less Harm Versus Doing Good
Most companies still have a subtraction mindset. They seek efficiencies in order to reduce the carbon they produce, the water they use, and waste they generate. Getting to net zero is an important destination and the recent wave of carbon commitments is inspiring.
But the most ambitious corporate carbon management plans seek not just to reduce carbon, but to use this exercise to reimagine their business. Carbon management doesn’t need to be seen as simply an accounting exercise, it can be a source of innovation that benefits the company and the planet.
Originally published at https://www.forbes.com.
