What is decarbonisation?
Decarbonisation is the process of removing or reducing carbon emissions into the atmosphere, with the end goal of eliminating all emissions caused by human activity. Decarbonisation is achieved primarily by shifting away from fossil fuels and carbon intense practices to low-carbon or zero-carbon technologies and energy sources (e.g., renewables, regenerative agriculture, hydrogen). A successful reduction of global greenhouse gas emissions would limit global warming.
Why does decarbonisation matter?
The world is in urgent need of decarbonisation: The effects of rising greenhouse gases in our atmosphere are already alarmingly clear. Rising temperatures have led to droughts, floods, wildfires, and receding glaciers. These disruptions have destabilising implications for the global economy and supply chains. To curb the amount of greenhouse gases in the atmosphere and slow global warming, we must rapidly decarbonise our global economy.
When was the term decarbonisation coined?
The concept of decarbonisation rose in prominence following the 2015 Paris Climate Agreement. The 2015 Paris Agreement set decarbonisation targets to limit global warming to well below 2°C above pre-industrial levels with the ambition for the global economy to reach net carbon neutrality, or net-zero, by 2050. To reach this ambitious goal, countries have to cut GHG emissions rapidly and reach carbon neutrality by 2030 and net-zero emissions by 2050. The moment when greenhouse gas emissions stop rising and begin to decrease steadily is called drawdown. At this point, we are not on track to achieve the levels of decarbonisation laid out in the Paris Agreement.
Our common goal is simple: reducing carbon dioxide emissions worldwide as soon as possible. This process requires both sweeping change and incremental steps: from sector to sector, from industry to industry. Even if the energy sector is the most scrutinised, other emission sources of paramount importance include food waste, cement, steel, and agriculture.
Plan A knows that every greenhouse gas that is not released into the atmosphere makes a difference. That is why we work with companies to track, measure, and lower their emissions. Your business can be part of the solution. Sign up for a free demo today and learn how you can bring your business to net-zero.
Why do businesses need to decarbonise?
The decarbonisation of the business sector is an integral part of reaching drawdown, or the point at which the amount of greenhouse gases in the atmosphere begins to decrease. There are tremendous opportunities for businesses that act as early adaptors for emissions reductions. It is already proven that climate leaders in the private sector can benefit in many ways from a net-zero transition.
Studies have shown that companies with lower carbon emissions are more attractive to investors and have improved talent retention, higher financial performance, cost savings, lower regulatory risks, and access to cheaper capital. Early adaptors to low-carbon business models generate higher value for shareholders and stakeholders.
In addition, lower emissions are an integral part of ESG. Integrating ESG gives businesses a clear competitive advantage as studies have found that investors and consumers prefer sustainable and ethical brands. Being a low-carbon company also lowers risk, as businesses can avoid greenwashing and its negative repercussions while also getting ahead of the curve and being prepared for upcoming reporting and regulations.
Plan A has streamlined ESG reporting tools to help optimise your business’s performance and get you ahead of the pack on ESG. Plan A’s new ESG template Builder template builder allows you to create and send questionnaires to report ESG-related and non-financial dimensions. As a result, any Sustainability Manager can now cover all internal and external ESG reporting needs, adapting to any framework in a few clicks. Find out more today.
What does good decarbonisation look like?
The advantages to decarbonising your business are clear and multifold. But how do you achieve true decarbonisation? For businesses to set science-based targets (SBTs) and strategically lower their emissions, they must first understand where and how they are emitting greenhouse gases along their entire supply chain.
This is why the first step to lowering a business’s footprint is scope 1, 2, and 3 carbon accounting and monitoring. Accurate carbon accounting gives companies an overview of where they emit the most and where reduction efforts would have the most significant impact. When it comes to environmental impact, the more you know, the more effectively you can take action.
If you need guidance on understanding your company’s scope 1, 2, and 3 emissions, head to our Academy to learn more. Our comprehensive guide explains emission scopes 1, 2 & 3 (as defined by the GHG Protocol) and how Plan A helps companies become carbon neutral.
Examples of successful decarbonisation efforts
“Leading food and beverage company, PepsiCo generated more than $70bn net revenue in 2020 while ramping up sustainability efforts - proving that financial gain and sustainability go hand-in-hand.”
Why does scope 3 matter when it comes to decarbonisation?
For most industries, up to 90% of a company’s emissions come from Scope 3 (indirect
emissions). Scope 1 and 2 often account for only 8% of a company’s GHG emissions. The data is clear: for companies to reduce their emissions, they must set their efforts on Scope 3 emissions and their entire supply chain. But companies do not control suppliers, so how can they measure their supplier’s emissions to then be able to reduce them?
Collecting data from external sources, collating them and providing an overview of suppliers’ emissions is a huge challenge.To address this critical decarbonisation need, Plan A has introduced a Supplier’s module that allows businesses to measure and reduce Scope 3 emissions. To find out more, sign up for a free demo today.
What is the private sector's role in decarbonisation?
Unfortunately, the world is not on track to meet the decarbonisation goals laid out in the Paris Agreement. However, there is growing momentum to transform our economy and governments are increasing the pressure on the private sector to transform.
Government regulations are rising to the challenge of decarbonisation by setting increasingly ambitious regulations and reporting requirements for businesses, such as the EU's Non-Financial Reporting Directive (NFRD), The Corporate Sustainability Reporting Directive (CSRD), and the entity-level disclosure for reporting on the EU's Sustainable Finance Disclosure Regulation (SFRD). These reporting frameworks make it mandatory for companies to lower their carbon emissions and help drive innovation and advances in low-carbon technologies.
What is net-zero and how can decarbonisation efforts get us there?
The hard truth is that there is already a dangerous accumulation of greenhouse gases that will warm the planet for decades to come. It is essential that humanity reaches for net-zero.
Net-zero is when the remaining emissions that cannot (yet) be avoided through ambitious decarbonisation are compensated for through carbon removal or carbon sequestration. This can, for example, be achieved by restoring forests or through direct air capture and storage (DACS) technology.
To understand decarbonisation and net-zero, it is helpful to think of an overflowing bathtub. Decarbonisation allows us to turn off the tap, stopping the flow of new carbon into the atmosphere. We reach net-zero when we “drain the tub” using carbon removal techniques to draw excess carbon out of the atmosphere and store it safely in what are called carbon sinks.
Not all climate removal approaches are equally effective. For instance, although planting trees is often touted as a way to offset greenhouse gas emissions, a tree can take decades to reach its full carbon capture potential. Trees are also susceptible to wildfire. When a forest burns, it releases carbon into the atmosphere. As climate change accelerates forest fires, this poses a real problem for the efficacy of trees as effective carbon sinks.
But there are exciting new developments being made in carbon removal. Innovations in ocean-based carbon sequestration, carbon mineralisation, and biochar all hold promise, although these approaches to carbon sequestration need to be invested into and scaled. Direct air capture is still in its infancy and much doubt remains about its efficacy, but it is also an area of interest.
The future of decarbonisation for businesses
Scientists, governments, business leaders, policy-makers, and individuals now understand the necessity for our systems to shift towards a decarbonised and resource-efficient economy to mitigate and adapt to climate change. Decarbonisation is the pathway to a climate-resilient future.
While many companies declared becoming carbon-neutral by 2050, recent estimates suggest we are not on track to meet the Paris targets – more must be achieved, and at a greater speed. In addition, many companies’ pledges do not include Scope 3 emissions. And when we remember that up to 90% of a business’s emissions are in Scope 3, it is clear that there is still much work to be done to decarbonise our economy.
Decarbonisation is not an easy path and will require billions of investments – but with global companies' active involvement, we will get there.
The benefits of a business starting a decarbonisation strategy are:
- Lower financial risk
- Protection against rising cost of carbon
- Avoiding potential greenwashing allegations
- Complying with a rapidly changing regulatory landscape
How can businesses decarbonise and reach net-zero?
Companies can achieve true decarbonisation through the following steps:
1. Data collection
2. Emission accounting across all (relevant) scopes
3. Emission (and ESG) Reporting - for baseline year or otherwise
4. Target Setting (ideally science-based)
5. Review of potential decarbonisation levers (and subsequent costs)
6. Implementation of selected levers (within and outside the value chain)
7. Development of corporate net-zero strategy
8. Annual emission accounting and reporting
9. Neutralisation of excess emissions on an annual basis
10. Implementing a net-zero pathway after achieving planned decarbonisation goals
“Corporate decarbonisation journey can be strenuous. However, it is scientifically proven that such a commitment will add corporate value in the long run while safeguarding our planet.” Dr Ramana Gudipudi, Decarbonisation lead at Plan A
If your business is ready to be a leader in decarbonisation, sign up for a free demo today.