Corporate GHG Emissions Need To Move Beyond “Best-Guess” Territory

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Businesses and industries need a clearer picture of their GHG emissions footprint to achieve their climate and emissions goals

Historically, companies looking to calculate their greenhouse gas (GHG) emissions have had to rely on self-reported data and estimates rather than primary data from supply chain partners. These best-guess estimates lead to inconsistencies and a lack of clarity about what is really being emitted, where. That lack of visibility and transparency has made it challenging to establish credible and achievable goals for GHG emissions reductions in this decisive decade.

RMI’s Horizon Zero project aims to enable companies and brands to take much greater strides toward their net-zero goals by providing clarity on where emissions are happening throughout their supply chains, and specific guidance for their supply chain partners to decarbonize manufacturing processes.

Getting Our Net-Zero Budget Back on Track

Horizon Zero is advancing breakthrough carbon accounting practices and technologies for tracking and calculating GHG emissions, so companies and industries can move beyond best guesses and get a handle on their actual emissions footprints. We use advanced satellite and remote sensing data, sophisticated modeling, and clear market strategies to identify the location and amount of greenhouse gas emissions.

The goal for these visibility efforts is to identify ways that the world can start slashing emissions immediately as part of the larger transition to a cleaner energy future. For a personal-finance analog, think of this step as sitting down with a comprehensive finance tool and realizing that you have over a dozen unused, unnecessary memberships and subscriptions you can cut right away.

Balancing the Corporate GHG Checkbook

Horizon Zero is a groundbreaking effort to streamline GHG accounting to provide greater comparability between companies and industries. A blockchain-based tech infrastructure will allow business leaders and supply chain decision makers to trace their company’s emissions through industrial value chains, down to the level of individual products and assets. With this visibility, they can use their purchasing power to create demand signals for more climate-friendly supply chain manufacturing and demonstrate accountability on climate action. Returning to the personal-finance analogy, imagine you’d been spending far beyond your means for years without an eye on the cumulative impact. The first step to start bringing your finances back under control would be getting a handle on how much you’re spending on what.

Horizon Zero performs a similar function by allowing corporations and policymakers to see precisely where GHGs are being emitted in their supply chains, allowing for data-driven decisions about more climate-friendly purchasing and operations.

Better Analysis to Create Long-Term Management Strategies

Just like falling behind on emissions goals, falling deep into debt does not happen overnight — it often results from spending without a clearly defined budget or a plan for future financial health. In the world of carbon accounting, this problem presents itself in corporations using 200-plus different accounting methodologies that provide carbon footprint estimations for a company’s direct operations but fail to account for Scope 3 emissions across their supply chains that are on average 5.5 times higher than direct emissions from operations. Horizon Zero is solving this problem by developing a harmonized (streamlined) carbon accounting system that attributes emissions to their exact source. The blockchain-based technical architecture we are developing to trace GHG emissions all the way from the extraction of raw materials to finished products further advances this goal by showing investors and brands where they can create demand signals for more climate-friendly products; pointing supply chain partners to where they can decarbonize operations and manufacturing processes to remain a favored vendor; and empowering consumers to buy products that align with their values.

Clarifying the Big Picture for Targeted Supply Chain Reductions

This visibility into supply chain emissions does not just enable granular decisions about industrial operations or which supply chain partner to buy from. For companies to achieve their net-zero climate goals within the coming years and decades, they need to understand exactly where emissions are coming from so they can reduce and ultimately eliminate them.

The Coalition on Materials Emissions Transparency (COMET) is a coalition advancing industry-specific guidance for emissions reductions. COMET complements Horizon Zero by giving supply chain partners the information they need to continually move toward announced climate goals to reach net zero by 2050, the standard scientists have deemed necessary to keep our planet on a sustainable climate trajectory.

The saying “you can’t manage what you can’t measure” has never been truer for GHG emissions. As we collectively advance the ability to identify and trace emissions, we may be unnerved by the volume of CO2, methane, and other emissions being released into the atmosphere. But getting clear about where we are starting will allow for faster, more impactful progress toward net-zero goals.

Learn more about Climate Intelligence’s work to make the invisible visible, and the daunting achievable.

© 2021 Rocky Mountain Institute. Published with permission. Originally posted on RMI Outlet. By Paolo Natali, Nicole Labutong.

Featured image from NASA


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RMI

Since 1982, RMI (previously Rocky Mountain Institute) has advanced market-based solutions that transform global energy use to create a clean, prosperous and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables. Please visit http://www.rmi.org for more information.

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