The Climate of Business #4: Is your net-zero the same as my net-zero?

In many discussions last week, especially during the European Alpbach Forum, which I had the honour to attend as a Climate Opportunity Leader, the major topics were the same. How are we going to align stakeholders to address climate change? Is it possible to run a triathlon together, rather than millions of mini-sprints individually??What is the role of business in this??

The answers are rather complex but to cover complexity and lead the way forward, the management of any company needs to get the basics right first. No one thought you could go net-zero over night, right? Today I dedicate the newsletter edition to those who need a glossary to make a board meeting on ESG more clear. But first thing’s first. Round up.?

Climate Change Reality ?

Giant clams have a growth spurt due to pollution (Nature )

The first climate change famine is about to be experienced in Madagascar (euronews )

The world's oceans are becoming acidic at an "unprecedented rate" (BBC )

"Concern over climate crisis at highest level in 30 years in wake of IPCC report" (Carbon Brief )

Live footage from Ida demonstrate the unstoppable power of the hurricane (see Tweet underneath, National Geographic)

The story behind the first CO2 pipeline explosion (The Verge )

More Biodiversity = Better and more Resistant Ecosystems (Nature )

Business Climate Reality?

Investors are unhappy with US oil and gas companies (Yale Climate Connections )

What is COP26 for? Alignment and acceleration. (Climate Change News )

US stock exchange regulator examines suspicion of greenwashing against Deutsche Bank subsidiary DWS (Spiegel )

“Carbon neutrality” doesn’t make sense (Bloomberg )

The cost of a good movie to the planet ain’t little (Atmos )

Tighter climate targets spell end of German coal by 2030 (Clean Energy Wire )

"Net Zero Is No Longer Enough – Its Time For Net Negative, Policy Coherence And Robust ESG" (Forbes )

Where do used solar panels go? They power the developing world (Bloomberg )

Nuclear + Climate Change? What is the impact of nuclear on climate change? (New York Times )

Claiming net-zero doesn’t mean you are net-zero - a gas producer goes to court (Bloomberg )

German court rules against coal-fired Datteln 4 plant (Clean Energy Wire )

Reality Check?(A Glossary of Climate Risk & Business)

Today I have put together some definitions which will make any board member, C-level or aspiring sustainability manager be able to analyse complexities, after having understood the basics.

Carbon Footprint?

The amount of carbon dioxide released into the atmosphere as a result of the activities of a particular individual, project, organisation or community.

Scope 1,2,3

Plan A has put together a detailed guide on this here . This one is not for a one liner.

CCF?(Corporate Carbon Footprint)

The calculation of a CO2 balance of all business activities forms the basis for corporate climate protection. This involves the analysis, evaluation and management of the greenhouse gas emissions that occur.

PCF (Product Carbon Footprint)

The PCF includes the total greenhouse gas emissions caused by a product at the various stages of its life cycle. For example, a cradle-to-gate PCF takes into account all processes from the extraction of resources, through the manufacture of precursors and the production of the final product itself, to the point at which it leaves the company. A cradle-to-grave PCF ("from the cradle to the grave") covers the entire life cycle of the product, including emissions from the use phase and the end of the product's life.

ESG?

ESG is an acronym made up of the English terms environment, social and governance. Large investors and institutional investors in particular are increasingly paying attention to the aspects of sustainable investments.

Environment: A strategy for climate protection, careful resource management and the use of renewable energies play an important role in the environmental aspect. In addition, air and wastewater emissions must be minimised and the ecological footprint reduced.

Social: Companies with ESG criteria commit to creating fair working conditions, respecting human rights, providing employees with access to training, and investing in workplace safety and health. In addition, forced labor and child labor are excluded.

Governance: In terms of corporate governance, independent supervisory bodies ensure that corruption or anti-competitive behaviour are ruled out. In addition, most companies anchor performance-based compensation for board members when sustainability goals are achieved.

LCA?

A life cycle analysis (also known as environmental balance sheet, life cycle assessment or LCA) is a systematic analysis of the environmental impacts and energy balance of products throughout their entire life cycle ('from cradle to grave'). If processing is only analyzed up to a certain point in time, for example only from raw material extraction to processing in a factory, it is no longer a life cycle analysis because the entire life cycle of a product is then not considered.

TCFD?

The Task Force on Climate-related Financial Disclosures (TCFD) is a global industry-led initiative on corporate reporting of climate-related financial opportunities and risks.

SFDR

The Sustainable Finance Disclosure Regulation (SFDR) aims to increase transparency on how financial market participants integrate sustainability risks and opportunities into their investment decisions and recommendations.

Climate Risk?

"The ‘core’ definition of risk is “the potential for adverse consequences”." In the context of climate the UNFCC discusses climate related risks as "created by a range of hazards". "Some are slow in their onset (such as changes in temperature and precipitation leading to droughts, or agricultural losses), while others happen more suddenly (such as tropical storms and floods)."

As this topic is quite wide, I will point out to the IPCC's Summary of cross-working group discussions .

Carbon Neutral?

Everything a company does produces carbon dioxide and the total of this carbon dioxide is the carbon footprint of a company.?Being "carbon neutral" means a company emits the same amount of carbon dioxide into the atmosphere that they have offset by purchasing carbon credits.?The criticism related to "carbon neutrality" is:

• quality of credits
• effectiveness in the context of the health of our planet - it isn't enough to pay for compensation to address climate change as there is a need to focus on reduction of emissions (hence why many companies don't compensate only, but rather reduce + compensate)
• longevity of impact

Carbon Credit

When a climate protection project is developed that prevents or reduces CO2 emissions, a CO2 certificate ("carbon credit") is created for each ton of emissions saved. A carbon credit is a tradable certificate that is equated with the reduction or avoidance of one ton of CO2.

Net-Zero

Net zero means a company has achieved a balance between the greenhouse gases put into the atmosphere and those taken out. Reaching net zero applies the principal, requiring us to balance the amount of greenhouse gases we emit with the amount we remove.

COP26

COP26 (Conference of the Parties) is the next annual UN climate change conference. The summit will be attended by the countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) – a treaty that came into force in 1994. The gathering invites corporates, politicians, activists and other climate leaders to discuss the future of our agenda to address climate change.?

To keep yourself informed on the latest developments related to the event, follow Gonzalo Mu?oz and Nigel Topping , High-Level Champions of COP26.?

Brown-Spinning?

"Selling off the highest-emitting components of businesses to private equity and hedge fund actors at a discount." Read the FT article that goes in-depth here.?

Greenwashing?

Attempt by companies or institutions to present themselves as particularly environmentally aware and environmentally friendly through monetary donations for ecological projects, PR measures, etc. Examples could include claiming carbon neutrality without calculating Scope 3, releasing a "sustainable" product line while continuing with resource-exhausting practices without improving your business level of sustainability, etc.

Carbon Bubble?

I am finishing on the Carbon Bubble note, as this would be the topic I would like to dive into next week. Companies and especially financial institutions often ask us in Plan A why does it matter that we follow science, why should a fund or company be focused on "accuracy" and avoid false claims of carbon neutrality today. The answer is simple - because if you don't you will pay the cost resulting in unexpected expenses for your business, such as stranded assets.

If you do the bare minimum today, you will pay the highest premium in costs tomorrow.