Navigating global decarbonization trends with D-Carbonize

Ross Douglas: Can you explain a bit about D-Carbonize? What is it that you do?

Frédéric John: We developed a software that is called a carbon cockpit, that is designed to help customers to measure and reduce their CO2 emissions. Our mission is to make decarbonization accessible to all companies.

Ross Douglas: Who would be a typical client of that service?

Frédéric John: Usually we work with industrial firms: companies that are manufacturing products or transporting products or are retailing those products at a global scale. We measure the carbon footprint of factories, warehouses, offices; and we've developed very good expertise in this manufacturing/industrial sector in different countries. Usually we work with large firms, but we also work with smaller companies that are included within this value chain, and who feel the pressure to report carbon emissions.

Ross Douglas: Typically, how would you go about measuring their carbon emissions? How do you connect into their software?

Frédéric John: For now, it's not an easy task but it's very accessible. I would say that 50% of the data that you need to perform a carbon footprint assessment (a proper carbon footprint assessment that goes into detail) exists internally within the company. With our technology we can connect to the IT system from where we get the data for our tool and then you have a sort of automated connection.?

Usually energy use is already tracked by companies… kilowatt hours of electricity, litres of natural gasoline, diesel, etc.? We can also easily track, for example, the quantity of raw materials purchased. Companies have a pretty good idea of the type and weight of the raw materials purchased.? We can also get logistics information from the telematics; directly from IT systems.

Ross Douglas: And what roles does D-Carbonize play after measuring?

Frédéric John: Our objective is to transfer our expertise to our customers. So, the first step is to go through information sessions about “What is a common footprint? What are the main principles around decarbonization that you need to have in mind? When you step into the conversation plan once you've done that it's important to map the different activity flows of your company. We deliver a visual representation, or dashboard, of their emissions.?

Ross Douglas: When companies have sight of their overall carbon emissions?

Frédéric John: We measure the data and once you have that, you can use them internally for your strategy, or externally for stakeholders and standards. For example, the Greenhouse Gas Protocol is one of the standards that we can use to perform the report. Then with my team of consultants we run the numbers and set up the tool with the visuals.? These are useful in reports that you can use for your carbon strategy.

Ross Douglas: Are customers surprised at the results when you show it to them??

Frédéric John: If it's their first carbon footprint assessment, they 100% of the time customers are surprised because they never thought that emissions would be at a certain location within the value chain or within the process. And this is what I really like with carbon accounting, because you can really highlight where you need to act. You cannot reduce what you don't measure and that's really what we want to insist on; you need a good diagnosis so that you can take action to reduce emissions.

Ross Douglas: What if they were sourcing products locally; and what if they used electric vans and trucks and not diesel, how different would the results be?

Frédéric John: Usually the purchase of raw materials adds up to a lot of emissions; not a lot of people are aware about the environmental impact of all the things that we are purchasing, because here the emissions are hidden. In terms of sourcing locally; sometimes bringing things from the other end of the world is not that heavy on emissions, whereas trucking a short distance can be. So, there are always surprises for the client as to where the bulk of their emissions comes from.?

Yes, an electrified fleet would help, but if the logistics provider does not offer this then their options are limited.?

Ross Douglas: Are clients generally committed to reducing emissions? I see that a lot of companies are falling behind in their ESG targets.?

Frédéric John: Firstly, it’s important for them to have a reference point; and we give them that. But to answer your question, all of our clients are the same question: is our carbon footprint good or bad? And this is very difficult to answer. Because a carbon footprint assessment is not designed to be compared with another one; it depends on the scope that you considered for your assessment. It depends on the seriousness and the metrics of the consultant. It depends on the emission factors that you're using and so on. But I would say the great thing now is we've done more than 200 carbon footprint assessments. So now we have some benchmarks, our customers can compare themselves with other carbon footprint assessments of similar companies.?

We are seeing a lot of companies put the information on their website, or in their annual report. Although most people want to reduce that carbon footprint, the results are a bit disappointing and we need to ask the question. Why is that? I can think about many reasons but one of them is (in my opinion) the failure to measure. Most companies are not measuring correctly. So they are reducing in a random way.?

I can give you an example. It's very often when I start a carbon 3 assessment with a company and the Here's an example: When I begin a carbon footprint assessment with a company, the CEO often says, 'I invested €300,000 in solar panels for my roof. My carbon footprint assessment should improve.' To which I always reply, 'Let's see.' However, the actual impact is usually very marginal. For industrial firms, it might only reduce the assessment by 2% or at most 5%. The majority of emissions are caused by logistics flows and the purchase of raw materialsCEO is in the room and says “I invested 300,000 Euros in solar panels for my roof; so my carbon footprint assessment should be good.” I always say “let's see”, and sure enough, the impact is very very marginal. If you are an industrial firm, it will reduce maybe two, three, maybe five percent of your carbon footprint assessment. But the emissions are caused mainly by your logistics flows, and by purchased raw materials.?

So, these resources (e.g. solar on the roof) were invested with a lot of hopes to reduce carbon footprint. But maybe those resources should have been invested in research and development, in innovations for equipment and product, or in sourcing other logistics providers. And so my point is a powerful carbon footprint assessment reduces the risk when you think about strategic investments.

Ross Douglas: And obviously if you're investing in solar panels, you have a payback period that's probably six or seven years. So that's maybe an economic investment as opposed to an environmental investment.

Frédéric John: To reduce your carbon footprint— I'm not saying you should not invest in solar panels to reduce your electricity consumption. It is to give you the perspective.

Ross Douglas: What we see a lot in the press is that sustainability is more expensive than companies and countries realize and therefore they're not reaching their targets…

Frédéric John: Exactly.

Ross Douglas: So they’re delaying their targets. In our business we see that installing solar panels and battery storage makes a lot of financial sense; and therefore we're seeing growth in those businesses. But this is growth driven by financial, not environmental, considerations. Are companies prepared to forego profit in order to reduce their carbon emissions?

Frédéric John: I think we need to talk about value when we are talking about decarbonization.?

In Europe we see carbonization as a burden, as something we need to comply with, it will be costly and there is no value out of it. But in other regions in the world where they are not thinking about this, they see decarbonization as an opportunity to create new value for customers, for the company.?

Every time that we do a decarbonization plan for customers, we always try to keep in mind the environmental impact and the economic impact. The good news is that it’s possible to generate value out of a carbon footprint. For example, we ended an assignment two weeks ago where we helped the customer to consider not selling the office furniture but to refurbish them.

Why is it relevant? Because today 99% of office furniture is just thrown away. They are not really recycled, because there's no circular initiative for furniture. And then I have many other examples where with our customers we create new value, like a new product made with local electricity consumption or with eco- responsible materials. I can tell you that now there is a market for low-carbon products, because of future carbon credit taxes.?

Ross Douglas: Let's talk quickly about solid battery storage. We see prices have come down battery storage prices are coming down. Is battery storage combined with EVs a good way to reduce emissions. emissions?

Frédéric John: It is an excellent way to reduce your scope 1 and 2. So I don't want to be too specific and too technical here, but in carbon accounting you have three Scopes, but the ones for which it is commonly accepted that you are responsible for are scope 1 and scope 2. When you electrify your fleet of vehicles (and your machines) you have a significant reduction in terms of CO2 emissions because we are lucky to live in countries where the electricity is low carbon. You reduce it even more if you use solar panels and combine this with low carbon electricity from the grid or a green contract from your supplier, then your impact is significantly reduced.?

So the answer is definitely yes; EVs and battery storage offer huge scope 1 & 2 emissions reductions.?

Ross Douglas: A lot of companies have committed to going NetZero by 2050. How realistic is this in your opinion?

Frédéric John: It could be realistic, so long as we use carbon credits and companies engage in impactful carbon reduction actions. But I generally don't believe that by 2050 we will be in a zero carbon world. Because being zero carbon means not using fossil fuels but also not emitting GHG emissions; if you are in the cement industry, or the chemical industry, there are natural reactions that produce these emissions, which you can do nothing about.?

So we need to bring back the carbon credit market. Trust has been completely destroyed in the past few years by scandals. I don't want to discuss it, but it’s a pity because we need the carbon credit market. So now I think the finance industry and those actors in the sector need to come back with transparent and worthy methodologies, standards, mediation, accurate certification, whatever it needs. To bring back the trust so that my customers can go back on the market and purchase carbon credits to offset residual emissions with confidence while doing everything they can to reduce their carbon footprint internally.