How do you plan and make decisions for carbon management?

Green House Gas (GHG) emissions from the operations of an organisation has become one of the key sustainability metrics in the modern business parlance, nudging companies to adopt technologies and services to reduce their carbon footprints. Categorisation of sources of emissions from industrial operations in different scopes viz., scope-1 (Direct emission), scope-2 (Indirect emission)and scope-3 (Indirect emission) is quintessential in realistic assessment of carbon footprint. It helps emitters in curating their business strategy to identify the low hanging fruits in the form of short term energy conservation measures and systematically plan their future investments in clean and green energy technologies towards achieving carbon neutrality.

One of the critical aspects in determining baseline is to recognise that there are indirect and direct emissions. Essentially, these are classified as Scope 1,2 and 3 emissions. While scope 1 are those direct emissions, scope 2 and 3 indirect emissions. This implies that the entity has control over the scope 1 emissions, but not on the other two. Scope 2 and 3 can be further distinguished based on the boundary of the organisation. Scope 2 are all indirect emissions that are within the boundary, a good example is the emissions associated with electricity used. Scope 3 considers all indirect emissions outside this boundary, such as the ones associated with procurement or waste disposal.

The old adage "What gets measured, gets managed" rings true when it comes to carbon management. Calculating the baseline GHG emissions for an organization is a crucial step, since it not only helps in identifying hotspots and setting achievable emissions reduction targets but also unveils challenges in data collection. For example, financial institutions might be able to collect Scope 1 and Scope 2 emissions data relatively easily but face a monumental task when trying to account for the emissions arising from their financing, lending, and investing activities.

Setting carbon reduction goals is not just a task; it's a strategic commitment. Aligning with global climate objectives and industry best practices is a proactive stance, demonstrating a genuine dedication to making a difference. It's a pledge to be part of the solution, contributing to a more sustainable and resilient world, while ensuring the long-term viability of your business.

In setting corporate goals for carbon management, careful planning and decision-making are essential. Begin by assessing the current carbon footprint through data collection and analysis. Identify areas with the highest emissions and prioritize them for reduction. Consider industry benchmarks and regulatory requirements when setting realistic and ambitious goals. Develop a comprehensive carbon management strategy that includes measures like energy efficiency, renewable energy adoption, and supply chain optimization. Regularly monitor progress and adjust strategies as needed. Engage stakeholders and communicate efforts to foster collaboration and ensure alignment with corporate objectives.

The targets must also be part of the company's overall decarbonization strategy. Your targets must match your transition efforts to avoid either over or under committing.

Map out activities that are the largest contributors, the complexity of reducing the activity's emissions. Balance the cost of implementing against the impact to find the most balanced pathway towards reading your target.

Implementing carbon reduction actions is the heart of meaningful change. It's not just about setting goals; it's about rolling up your sleeves and taking tangible steps to lower emissions. Prioritizing based on impact and cost-effectiveness ensures efficient progress. These actions, from energy efficiency to behavioral changes, drive sustainability, cut costs, and secure a better future for both your business and the planet. It's not just responsible; it's smart.

To implement climate actions through carbon management, effective decision-making are crucial. Start by assessing the current carbon footprint and identifying areas for improvement. Set specific goals aligned with climate targets and industry standards. Develop a comprehensive carbon management strategy that includes measures like energy efficiency, renewable energy adoption, and carbon offsetting. Prioritize actions based on their potential impact and feasibility. Regularly track progress and adjust strategies as needed. Engage stakeholders, communicate the importance of climate action, and collaborate with partners to maximize impact. Continuously evaluate and innovate to drive ongoing improvements in carbon management efforts.

Monitoring progress is like steering a ship; it ensures you're on the right course. Using clear indicators and efficient tools for data collection and analysis makes it easier to stay on track. It's not just about checking the boxes; it's about staying accountable and focused on achieving carbon reduction goals. It's a key part of responsible business and a vital contribution to a more sustainable future.

Monitoring carbon reduction progress in carbon management involves careful planning and decision-making. Begin by establishing a baseline through data collection and analysis. Set specific, measurable, and time-bound reduction targets aligned with corporate objectives. Implement robust monitoring systems to track emissions, energy usage, and progress towards goals. Regularly review and analyze the data to identify trends, areas of improvement, and potential strategies for further reduction. Make informed decisions based on the findings, adjusting strategies and initiatives as necessary. Engage stakeholders and communicate progress transparently to foster accountability and drive continuous improvement in carbon management efforts.

I must point out that, when it comes to monitoring GHG emissions, we must comply with the UNFCCC and the Kyoto Protocol. The already established inventories reporting frameworks should guide us in the evaluation progress. Moreover, our monitoring work must be subject to a constant measurement of our KPIs according to our internal quality assurance methods.

Climate-related disclosures have been gaining a lot of momentum in the recent past and provide a structured approach for organizations to report on their progress. The Task Force on Climate-Related Financial Disclosures (TCFD) has put forth a framework that focuses on four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Within the Metrics & Targets pillar, the TCFD provides recommendations related to the types of climate-related metrics organizations should be reporting on (including Scope 1, 2, and 3 emissions) as well as descriptions of climate-related targets.

Disclosure and external assurance go hand in hand. Now, why we report? Reporting our emissions is crucial in order to properly compare the historic emissions with the projected ones, fostering credibility to our reduction/mitigation goals. I would advice to refer to the UNFCCC communication requirements for a full report guideline.

In addition to reporting corporate progress in carbon management, considering the Task Force on Climate-Related Financial Disclosures (TCFD) is crucial. Aligning with TCFD guidelines involves disclosing climate-related risks and opportunities. Assess and disclose the financial impacts of these risks, along with strategies for managing them. By incorporating TCFD recommendations, companies enhance transparency and provide valuable information to investors and stakeholders. This enables a better assessment of the company's resilience in a changing climate.

Adding an internal carbon price (ICP) to the investment decisions can accelerate the decarbonization. ICP derived through a customized emission reduction projects and plotting marginal abatement cost curve to prioritise projects to meet the annual reduction goal can be used for reference in all the investment decisions.

In global scale, market-based solutions are only option. It is available in two forms: 1. Pricing on carbon emission - Here, no target is given. Cost of carbon controls emission. EU and UK follow this type of mitigation measures. Present price is around $100 per tonne. 2. CaT system (cap and trade) - In this, emission above target can be sold as carbon credits. China is following this mechanism.