- Step 1: Understand the fundamentals of net zero target
- Step 2: Shape short and long-term targets to define your net zero commitment
- Step 3: Turn your targets into action
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Case study: target benchmarking (Life sciences)
Context: A pharmaceuticals company set an ambition to become carbon neutral by 2050, without plan to achieve it. To ensure its target would be competitive with its peers, the company used external benchmarking to inform its targets
Step: Target benchmarking
The first step in benchmarking was to define what characteristics would be compared. The company began by reviewing sustainability reports (e.g. TCFD) from peers known to be leaders in sustainability. A few companies were also selected from related industries to source criteria their immediate industry may have been slow in adopting.
A combination of 32 quantitative and qualitative factors were identified to describe peers’ targets as well as their readiness to pursue the targets. An intensive analysis of 43 peers was then conducted to assess performance across these key dimensions.
Qualitative metrics were rated on a four-point maturity scale from best practice as defined by the performance of standout players, to no action taken. The performance of the company was compared against the average and range of peers’ performance for all 32 factors.
The analysis identified the company was well positioned to have a leading target in procurement Scope 3 emissions because of its sector leading performance in procurement sustainability strategy. Availability of GHG baseline data, conversely was a limiting factor where the company identified the need to improve.
Challenges/lessons learned: A key challenge of this process was identifying the characteristics to include in the analysis. Sharing and gaining sign-off on proposed indicators early from senior leaders took time, although ensured the final output was actionable.
Analysis shows a selection of benchmark indicators where the pharmaceutical company identified under performance relative to its peers with regard to GHG baseline.
A second analysis showed that the company was planning to target that would commit to a more significant reduction in emissions, but over a longer time period.
Case study: impact and influence mapping (OEM)
Context: A commercial vehicle OEM aspires to clarify its emissions target for upstream scope 3 emissions, to both heighten its climate ambitions and deliver the first net zero commercial vehicle to market
Step: Impact and influence mapping
To start this initiative, the team identified the key the upstream Scope 3 emissions that would be involved in producing their product. The Greenhouse Gas Protocol’s 15 types of Scope 3 emissions was used as a framework for developing a data request that covered: bill of materials, logistics, manufacturing, supplier data, relevant emissions factors. From this data, emissions were attributed to different components of the vehicle and found that battery sourcing accounted for over 50% of upstream emissions.
A second analysis showing the fragmentation of the battery supplier market suggested that the company could exhibit influence in this category by negotiating and possibly switching suppliers.
Challenges and lessons learned: Assessment of influence for battery sourcing as well as other high emission areas was initially found to be low. Initially influence was determined by interviewing teams closest to the emission category, and influence was determined to be low. The team then analyzed the supplier market with quantitative emissions data based on publicly available emissions data, and used this fact base for a second round of interviews that determined there was influence in procurement.
Analysis indicating batteries as a high impact area.
Analysis suggesting that battery procurement is an area of influence where the company has the potential to impact change.
Case study: initiative prioritization (chemicals)
Context: a chemicals company considering setting an intensity based near-term emissions target conducted a decarbonization analysis of Scope 3 emissions, that revealed pathway to reduce emissions by around 50% by 2030
Step: Initiative prioritization
Through the lever identification, 12 levers were identified within a high-priority division of their chemical’s business. A total cost of implementation for each lever was calculated, derived from input from expert interviews and industry benchmarks for upfront and recurring costs (e.g. costs of developing new suppliers, adjusting processes to account for changes in feedstock). For certain levers, such as growth in products with higher recycling rates, assumptions were made on revenue growth.
A similar analysis was conducted for quantifying each lever’s abatement potential, and then levers were plotted on the abatement curve. Though accounting for just 30% of emissions, the analysis showed 6 of the 12 levers had positive NPV and were identified as priority focus areas.
Other top management concerns included an assessment of capital intensity and near-term realization potential which were used as an additional screen for prioritizing initiatives.
Challenges and lessons learned: Determining cost of abatement for with scope 3 emissions was challenging because much of needed inputs needed for the analysis required input from suppliers. As a result, close collaboration with procurement teams was a key part of this analysis to understanding what alternative sourcing options were viable. The company also spoke with former experts from upstream suppliers to gain insights for assessing levers.
Case study: Operational considerations and planning (Industrial Supplier)
Context: As part of the industrial supplier’s decarbonization strategy, the company set out to pursue a zero-carbon product portfolio where levers were prioritized and then translated into detailed operational initiatives
Step: Operational considerations and planning
Prioritization of the different levers identified steel sourcing among others as a priority lever. The head of procurement was tasked with developing an actionable plan to that would incorporate emissions into sourcing decisions. The team surveyed suppliers to understand what was available on the market and assessed what types of trade-offs would be required to meet the abatement targets. A transition plan was developed in conjunction with strategic suppliers of how over five years steel sourcing for the company could see a 15% reduction in emissions, with marginal price increase.
For each lever, a similar assessment was conducted that mapped out abatement over time and highlighted other operational considerations. The output was short-term decarbonization roadmap.
Challenges and lessons learned: Teams developing the operational plans struggled initially to identify ways to shift operations. Experts were consulted who had run similar integration of carbon accounting in procurement to help the team chart their negotiating a decarbonization plan with their suppliers.
Case study: Lever identification (Mining)
Context: A global player in specialty minerals identifies downstream scope 3 abatement levers as part of its near-term decarbonization plan reducing emissions by >30% after setting a SBTi target
Step: Lever identification
As part of its SBTi target, the mining company needed to identify levers for emissions from their downstream products (e.g. industry using raw materials). To identify levers for these downstream Scope 3 emissions, the company started with an internal analysis before engaging their customers directly.
For their internal analysis, their earlier emissions mapping had already highlighted glass production as a high emissions process using their products. The company first mapped the glass production value chain, and then employed industry experts to source ideas along the value chain on how modifications to the company’s products could lower emissions.
This process identified 17 levers across six stages of the value chain from. Having developed an initial understanding of the levers for their downstream emissions, the company plans to engage their customers to source more ideas on how emissions in high emitting parts processes could be reduced.
Challenges and lessons learned: The process to identify levers is heavily dependent on finding experts with a good technical understanding of the process and ideas for improvement. To facilitate this process, the team used a value chain framework to better structure and focus experts, and data analysis to help guide experts based on quantitative insights.
Case study: decision making (construction)
Context: A construction material distributor assessed emissions abatement opportunities in parallel with an operational review and decided to initiate a decarbonization strategy as a result. Management heavily prioritized cost in assessing abatement initiatives limiting the number that went forward for implementation
Step: Decision making
The final decision makers for approving the proposed abatement initiatives were the CEO and General Operations Manager. As the key levers from earlier analysis had been identified in ops and procurement, a lead ops manager and head of procurement were tasked with leading the analysis.
Detailed operational plans for each lever were re-prioritized given the more granular analysis and assembled within a consolidated master proposal, with scenarios to show prioritization trade-offs.
The company’s leaders were most likely to approve abatement activities that aligned with broader cost-saving goals.
Challenges and lessons learned: Final approval of a decarbonization roadmap needed to align with the broader strategy of the company. Including analyses that assessed priority interests for management (e.g. cost saving) helped to guide their decisions where decarbonization could be pursued in parallel to other strategic initiatives.