Corporate Decarbonization Report
The international research organization CDP (Carbon Disclosure Project) released a corporate decarbonization report, taking more than 800 European companies as the object to analyze their carbon emission reduction status.
CDP believes that extreme weather events and fluctuations in energy prices are essential reasons why companies need to consider climate change, and reducing greenhouse gas emissions is the basis for sustainable development. According to Intergovernmental Panel on Climate Change (IPCC), in order to achieve the goals of the Paris Agreement, global carbon emissions need to be reduced by 45% by 2030 (compared to 2010).
Corporate Decarbonization Development
CDP analyzed 843 European companies from 17 sectors that publicly disclosed the climate change questionnaire designed by CDP. The combined market capitalization of these companies accounts for 75% to 80% of the market capitalization of all companies in Europe. To show how corporate decarbonization have progressed, CDP backtracked the data to 2019.
The media sector has the fastest growth in carbon reduction disclosures (67%) over a three-year period, and the food sector is also in decarbonization leadership. These sectors have already disclosed information on carbon emissions, including Scope 3, and have taken action on emissions trajectories and decarbonization plans.
The remaining sectors can be divided into two categories, one is medium-maturity manufacturing sectors, and the other is hard-to-abate sectors. Medium-maturity manufacturing sectors require less energy in their operations (100 to 800 MWh per million euros in sales), including biomedicine, manufacturing, clothing, electronics, machinery, etc. Hard-to-abate sectors are difficult to decarbonize require more energy in their operations (1,000 to 4,000 MWh per million euros in sales), including mining, chemical manufacturing, logistics, etc.
From the perspective of all sectors, 77% of enterprises have set carbon emission reduction targets, and 64% of them have used absolute target values. Regarding the setting of absolute emission reduction targets, 47% of enterprises followed the SBTi target rules, and the food sector (79%) and the media sector (63%) made the fastest progress in terms of SBTi absolute emission targets.
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However, companies are still focused on short-term goals, with only 13% of companies setting a carbon emission target for 2030 and 21% of companies setting a carbon emission target for 2050. In terms of net zero goals, 77% of companies have not set net zero goals, 14% have set net zero goals but still need SBTi verification, and 8% have net zero goals that have been reviewed by SBTi.
Scope 1 and Scope 2 Carbon Emissions
CDP found in corporate decarbonization report that over the past three years, companies have reduced Scope 1 and Scope 2 emissions by 14%, while increasing operating income by 8%. This suggests that emission reductions have not come at the expense of development. These emission reductions mainly come from the improvement of energy efficiency and the application of renewable energy. At present, renewable energy has accounted for one-third of the total energy consumption, among which the media sector and the financial sector have the most applications of renewable energy.
In terms of energy efficiency, the financial sector (94%) and the electronics sector (84%) have seen the greatest improvements in energy use efficiency, reducing their Scope 1 and Scope 2 carbon emissions by 27% and 13%.
Scope 3 Carbon Emissions
Scope 3 emissions of an enterprise depend on many stakeholders such as suppliers, consumers, employees, etc. How to comprehensively and accurately measure these data is a vital challenge. Scope 3 accounts for 92% of all carbon emissions, and it accounts for more than 80% in 14 of the 17 sectors.
In the specific classification of Scope 3 projects, “purchase of goods and services” and “use of products” accounted for 74%, but the coverage of carbon emission reduction measures by enterprises was only 37%. Scope 3 occupies an absolute position in carbon emissions. How to reduce them is an essential challenge in corporate decarbonization.
Reference:
Corporate Decarbonization Report: A Race Against Time for Corporate Decarbonization
