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☁️ "The Big Moment for Carbon Accounting"

The Interchange

Photo by Arnaud Mesureur / Unsplash

Host: Shayle Kann
Guest: Taylor Francis | Co-Founder | Watershed
Category: ☁️ Carbon Reduction

Podcast’s Essential Bites:

[4:45] “I think we are in the early innings of a very fast transition to what I would think of as kind of the climate governance imperative for companies. And the climate governance imperative for companies is that all public companies, all large companies, in the very near future, are going to have to have a set of structures and routines around carbon. And those structures and routines are they're going to measure carbon, they're going to have plans and teams tasked with executing those plans on reducing carbon and they're going to disclose their progress on a regular basis.”

[5:20] “I think that in the last few years, and especially the last few months, you've seen the scale and seriousness of climate governance for companies change. And so on the scale side, I think most big companies, most public companies have some sort of climate programs, some sustainability report, […] they're doing something. And that is quickly going to 100%. I think every large company next year is going to be doing something on climate. And the seriousness side, the honest reality is that most climate programs at most companies today are early on the seriousness curve, early on the impact curve, they're kind of dipping their toe into measurement, they're dipping their toe into reporting, they're just starting to think about what does it actually take to reduce emissions.”

[6:56] “Traditionally call it the last five years, we've had this kind of period of sustainability disclosure going mainstream. And the thing if you're a company in the sustainability disclosure world or in the sustainable disclosure paradigm, you publish a report. And at a minimum, it's a PDF, best case it's something you submit to CDP, […], the Carbon Disclosure Project. It's the kind of central clearinghouse for carbon numbers. They've seen hockey stick growth in the number of companies disclosing the CDP. It's in the 10,000 companies per year range now, which is awesome.”

[7:43] “At the same time, in the last few years, I'd say there have been a few pioneering companies that have been doing path breaking work of going way beyond that. And these have generally been companies like Google, Patagonia, Apple, Facebook, Walmart, companies with a lot of resources or a lot of motivation on climate. And they've been thinking about in a totally different way, which is, what is the set of things we can do that actually reduce our entire emissions asap? And so […] looking forward, I think disclosure is kind of the new floor and we're seeing that kind of more serious climate action, I think will become the standard that every company of a certain scale aspires to relatively quickly.

[9:56] “I'm seeing the emergence of a new kind of climate lead function at companies, where if you're the climate lead at a company, your responsibility is measurement and reporting, target setting and then kind of doing the internal organizational alchemy to make sure the company actually achieves the target. And then the team is actually doing the work often set all across the company. It may be in the supply chain team, or in the product design team or the culinary team […]. But there is a climate lead who is responsible for measurement, reporting and target setting and then they are the kind of internal evangelists who gets everything done. […] The really interesting thing is who that person reports to has changed. […] A lot of companies are now having CFOs be the executive sponsor […] who's driving climate work. And that's great, because there is seriousness and budget and commitment and follow through that comes from initiatives that are driven by a CFO. And we're seeing it kind of transition out of a social impact CSR, PR land of the past. And I think that's a good sign.”

[16:41] “I think there's three pieces of the scaffolding. Part one is accounting. What are the rules on how a company figures out what its carbon footprint is? And here, I think there's actually a really good story around consensus and consistency. Because the GHG Protocol, which the World Resources Institute has been working on for north of a decade, is the gold standard. […] I think for what it's worth the unsolved standards problem on accounting is what data goes in. […] what level of granularity, what level of specificity actually goes in? This is where we're spending a lot of time trying to help companies do carbon accounting at the line item level, every single purchase that a company makes trying to get to granular, actionable emissions factors. What is the specific company I bought that product from? What is the carbon impact of their specific practices? That's where this kind of first first category of the scaffolding really needs to get better fast is to shift from a world of averages, everyone's kind of using different input data and so it's impossible to compare anyone's output numbers to something more actionable granular.”

[21:29] “Level two is around reporting standards. […] This is the layer that I suspect will see some standardization, some consolidation in the future. My hope is that that consolidation pushes […] in two directions. One is towards numbers rather than words, more quantitative, less qualitative. [...] And the other way, I hope that the standards shift is towards holding companies accountable for the targets they've set in the past. […] The same way that stocks get punished if you don't meet your guidance, your company should lose in the rankings if they don't meet the targets that they set out before.

[23:56] “Level [three of] the scaffolding is what type of target are you setting? And here, […] there's […] three things to pay attention to. Act one was carbon neutrality. Five years ago, what was the company committing to? Carbon neutrality. […] The second entrant on the target scene [was] […] what would it take for the world to beat climate change? And then what does that mean for a specific company? […] And then the third entrant is net zero. This is all the buzz in the last two years. And this is the one where I think if you ask five different people what net zero means you'll get five different answers. That's a problem. But net zero is also the best standard and so if we can get everyone to agree on what good net zero looks like, and set that as the bar for climate governance, I think that is going to drive a really good thing.”

[26:36] “Our opinion is that true net zero requires three things. Number one, it requires you to count everything, scope one, scope two, and especially scope three […]. Pillar number two, have a reduction plan that is at least as good as what the Science Based Targets Initiative would ask you to do. Deep reductions in your supply chain in line with what the science demands of your overall sector. And then it adds in step three and this is where there's some debate. Our opinion is that step three, the zero part of net zero is true, durable, permanent carbon removal. That the way you get to zero is by taking carbon out of the atmosphere and sequestering it underground, not paying someone else not to pollute, which is what most offsets […] are.”

[38:42] “The no-brainer thing you should have done yesterday is to make sure that all the facilities you control are powered by clean power. And there's similar to the offsets removal discussion, there's a good and a bad way to do clean power. And so the thing you should have done yesterday, is made sure that you have all of your facilities powered by clean power in a truly additional incremental way. […] The thing you should do tomorrow is to look at your carbon supply chain and do a combination of redesigning your operations and product to be lower carbon and engaging your suppliers to change their practices. And that is really the kind of decarbonisation cascade that needs to happen and for virtually every company with the exception of the big scope one emitters, that's where the action is.”

Rating: ⚡⚡⚡⚡

🎙️ Full Episode: Apple | Spotify
🕰️ 43 min | 🗓️ 08/13/2021
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