June 10, 2021
A Conversation with Smart Energy Decisions’ John Failla
The scale of transformation needed to meet ambitious Net Zero goals is extensive. Organizations must address the technical transformation, which includes solutions for e-mobility, energy efficiency, renewable energy, etc. But organizations must also address the human and organizational systems in a way that creates alignment and ownership. The scale of these challenges requires everyone from senior leadership, to the CFO to IT.
In this conversation with Smart Energy Decisions’ founder John Failla and ENGIE Impact’s expert speak to some of the foundational components of what Net Zero is all about, and how to go after your organization’s goals strategically. Discussion topics include:
Transcript has been edited for clarity.
John Failla: With most of the commitments now being made focusing on Net Zero, how should attendees be thinking about getting there? What are the different pathways to Net Zero and what are the key levers that you could pull to accomplish this very ambitious goal?
ENGIE Impact: There are a lot of companies, especially in the last 12 months, that have started to make those commitments. I would say the distinguishing feature of all of those is that it is a science-based target and a long-term goal. Increasingly, it's about hitting 1.5 degrees, which means eliminating and not emitting any emissions by the year 2050. Many companies are even shifting that date to around 2040, which is incredibly aggressive and ambitious. This requires bailing out more water than their fair share. The definition that is starting to emerge is the one set by the science-based target initiative and is playing a pivotal role in the conversation of how we define these commitments. In many ways, they set the standards around what qualifies as a science-based goal, providing guidance as well as validation around it.
The other distinguishing feature of these commitments is that they increasingly include scope 3 emissions. 90% of companies that have committed to science-based targets through SBTi have committed to scope 3 targets, which is different from Scope 1 and 2.
Scope 1 and 2 emissions are under their direct control, either through fuel that they burn in their vehicles, natural gas, or the electricity that they purchase. Scope 1 and 2 are really about getting to true zero, whereas scope 3 is more difficult. Things like business travel and purchased goods and services, where there is not a high degree of control for most companies, fall under scope 3. The guidance there is about setting targets on two-thirds of your scope 3 emissions and individual targets for each one. For instance, with business travel, my organization is jam-packed and I help them think through what sort of programming goals should be set around business travel. We are primarily a professional services company and then management consulting services and rely on airplanes to go visit clients but we still consider what targets to set that are reasonable and don’t limit the way that we can grow. Additionally, we are asking how do we empower people in the organization to make decisions that reduce carbon, both by having visibility as well as the ability to track and create incentives.
There is a lot of innovation that's happening around how to think about scope 3 which is really encouraging.
Net Zero is that package that includes science-based targets as well as scope 3 emissions. One more thing on carbon negative, Microsoft has recently planted a flag in the conversation with their goal in May that focuses on removing carbon from the atmosphere, not just getting to zero emissions. They've taken it one step further to removing emissions throughout the history of Microsoft from its inception in 1975, Which opens up the next frontier of ambition and setting carbon goals.