How can businesses reduce their impact on the environment? Having become the benchmark for climate policy in recent years, carbon neutrality has also been embraced by the private sector. A growing number of companies have announced that they want to achieve the “net zero” greenhouse gas emissions objective by 2050. But the method remains unclear. Should we continue to bet on carbon offsetting, while the revelations about the false promises of this practice accumulate? How can we ensure that the trajectory taken by societies respects that necessary to achieve our climate objectives?
“Companies must act to help their customers reduce their emissions,” explains César Dugast, expert at the consulting firm specializing in low-carbon strategy Carbone 4. At the head of the “Net Zero Initiative” project, he pleads for the establishment of an indicator allowing “avoided emissions” to be counted and details the levers companies can use to achieve carbon neutrality.
L’Express: How do you define “avoided emissions”?
César Dugast: This is the difference between the CO₂ emissions of a project, a service, a product sold and what would have been emitted in its absence. It is an indicator which has no physical reality, a sort of mental view which compares an existing situation with an alternative situation. In practice, within companies, we talk about emissions avoided by products and services. For example, a seller of electric vehicles can declare avoided emissions on the grounds that, without him, his customers could have purchased a thermal car. It is therefore possible for a company to quantify its positive impact on its customers by promoting product and service solutions that decarbonize its balance sheet.
This therefore implies a strong element of subjectivity…
Of course, because this theoretical alternative is inherently unverifiable, to the extent that it never takes place. To take the example of the electric car dealership, the customer in question could have purchased not a thermal vehicle, but a bicycle: the reference scenario taken for the calculation of avoided emissions would then be completely false. This is why certain assumptions must be taken into account to guarantee the maximum integrity of this calculation.
At Carbone 4, we therefore sought to build calculation rules for companies, to encourage them to report their avoided emissions according to a standard that is the same for everyone and, thus, as robust and transparent as possible. Grouped under the Net Zero Initiative project, these calculation rules are broken down sector by sector.
There is a risk of relying on a worst-case scenario to justify improvement. How can we guard against this bias?
This is indeed the danger of avoided emissions. If we are not careful or if we do not scrutinize enough what companies do, the risk is that they will always take the worst emission trajectory as a reference scenario. This is why, in the methodologies we apply, we take care to ensure that this is never the case. This is a first safeguard. The second is to prevent companies that emit a lot of greenhouse gases from taking advantage of the emissions avoided to communicate outrageously on a minimal part of their good practices, and obscure the bad ones. We have therefore chosen to require companies to disclose not only the quantity of avoided emissions that this represents for this actor, but also the share of turnover represented by products resulting from avoided emissions. Good communication would therefore be to declare not that we are avoiding 1 million tonnes of CO₂ per year, but that these avoided emissions represent 1% of turnover. Which would amount to saying that 99% of turnover continues to emit greenhouse gases without benefit for the decarbonization of society… This is a way of presenting things which should push companies to put them on the right trajectory, and communicate honestly about their impact.
Is the aim of the approach, precisely, to put companies on a decarbonization trajectory or simply to better account for their carbon impact?
We work on these methods because we believe that a company must go beyond its own decarbonization. A company that manufactures electric bicycles or cars knows full well that it must reduce its carbon footprint. For this, it has numerous benchmarks which help it to do so, in particular objectives based on science-based targets initiative [SBTI], which forces them to position themselves on a decarbonization trajectory aligned with climate scenarios of warming of 1.5°C. We are convinced that, alongside this effort, companies must act to help their customers reduce their emissions. In other words, we see avoided emissions as an indicator for steering the decarbonization of society. We would therefore like a company that produces electric vehicles to ask itself the question of how it can increase its avoided emissions as much as possible. These are new perspectives for considering corporate action in favor of the climate, very different from the question of carbon footprint. This implies, for example, that an electric car manufacturer concentrates on the markets most exposed to thermal vehicles, so that each sale of an electric vehicle maximizes the chances of “wiping out” a thermal vehicle.
We are already asking companies for carbon assessments, climate plans, more and more indicators… Is it necessary to add the calculation of avoided emissions, despite the structural weakness of this concept, that of the reference scenario?
Large companies have the means to spend time calculating their carbon footprint and, if climate departments had the same budgets as marketing or finance departments, the question would not even arise. The notion of avoided emissions certainly comes with this weakness – the reference scenario is by definition unverifiable. But, in reality, this is not a problem when we determine precisely what this indicator should be used for. Its purpose is not to aim for carbon neutrality: a company will never have the right to subtract its avoided emissions from its carbon footprint. On the other hand, if we consider it as a separate indicator, which is not even necessarily intended to be communicated externally and which would rather be used for internal strategic management purposes, it is a good tool to maximize the positive effects of an activity. As long as this does not become a communication artifice, aimed at improving the image of a company, it can make a lot of sense, in order to reorient a company’s portfolio of products and services towards products as low carbon as possible. .
Today we consider shows in a flow logic, with the objective of reducing the flow of greenhouse gases that are released into the atmosphere to limit global warming by achieving carbon neutrality in 2050. But some experts believe that it would be more relevant to talk about a “carbon budget” rather than “neutrality”. What do you think ?
Indeed, we could say that what matters to us is the accumulated quantity of CO₂ allowing us to respect the objective of containing global warming below 1.5°C. Hence the extreme importance of this notion of carbon budget, which, moreover, is very telling for companies, used to managing budgets. It is historically a bit curious that the vision that has emerged is that of managing the flow of emissions, when what determines collective success in terms of the fight against climate change is the management of this budget.
But this assertion must be qualified. Because all flow objectives, such as carbon neutrality, are conditional on a temporality: the carbon neutrality target must be achieved by 2050. In reality, the association of this flow objective coupled with a temporality draws a trajectory which is consistent with a carbon budget. The two notions are therefore interchangeable as long as the flow objectives are respected year after year. In France, the State has fallen behind on its trajectory, and this is reflected in an accumulation of CO₂ in the atmosphere. Unfortunately, it will not be enough to return to the initial trajectory to erase this delay, because it will have to be compensated for by going further. Which is not necessarily anticipated today.
In recent months, some companies have questioned this objective of carbon neutrality, in particular to avoid exposing themselves to legal risks regarding the use of carbon compensation. Could these renunciations multiply?
At Carbone 4, we have long fought against this logic of compensation. The real problem is the question of defining carbon neutrality at the scale of a company which, for a long time, was based on the notion of compensation and purchases of carbon credits. But companies are starting to understand that this is not how we are going to solve the climate problem.
Added to this is an increasingly high legal risk. We have seen a certain number of disputes targeting oil majors or companies which had claimed so-called carbon neutrality by 2050, when their real plan did not hold water. I think that this type of procedure will multiply, because the regulations are becoming more and more firm on the subject: a law in France now regulates the claim of carbon neutrality and the public is less and less fooled on the question.
But is it possible to be neutral without compensation?
It has been our battleground for several years within the Net Zero Initiative to say that being neutral at a company level was absurd. Claiming the neutrality of an entire production process, with hundreds of thousands of people working to provide totally useless products and services, just because we wrote a big check for a reforestation project on the other side of the world, it doesn’t hold up for a single second!
Our alternative is to no longer want to seek to be carbon neutral, because that makes us act on the wrong levers, but to seek a maximum contribution to planetary neutrality. Planetary carbon neutrality is defined by climate science, while corporate neutrality is a concept created from scratch by the carbon market and voluntary offsetting. Our approach is to say to companies: “Act in such a way that your activity is useful for the transition to global carbon neutrality and continues to be relevant in a low-carbon world.” In other words, achieving collective neutrality does not necessarily mean being all “neutral” through carbon offsetting.
Despite everything, it is important to promote carbon sinks, for example by promoting reforestation…
The right strategy for a company must be to tackle these three levers head-on: footprint reduction, avoided emissions and negative emissions – or carbon sequestration. Some have the ability to increase carbon sinks in their value chain. For example, in the luxury, cosmetics, distribution, construction sectors, etc. Many suppliers come from agricultural sectors. There is a huge challenge in supporting these actors, for example, in converting their agricultural methods towards more virtuous practices.
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