Summary
As the leader of a sustainability-focused manufacturing company, you’ve made conscious choices, like powering your factories with biogas from a local farm and opting for locally-produced, recycled, and organic cotton sweaters as employee Christmas gifts. However, the New Year’s wishes from your suppliers brought unwelcome news of price hikes to align with global inflation.
Yet, upon scrutinizing your carbon footprint, a puzzling trend emerges. Despite your efforts to curb emissions, they’re on the rise.
Why is that? It’s likely tied to the use of monetary emission factors in gauging your carbon impact.
If your calculations heavily rely on these monetary factors, your carbon footprint will increase, whether due to a deliberate decision or a period of inflation like the one we’re experiencing. This might discourage those with the best intentions of aligning with global carbon neutrality.
Carbon Border Adjustment Mechanism (CBAM)
The recent agreement on the Carbon Border Adjustment Mechanism (CBAM) by EU negotiators marks a significant step in taxing imports of high-carbon products from countries lacking adequate greenhouse gas pricing mechanisms.
Carbon Price Projections
To mitigate dependence on external factors such as inflation, use average emission factors available in public or private databases like ADEME or Ecoinvent. These factors represent the average amount of greenhouse gases throughout the life cycle of a product or service, offering a more accurate carbon account, such as the tCO2e generated by purchasing 200 tons of cotton for your staff’s Christmas sweaters. The next step towards a more precise footprint involves using actual emission factors derived from your company’s basic data. These include details about your company’s activities, such as the liters of gasoline consumed to transport a specific product, the weight of a load, or the distance traveled. This method breaks down your carbon footprint at each stage, pinpointing emission hotspots and highlighting areas where costs, resource use, and overall impact can be optimized based on the reality of your purchases.
Actual emission factors are essential for any company aiming to gain a clear understanding of the main sources of emissions and accurately track emission reductions. This is how companies can effectively reduce their impact.
Expenditure-based calculations work for a quick initial estimate. However, as you move into action, transitioning to the use of average emission factors becomes necessary. For critical categories such as goods or services, the ultimate goal should be to have actual and customized emission factors.
Urgency of Immediate Action
With the economic weight of carbon prices looming large, businesses are urged to anticipate and act promptly. Renaud Bettin, Vice President of Vermena responsible for climate action, emphasizes the need for companies to move beyond mere CO2 reduction numbers. Integrating an internal carbon price becomes crucial for steering activities, allowing businesses to invest in decarbonization and support impactful climate projects.
In conclusion, this article underscores the importance of businesses embracing a proactive approach to carbon pricing, aligning strategies with the evolving regulatory landscape to ensure financial resilience and environmental sustainability.
