What success at COP27 looks like- mandatory Scope 3.
COP27, the Glastonbury of the climate world as some refer to it, is the annual summit of governments and world leader’s on tackling climate change.
Since the Paris Accord in 2015, most of the world has pledged to do what it can to prevent temperatures from rising by 1.5ºC since pre-industrial levels. As we enter COP27, we have already hit a 1.1ºC rise. Begging the question, what could this summit do to curb the imminent crisis?
This conversation with Eduardo Gómez, Emitwise’s Co-Founder and Chief Design Officer, highlights what we on the ground, working with ambitious companies every day who want to fundamentally reduce their emissions and achieve net zero, feel is needed to get there.
You can watch the interview in full above, or read along below.
The interview
Qu: Are you excited and optimistic about COP27?
You know what? I have mixed emotions. I’m always aware that it’s a big opportunity to protect the planet and a big chance to miss the mark. So I’m probably more nervous and anxious than anything else.
It’s the single biggest conference for international collaboration on climate change. And so, If these fail, what will help promote the change needed or international cooperation? So yes, definitely mixed emotions, excited, nervous and anxious.
Qu: Greta Thunberg hasn’t been alone in saying that COP27 is greenwashing. What are your feelings about this?
I’m not sure I’d use the term greenwashing to describe COP27. In my opinion, I don’t think that’s the right word. So there’s one thing: greenwashing, and the other is whether it’s effective or not.
I think it has been very ineffective since it started decades ago. To keep the world below a 1.5ºC temperature rise which we all set out to do as part of The Paris Accord, we need to reduce our common footprint by 50% by 2030. Yet, we’re on track to reduce emissions by 11%. That leaves us in a world with 3ºC warming.
So when you put that into perspective, even with all the internationally declared goals, it still doesn’t put us on track for what needs to happen. All the COPs before this are supposed to have helped us get there, and they’ve not been able to spur more than commitments to action. So yes, I’m not sure if it’s greenwashing, but definitely ineffective.
But going back to the word ‘greenwashing’. It’s been coming up a lot recently, and rightly so. António Guterres, the Secretary-General of the United Nations, has come out being very vocal about it. He pulled together, just this year, ‘The Expert Group’, believing there needs to be a zero-tolerance approach to net-zero greenwashing.
This resonated with me, particularly within industry, the need to combat phoney net zero pledges that rely entirely on green credits and don’t encapsulate the value chain Scope 3 emissions.
Greenwashing is undoubtedly real, and COP25, 26 and all the others haven’t been able to combat it effectively. But maybe there’s hope for a push in the right direction this year.
Qu: It’s great to see COP27 return to Africa this year. But can you explain why that is so poignant?
It’s poignant for a couple of reasons.
Firstly, climate change has a big inequality problem in that it doesn’t, and won’t, impact every country the same. And unfortunately, those countries, like Africa, that are less able to combat and adapt to climate change are the ones that are feeling it the most. Ironically, they’re the ones that have contributed least towards climate change. Africa is certainly in such a position.
2022 has been a tough year for Africa and hasn’t been reported much on the news. Particularly in the West of Africa, where 4,000 people have died due to droughts and floods. It is one of the world’s most vulnerable continents and regions to climate change.
Secondly, I’ve been reading a lot about the history of climate change recently, and it’s been 50 years since it became a public concern in the 70s. Yet, as the author points out, the biggest tragedy has been our inability to prevent the largest and most thriving new economies from being built with this in mind.
Economies like China and India, which have boomed over the last 50 years, haven’t done so in a renewable and sustainable way. In fact, they’ve significantly contributed to the warming planet. One has to ask, could we have found a different way, one where China was a model for green growth?
And as I bring it back to your question, Africa still has a lot of growth to do. There’s a lot of economic development yet to happen. We have the opportunity to help them do so in a way that isn’t reliant on fossil fuels, where they learn from our mistakes.
Qu: What still needs resolving from COP26 at this summit?
One of the big topics for this year, and a hangover from the last summit, is loss and damage. As global warming continues, there will be impacts we can’t mitigate or easily adapt to.
Societies around the world are going to be significantly affected. As I mentioned earlier, regions like Africa are likely to be affected considerably. The idea is that wealthier countries with more developed economies will contribute to the loss and damage fund to support the countries most impacted by climate change.
It’s a very thorny issue, one that many economically developed countries have shied away from, despite causing a large proportion of global warming.
Researchers estimate that developing countries will face up to $580 billion annually in damages from climate change by 2030. That goes up to £1 trillion annually by 2050. An amount I can’t even fathom!
Currently, wealthy economies contribute about $20 million annually. So we’re falling short, but I think it’s unlikely to be resolved in a couple of weeks of discussion.
The other outstanding failing; is not pricing carbon for its impact on society. The International Monetary Fund (IMF) has been quite vocal about proposing a global price on carbon of around $25-$75 per tonne of carbon. The price scale is sliding up for companies in countries where a higher price is more affordable, i.e. German companies paying more than African ones.
Putting a price on carbon in place is very difficult to achieve and would require a lot of collaboration. But the impact would be significant, incentivising and accelerating the transition to net zero.
Qu: What would success look like in your opinion from COP27? What would be a positive and tangible outcome?
Well, those previous two examples are thorny issues that need resolving. However, if I’m being pragmatic and realistic, making reporting Scope 3 and supply chain emissions mandatory is table stakes. And it’s actually achievable.
Let me just quickly explain this concept of Scope 3. If I am a machinery manufacturing company, I have to buy steel to build that machinery. The emissions that go into making the steel I purchase aren’t directly under my control. I haven’t directly emitted them myself. But as they sit within my supply chain, I am responsible for them.
There’s been a lot of controversy around accounting for Scope 3. A significant number of companies still don’t report their supply chain emissions, where the bulk of their company’s emissions actually are.
Retail companies, for example, sell manufactured goods; over 90% of their total emissions sit within their supply chain. That could be around 70% for heavy manufacturing companies. There is no net zero future if we don’t take into account Scope 3 emissions.
The topic came up for discussion in COP26, and it’s grown into a big conversation throughout the last year, with some regulations mandating their inclusion. The ISSB is one example, which is at the final drafting stage and is using COP27 to talk and learn more about the implications of including Scope 3.
If we don’t walk away from COP27 with alignment around tracking Scope 3, I think we’ve got big problems.
Qu: What advice would you give to a company trying to measure and track Scope 3 emissions?
You know, it’s one of the questions I get asked often: Where do I get started? Some truly advanced companies are already reducing their Scope 3 emissions, but most don’t know how. Sustainability is a journey. It takes making steps in the right direction and building on them.
This doesn’t mean delaying starting. At Emitwise, we typically recommend to our customers who are relatively new to Scope 3 to use a spend-based approach to calculating them. So, if we use my previous example with the manufacturer using steel to start accounting for Scope 3, we just need to understand how much steel you’ve bought. As we get more granular, we can look at quantities, the type of steel, from which supplier etc. But to start with, just looking at the amount you are spending on it gives you an estimate of your Scope 3 emissions.
That’s a good enough place to start identifying carbon hotspots and where you should dig deeper into the data. So, for example, if you realise that 30% of your total carbon footprint is in steel, then it’s a good indicator that you need to increase the accuracy of your understanding of those emissions. Speaking and working with suppliers to collect more granular insights because without that data accuracy, you won’t be able to reduce those emissions or get credit for your work trying to do so.
So yes, Scope 3 is a complex topic, but it can be easy to start. Making it mandatory would be game-changing because with every company doing it, there’s room for the collaboration we need to see across industries and supply chains to reduce emissions.
We can’t see incremental changes to achieve what we need to. We need exponential changes. Making Scope 3 reporting mandatory could be just that.