Companies assess their climate solutions
Transition, companies and avoided emissions
Companies are increasingly taking climate issues into account in their strategies. Beyond a reduction of their own greenhouse gas emissions, they are positively contributing to energy transition by offering low-carbon solutions, i.e. products, services, projects or investments that enable their customers to reduce their own greenhouse gas emissions.
Assessment of companies’ direct and indirect emissions has developed significantly in recent years. It enables a company to reduce them, and its stakeholders to better understand current status and reduction strategies.
However, these emission balances do not reflect the potential value of the solutions provided by the company. Calculating and communicating the emissions avoided by a solution enables the company to document its contribution to emission reduction.
Why assess avoided emissions?
The avoided emissions first enable a company to position itself as an organisation that contributes positively to the fight against climate change. The company thus produces climate change reports that go beyond its impacts and extend it to its influence on other stakeholders, and especially its customers.
This information then allows investors, shareholders and insurers to better understand how the company addresses the climate change issues. They are paying an increasing amount of attention to this topic and expect economic actors to progressively build plans towards a low-carbon future.
For customers, knowing the emissions avoided by their decisions makes it possible to integrate climate change into their purchasing criteria and their investment decisions.
They are a useful tool for comparing different offerings, provided that the avoided emissions are calculated using similar methods for each.
At country level, avoided emissions can be useful for assessing the contribution of different sectors towards the 2°C target, and for identifying industrial sectors to be developed or created.
Moving towards increased rigour, consistency and transparency
However, assessing and communicating about avoided emissions can be somewhat risky. Without a robust and shared methodology, the results put forward by companies could seem inaccurate and difficult to compare, if not too optimistic.
Therefore, EpE enterprises have sought to develop clear and common guidelines so that they can estimate and communicate, whenever necessary, the emissions avoided by their solutions.
This document aims to provide increased rigour, consistency and transparency on this subject. Firstly, it defines “avoided emissions” as clearly as possible. It then provides recommendations on how to calculate and communicate about them. These recommendations are collectively built by the EpE member companies, based on joint work and good practice exchanges. (EpE – “Enterprises for the Environment”).
These recommendations cover both assessment and communication of avoided emissions. This work is just a start and, the methods will be refined over time based on experience as well as on the reactions of financial markets and customers.