Month: September 2023

Our latest Horizons: Alternative Proteins report reveals significant growth in the industry, with cultivated meat and fermentation-derived proteins producers making the most notable leaps. However, manufacturers are still facing obstacles around scale-up, sustainability, and regulatory approvals.

I find myself particularly impressed by today’s manufacturers of alternative proteins. They’re relatively new to the scene, they’re competing in an unproven marketplace, and they face regulatory and commercial challenges that the traditional food and beverage industry can’t necessarily solve for them. Despite all of this, they’re persisting—thriving, even. The 2023 Horizons: Alternative Proteins report, based on detailed survey responses from more than 150 manufacturers in operation today, is proof.

When we last surveyed this industry in 2021, we found both optimism and uncertainty among manufacturers, often in equal measure. Test kitchens were generating innovative products and processes, but the challenges of commercial scale-up were frustrating even for the most well-established operators.

Two years later, our updated survey charts a promising evolution:

More than 70% of survey respondents are manufacturing at commercial scale, up from 65% in 2021—a signal that manufacturers are solving at least some of their scalability challenges.66% of respondents have seen an increase in sales volume since 2021—a signal that consumer demand for alternative proteins is healthy and growing.Today’s manufacturers plan to spend nearly 50% less on capital projects than they did in 2021—a signal that manufacturers are more strategic with their budgets, investing surgically where capital is needed and benefiting from their early investments in flexible, future-proof facilities designed to sustain long-term growth.

What does “alternative protein” mean?

The term “alternative proteins” refers to meats and dairy products that may be plant-based or produced through cell cultivation or fermentation.

More interesting is what hasn’t changed. Average company sizes remain largely consistent between 2021 and 2023; then as now, only about a third of respondents have more than 1,000 employees. This could indicate a healthy pipeline of new and pioneering entrants, but it’s also a signal of persistent challenges—consider the large-scale layoffs, high-profile recalls, and bleak outlooks from market analysts that have recently plagued this industry. It does not appear the industry has seen large-scale consolidation, as some had predicted. How can these manufacturers maintain the resilience and ingenuity that got them this far in the face of such formidable challenges? In this report, we will attempt to answer questions like this one by examining our survey data through a series of lenses, including:

Cultivated Meat

Our survey responses highlight the maturation of the cultivated meat industry. Price parity is coming soon, at least for premium or value-added products, and most manufacturers are hopeful that their products will be on the market within two years. But to achieve this—while making a profit—production levels must rise and costs must fall.

Join Derek Ung, Sebastian Bohn, and Krizia Diaz as they unpack this challenge and deliver good news: There has been an exponential decrease in the cost of culture media, by far the most expensive material two years ago, and production targets have risen dramatically since our last report. Momentum is certainly in the right direction, and if the challenges identified by our trio of experts are addressed, the outlook for a sustainable and profitable future is good.

Fermentation Derived Proteins

A surprise awaited Sebastian Bohn, Brendan Kress, and Tony Moses when they examined the survey data from this segment. They had expected fermentation-derived proteins manufacturers to overtake cultivated meat manufacturers in terms of go-to-market readiness—what they didn’t expect was to see these manufacturers move ahead of all other markets and emerge as the most commercially advanced segment in our survey.

However, the path ahead may not be smooth. Our survey data reveals a few challenges brewing that will soon boil over. For example, respondents in this segment are hoping that a sustainability-focused promise will justify a premium price, despite acknowledging, in a different survey question, that sustainability isn’t driving consumers’ buying behavior in a significant way. To continue their successful trajectory, manufacturers in this segment will need to address these problematic areas—and soon.

Plant- and Mycelium-based Meat

Given the grim headlines hounding plant-based protein manufacturers, our experts Jason Tucker and Tony Moses wondered if the survey results would uncover a slump in growth. However, they discovered a surprisingly robust pipeline of new entrants, and an interesting pivot in terms of this segment’s core identity: Instead of nobly setting forth to save the planet, today’s plant- and mycelium-based manufacturers have developed a savvy business model that’s hardly discernable from the mature commercial strategies guiding today’s traditional food and beverage industry.

How can manufacturers in this segment continue this trend toward resilient business practices and reliable growth? In this section, Tucker and Moses dive into the survey data to propose an answer.

Plant-based Dairy

A subtle but remarkable shift is underway in the plant-based dairy segment. Two years ago, our survey respondents indicated a keen focus on upstream innovation as they searched for the right ingredients and formulations to offset their material costs while perfecting their core offering. As our experts Pablo Coronel and Jonathan Clark note, today’s producers have the same appetite for innovation, but it’s playing out further downstream.

Packaging upgrades hover near the top of manufacturers’ capital investment wish list. As well, diverse formats like cheese, sour cream, and yogurt are catching up to—and in some cases surpassing— fluid milk alternatives in the overall product pipeline. To keep this momentum going, our experts advise an optimistic but measured approach to future development—more haste, less speed.

Sustainability

Most alternative protein manufacturers indicate that they have sustainability budgets, while fewer have goals and concrete plans to put those budgets to work. In this section of our report, experts Maya DeHart, Aaron Kilstofte, and Jonathan Dressler go deep into the survey data to understand and contextualize this phenomenon, and to offer advice for companies trying to access the rewards of good environmental stewardship from both a brand positioning perspective and in terms of ROI and optimized manufacturing.

Their key advice? Get started now and develop a strategy that will steer you away from a troubling pattern noted in the survey data—that is, a growing disconnect between capital expense planning and the complexity of making meaningful changes at a facility level to achieve sustainability goals.

Regulations

As companies mature from start-up to production scale, the importance of food safety and hygiene is clearly 
paramount. Our respondents indicate an improved understanding of the regulations that govern them and have dedicated significant resources to quality assurance, compliance, operational procedures, 
and facility upgrades.

How does this evolution in regulatory maturity play out across companies of different sizes? Join experts Dennis Collins and Pablo Coronel as they offer their perspectives on what companies at both ends of the CapEx spectrum are doing to implement a strong regulatory strategy—and, more importantly, to earn and maintain the trust of consumers.

Alternative protein manufacturers need a strong commercial strategy

To operate successfully at a commercial scale, manufacturers of alternative proteins need a strategy that integrates both consumer expectations and the realities of operating a large-scale food and beverage plant.

This is, perhaps, our biggest takeaway from the 2023 survey: to shift from a fledgling idea to a cash-positive manufacturing company, today’s manufacturers of alternative proteins are pushing themselves beyond the single-note mission that may have galvanized them initially (“Let’s change the world!”) and toward a savvier, more nuanced commercial strategy (“Let’s generate a sustainable profit by selling cost-effective products!”). This shift may not inspire powerful feelings in the heart, but it does generate a powerful balance sheet. It’s this industry’s best hope for continued progress in an increasingly wild world.

To access more insights on the life sciences manufacturing industry, download the report below.

Horizons 2023: Alternative Proteins

Northern Trust announced today it has released its latest Sustainability Report, highlighting efforts to bolster inclusion in the workplace, engage in philanthropic and social impact investing, and minimize the environmental impact of business operations.

“Our approach to sustainability is grounded in our enduring principles of service, expertise, and integrity,” said Kimberly Evans, Head of Corporate Sustainability, Inclusion and Social Impact. “While our stakeholders’ expectations and demands vary by topic and timing, it is our responsibility to navigate the ambiguity in a way that honors our commitment to people, the planet and prosperity for current and future generations.”
 
Highlights from the 2022 Sustainability Report include:

Diversity, Equity and Inclusion: Northern Trust is committed to advancing an inclusive culture in which all individuals are valued, respected, supported and can fully participate in and contribute to the firm’s success. Examples of Northern Trust efforts include a Women’s Leadership Development Forum in which more than 2,100 women have enrolled.
Community Development: Northern Trust’s community development portfolio exceeded $3.9 billion as of the end of 2022. Investment priorities include affordable housing; community financial entities that focus on unbanked, underbanked and underserved communities, including support of micro-lending programs; education and social services; and job creation.
Corporate Philanthropy: In 2022, Northern Trust donated more than $19 million to non-profit groups in support of a philanthropic strategy that focuses on four areas of fundamental impact to broaden opportunities and improve financial futures: educational excellence, food security, accessible health care and affordable housing. Over the past decade, Northern Trust has donated more than $170 million to charities across the globe.
Materiality Assessment: Northern Trust conducted an assessment in 2022 to evaluate post-pandemic shifts relative to environmental, social and governance issues from our stakeholders’ perspectives, the competitive landscape, and needs of the communities in which we work and live. Our expertise is aided by participation with leading frameworks, in industry groups and in stakeholder engagements. This report outlines what we learned and how we’re developing plans to address the top priorities. The results will be used to establish our key performance indicators for the next several years.
Sustainable Operations: A fundamental principle of sustainability is to meet the needs of the present generation without compromising the abilities of future generations to meet their own needs. We align our business to this concept by integrating environmental considerations into company-wide processes, continually improving business practices and delivering tangible, positive results related to the environment. Northern Trust managed its business operations to achieve carbon neutrality for the first time in 2022.

As of Dec. 31, 2022, Northern Trust reduced our energy consumption by more than 30 percent compared to a 2019 baseline. Additionally, Northern Trust in 2022 worked with Climate Vault to reduce carbon emissions through a two-step approach. Climate Vault first purchases and “vaults” carbon emission allowances from government-regulated compliance markets. Climate Vault will then leverage the value of the emission allowances to fund an equivalent or greater amount of carbon removals from new carbon dioxide removal (CDR) technologies through a bi-annual grant process. Additional information about our GHG emissions can be found in our Statement of GHG Emissions.

Media Contact: 
Doug Holt
312-557-1571
Doug_Holt@ntrs.com

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There’s no question that data centers have complex operations that include numerous hazardous activities and spaces. These operations are further complicated by the nature of data center design and the myriad of stakeholders that play unique roles in daily operations, securing, upgrading, and maintaining. These data centers hold the equipment and processes upon which global businesses, educational systems, and the general public rely.

Antea Group co-hosted our first EHSxTech event specifically focused on data center EHS challenges with STACK Infrastructure in Virginia where we were joined by Data Center EHS professionals from more than 13 technology companies representing hyperscalers, colocation providers, and enterprise owner/operators.

The lively conversations, presentations, and panel discussion focused on EHS challenges specific to data centers including keeping employees, contractors, sub-contractors, vendors, and visitors safe throughout initial construction, operations, retrofit, and upgrade phases of the data center lifecycle. Some of the key discussion points included the challenges of supplier and vendor management, the utilization of EHS Management Systems, and overcoming biases in incident investigation.

Tying together the various discussions throughout the event was one common goal: navigating complex EHS challenges in data centers to create a safer, healthier working environment for all.

Vendor Management and Contractor Safety 

We kicked off the event with a panel discussion on the challenges of multi-employer worksites and a group discussion on vendor and contractor management.

In any multi-employer worksite, you run into complex EHS challenges. As an EHS professional, communication and early involvement were identified as two key components to successfully manage these worksites. Ideally, EHS engagement should begin during initial contracting efforts. Setting clear expectations for employee safety should occur early in the business relationship and is key for avoiding conflict and confusion as more and more stakeholders engage at a given facility.

A comprehensive EHS supplier and vendor management program was also identified as a crucial element in ensuring safety over the data center operations lifecycle. Understanding a contractor or partner’s safety history, processes, and procedures allows for the identification of potentially unsafe practices prior to vendor onboarding and project initiation, affording an opportunity for proactive risk mitigation.

Discussions with attendees at the event revealed a wide range of contractor management maturity levels. Some companies described highly mature vetting processes for contractors, including dedicated teams for contractor vetting, while others leveraged small internal teams or external vendors to evaluate contractor programs, procedures, and past performance. A commonly overlooked group of contractors is those providing low-risk services such as vending and janitorial support. Given the complex nature of data centers, the inclusion of these vendors in the contractor safety program is seen as a best practice that everyone should consider.

Another major challenge involves vetting and auditing second and third-tier subcontractors where visibility of past performance metrics is piecemeal, at best. To tackle this issue, participants discussed the importance of continually updating and enforcing contractual language to ensure general contractors maintain oversight of these subs, thereby closing any potential contractual loopholes or gaps in communication during the introduction of new subcontractors onsite.

These multifaceted challenges underscore the complexity of supplier and vendor management within data centers, requiring nuanced strategies and continuous improvement efforts.

In addition to vetting contractors, EHS leaders are responsible for overall contractor safety. Ensuring the safety of contractors is essential to prevent accidents, protect the data center’s operations, and comply with legal and regulatory requirements. Here are the priority areas of focus and best practices the attendees discussed:

Prequalification of contractors: Establish rigorous prequalification criteria for contractors, including maintaining and providing safety records, certifications, and training.Contractor Orientation and Training: Provide comprehensive safety orientation for all contractors before they start working at a data center and ensure they receive training on data center-specific safety procedures, emergency protocols, and facility rules. It is crucial that all contractors understand that any onsite personnel within their subcontractor network are required to receive this orientation and training prior to beginning work. One practice to “catch everyone”, prior to beginning work was tying facility access directly to completing the onboarding training.Safety Equipment and Personal Protective Gear: Ensure contractors are provided with necessary safety equipment and personal protective (PPE) gear, and ensure they are trained in their proper use. PPE should be provided by the primary employer. Also, verify regular inspections and maintenance of safety equipment is completedDocumentation and Record-Keeping: Maintain accurate records of contractor safety training, certifications, incident reports, and safety compliance. Ensure all documentation is up to date, and easily accessible.

Following our discussion on Contractor Management, the EHSxTech group viewed a virtual presentation on incident investigation best practices and prevention of cognitive bias.

Incident Investigation: Preventing Cognitive Bias 

Incident investigation is a complex process that requires careful consideration of cognitive biases that can influence outcomes. Cognitive biases are often automatic and unconscious, shaping how individuals select and process information. Jennifer Serne-Allen, Safety Professor at Central Washington University and Accident Investigation and Human Factors Researcher shares Hollnagel’s concept of “What you look for is what you find”. This can lead to shortcuts that simplify decision-making but may also result in biases like the anchoring effect, confirmation bias, and fundamental attribution error.

When conducting incident investigations, it’s important to keep in mind the potential biases in each investigation method. Below are some examples of common ways investigation methods can be biased:

Checklists are a tool often used in incident investigations which, when worded in a certain way and used under pressure, can inadvertently introduce biases.Eyewitness testimony is vulnerable to memory distortions and suggestions during interviews.The “5 Whys” or the “5 Blames” approach can introduce biases and oversimplify causal chains of events.Root Cause Analysis (RCA) can be influenced by initial hypotheses.

To mitigate these biases, training on cognitive bias awareness is essential. It’s crucial to recognize that we often notice bias in others more than in ourselves. “One strategy to combat bias is to list out reasons why your original hypothesis might be wrong,” suggested Serne-Allen. Another approach to consider is instead of asking “Why,” investigators can focus on asking “How” to understand the conditions that allowed an event to occur. Using diverse investigation teams can help uncover a more comprehensive perspective on incidents. These strategies can enhance the quality and objectivity of incident investigations in data centers and ultimately improve health and safety practices.

To wrap up the event, attendees discussed EHS Management Systems and the ever-present challenge of lone work in data centers.

Utilizing EHS Management Systems 

At the beginning of our event, it became evident that a majority of attendees already had some form of Environmental, Health, and Safety Management Systems (EHSMS) in place, but many of these systems were not necessarily aligned with ISO standards.

Several participants explained that they felt the need to establish a solid safety foundation before pursuing ISO alignment, emphasizing the importance of success in building that foundation or gradually moving towards ISO compliance. Notably, the lack of ISO alignment was cited as a challenge for those seeking contracts with public sector customers.

Many participants mentioned transitioning away from tracking incident rates and instead focusing on internal safety assessments and incident reporting to provide a more comprehensive view of their safety processes and metrics, particularly for customers who specifically request incident data. While some companies, driven by European clients, were pursuing ISO 14001 certification, the consensus was that unless there was a customer-driven need, many participants were concentrating on establishing strong safety management foundations that could align with ISO standards in the future. This pragmatic approach highlights the evolving nature of EHSMS implementation in data centers.

Check out our webinar on implementing EHS Management Systems here. 

The On-Going Challenge of Lone Work in Data Centers 

Lone work is very common within data centers and continues to be an important topic of discussion due to the 24×7 nature of data center operations. However, even though it is a standard practice across the industry lone work at data centers still comes with risks. Without a partner or someone to supervise them, a lone worker has to be extra careful and hyper aware to stay safe. Data centers can feel like a low-risk environment, however, they pose life-threatening hazards such as falls, electric shock, medical emergencies, and more. All of these hazards become even concerning when there’s no one else around to respond, in the event of a fall or medical emergency. That’s why it’s so important to identify lone worker risks and to create a detailed lone worker policy.

Wearable technology is one option in the journey to help keep lone workers safer. For example, devices that monitor a worker’s vital signs such as smart helmets, safety vests, and smartwatches, can help in the event of a medical emergency. Some of these devices also offer tracking information, so an EHS professional can tell exactly where a lone worker is in a data center, where they’re moving to, and if something is wrong.

Several participants shared how they have made efforts to adopt wearable technologies and software solutions, however, they continue running into barriers and obstacles that have prevented the adoption of a solution across all sites. These barriers have included security concerns, impracticability of poor cellular/internet connectivity within certain areas of the data centers, high costs, incompatibility with existing software and poor employee adoption.

Learn more about lone work in data centers here.

Conclusion

As demand for data centers continues to grow, developing robust EHS programs will only become more important. Each stage of the data center lifecycle, from new builds, expansions, retrofits and upgrades to ongoing operations, presents unique challenges for EHS professionals. We’re grateful for our EHSxTech community where EHS professionals are able to come together to address these challenges by collaborating, brainstorming and working together to create a safer, healthier, more sustainable approach to data center operations. Once again, a huge thank you to all our participants and to our host, STACK Infrastructure!

Interested in joining our next EHSxTech? Learn more here.

About Antea Group

Antea®Group is an environment, health, safety, and sustainability consulting firm. By combining strategic thinking with technical expertise, we do more than effectively solve client challenges; we deliver sustainable results for a better future. We work in partnership with and advise many of the world’s most sustainable companies to address ESG-business challenges in a way that fits their pace and unique objectives. Our consultants equip organizations to better understand threats, capture opportunities and find their position of strength. Lastly, we maintain a global perspective on ESG issues through not only our work with multinational clients, but also through our sister organizations in Europe, Asia, and Latin America and as a founding member of the Inogen Alliance. Learn more at us.anteagroup.com. 

Reporting on GHG emissions is becoming a must for many corporations. In the EU, this is required by the Corporate Sustainability Reporting Directive. In the US, GHG reporting is on the agenda of the Security and Exchange Commission, and the IFRS standard for climate-related disclosures has now been launched.

While the space is developing rapidly, there are pitfalls to watch out for. Here we will discuss these pitfalls and offer suggestions on how to avoid them – based on 20+ years of GHG accounting experience in the Inogen Alliance.

GHG Emissions Sources

The rules for Corporate GHG accounting are formalized by the GHG Protocol – this is the industry standard. According to the GHG Protocol, there are three types of emissions:

Scope 1 are the direct emissions from sources controlled or owned by the company. This includes stationary and mobile combustion, emissions due to physical or chemical releases (flaring, certain chemical reactions, emissions from animal rearing and fertilizer use), as well as use of refrigerants.Scope 2 are emissions from the generation of purchased electricity, heating, or cooling.Scope 3 are all other indirect emissions in the value chain. This includes 15 separate emission categories. According to CDP, the most significant sources are typically purchasing of goods and services in the supply chain, as well as the use of the company’s sold products. These make up around 90% of Scope 3 emissions on average.

Typically, Scope 1 and 2 emissions are much easier to calculate than Scope 3. So where do companies get these wrong? Let’s find out.

Corporate GHG Data Management is Still Very Poor

A recent scientific paper showed that in the majority of cases, some of the world’s largest corporations with a long-standing history of GHG reporting do not accurately disclose even Scope 1 emissions. Their emission calculated for each fuel source do not add up to the reported total. This is concerning since Scope 1 emissions are the easiest to calculate, and making sure the total adds up is achievable in basic spreadsheet software. What is more, if some of the world’s largest companies can’t handle even the easiest GHG reporting, then what should we expect from smaller companies that will also have to disclose? Here is out advice for making sure you get the data right:

You can’t just outsource

Organizing the company’s emissions data can be a challenge for companies. It’s tempting to just throw money at the problem and hire a consultant. Consultants can be invaluable to help you identify the right data sources in your company. But you know your business best – an external consultant will not be able to navigate the intricacies of your corporate structure without your help.

You need a good internal project manager, guided by an experienced advisor who understands your business and can help you identify and collect the necessary data. Your internal project manager should have the final responsibility of checking your data before reporting. Consider also formalizing this role by designating at least a dedicated Sustainability Manager. Otherwise, you risk silly errors like your emissions not adding up. Low quality reporting ultimately means extra audit costs and multi-year restatements, plus wasting internal staff time to fix issues that should have been easy to avoid in the first place.

It’s about data, not software

When it comes to GHG accounting, it’s tempting to try to automate. More and more GHG and sustainability reporting software tools are popping up. Some are also used by us in the INOGEN Environment Alliance. However, overly relying on software is not productive. As the example above shows, with bad data, you get bad results. Focus on data first, and software solutions second.

We Are Still in the Wild West of GHG Calculations and Audits

Another study by King’s Business School showed that many consultants calculate Scope 1 and 2 emissions with methodologies that are simply not allowed under the GHG Protocol. Yet somehow these calculations manage to pass audit and make their way onto public reporting platforms such as CDP. This is quite concerning – as mentioned above, Scope 1 and 2 emissions are much easier to calculate than Scope 3. The GHG Protocol – the corporate standard for emissions accounting – is also quite clear on what methods are allowed in what circumstances – auditors should be able to easily spot any errors.

What is more, the study shows that with different calculation methods, you can get widely different results for the same type of emissions. This is even more concerning since investors rely on accurate data to prioritize investments. If emissions reporting can be lowballed by cherry-picking methods, then the investment community is in big trouble.

The quality of solutions providers is evidently varied, and the market practice is not yet fully established. Here are some things you can do to make sure your reporting is up to par:

If outsourcing, choose the right advisor

External advisors are invaluable for helping you quickly get up to speed with GHG calculation methods. If you are working with an external advisor, make sure to pick one that is experienced not just in GHG calculations, but also in sectors and companies of similar size as yours. After all, if your advisor can’t navigate the intricacies of your corporate structure, the applicable methodologies, and the sector-specific data that is required to calculate emissions, can they really guarantee that they will provide you with accurate and actionable results? We don’t think so and neither should you.

Don’t treat audits as a formality

Let’s face it – most companies just don’t have their processes set up for annual GHG accounting. So, the data quality is not always as good as for financial reporting, and errors do occur. Your auditor can and should help you spot any major errors so that you can improve your accounting. Then you should be able to avoid non-compliance, plus also silly errors like your emissions not adding up. But not all auditors are created equal – make sure to pick a provider that has experience in GHG calculations. After all, you would not hire a GHG specialist for your financial report, nor should you hire a non-specialist for your GHG account. Otherwise, you risk your auditors missing obvious errors.

When calculating, always err on the side of caution

Unfortunately, the GHG Protocol does not formally mandate what methods companies should use. So cherry-picking methodologies that calculate the lowest amount of emissions is not strictly non-compliant, at least when considering GHG standards. However, it’s still dishonest, and intentionally misleading investors is still a crime. So, if there are multiple ways to calculate the same type of emissions (such as different sources of emissions factors), always choose the most conservative one. In ESG, the precautionary principle applies – in this case not just because of the planet, but also for your own peace of mind.

Scope 3 is Where Companies Are Least Prepared

Scope 1 and 2 emissions are usually not difficult to calculate. The difficulty is usually in Scope 3, which is typically also the largest source of emission in most companies. This is confirmed by a recent report by CDP for EU companies – Scope 3 is by far the most important for Science-Based Targets for GHG reduction, yet companies are also the least prepared.

Here are some tips for setting up and achieving a Scope 3 emissions target:

For Scope 3 targets, you have two options:

An absolute emissions reduction target – you have up to 10 years to achieve this.A supplier engagement target – you don’t commit to reducing emissions, just to engaging 2/3 of your suppliers for setting their own reduction targets. You have up to 5 years to achieve this.

Scope 3 can be scary, no doubt. Companies are worried that they can’t guarantee that their suppliers will reduce their emissions, so then they can’t guarantee that they will achieve an absolute reduction target. So, they opt for supplier engagement – you don’t have to claim emission reductions, just that you have “engaged” your suppliers. Don’t think that a supplier engagement target is easier than absolute reduction

Seems easier? Not if you consider the implications. If you want to reduce supply chain emissions, you need to engage your suppliers anyway – that is how you get the data you need to track the target! So instead of a supplier engagement target, consider absolute reduction – then you have 10 years to engage your suppliers and not five.

Engage internally and focus on traceability

As noted in the beginning of this article, purchase of goods and services and use of the company’s products are the most significant emissions sources in most cases.

Emissions from the use of your products can be direct – such as the energy consumption of an appliance. But some use phase emissions are also indirect – e.g. if you want to use shampoo for your shower, you also need some hot water – the emissions for heating up the water should be accounted for. Calculating use phase emissions should be achievable if you dedicate internal staff – after all, you know your products best, and have access to the best data about the usage specs for your products. An external advisor can help you identify the right level of detail for such calculations so that you can make the process efficient.

Emissions from purchased goods and services in the supply chain is where most companies stumble. Often you only know who your direct supplier is, but not where the product is manufactured, even more so when considering complex products with intricate supply chains. So, the GHG Protocol allows workarounds in the form of average data, typically from LCA databases such as Ecoinvent and GaBi, or spend-based average data from input-output models such as USEEIO, EORA and EXIOBASE. This is good enough as a start, but with average data you only get average results – you don’t know if the supplier’s emissions are improving. So, your goal should always be traceable data – only then can you track your target. Working with your procurement team is key – an external advisor can help you in setting up a supplier traceability and engagement process.

You are not alone in engaging your suppliers

According to the latest progress report of the Science-Based Targets initiative (SBTi), 1/3 of global market cap is covered by GHG emission reduction targets. This means that if your organization is setting Scope 3 reduction targets, you are likely to find yourself in the company of your peers. So, chances are that some of your suppliers may already have emission reduction targets and may already be reporting data to platforms such as CDP. An external advisor should be able to easily help you find and use this data for improving your GHG inventory.

What is more, if your peers already have their own targets, then there is room to put joint pressure on your suppliers. Make sure to engage with relevant industry initiatives – climate change is a shared challenge, so solving it will also require collaboration.

In Closing

GHG accounting is becoming a must and it can be challenging if you are just starting out. With this advice, you can hit the ground running and avoid some common pitfalls. Keep in mind that like annual financial reporting, GHG reporting is also here to stay, so don’t let “perfect” be the enemy of “good” – start out simple and build up what you need as you go along. An experienced advisor can help you set up a long-term GHG accounting roadmap so that you can confidently work on improving your data and reporting quality over time in the most efficient way – focusing on the biggest emissions sources and the largest opportunities for improvement.

Let us know how we can help you in GHG accounting and inventories, Science-Based Target setting, and identifying emission reduction opportunities in a wide range of sectors.

Inogen Alliance is a global network made up of dozens of independent local businesses and over 6,000 consultants around the world who can help make your project a success. Our Associates collaborate closely to serve multinational corporations, government agencies, and nonprofit organizations, and we share knowledge and industry experience to provide the highest quality service to our clients. If you want to learn more about how you can work with Inogen Alliance, you can explore our Associates or Contact Us. Watch for more News & Blog updates here and follow us on LinkedIn.