Tuesday, 17 November 2015

The Scope 3 Conundrum - Sharing Responsibility, Sharing Knowledge, Sharing Value in Managing Scope 3 Inventory

“An effective corporate climate change strategy requires a detailed understanding of a company’s GHG impact…  Until recently, companies have focused their attention on emissions from their own operations. But increasingly companies understand the need to also account for GHG emissions along their value chains and product portfolios to comprehensively manage GHG-related risks and opportunities.”

- WRI/ WBCSD’s Corporate Value Chain (Scope 3) Accounting and Reporting Standard, 2011 

The Scope 3 Conundrum

As companies strive to go deeper into their value chain for a true assessment of their GHG emissions impact, they realise that the process is fraught with challenges.  The WRI/ WBCSD’s Scope 3 Accounting and Reporting Standard provided a standardized and step-by-step approach for companies to understand the full impact of the emissions in their value chain. However, preparing the Scope 3 inventory presents some unique challenges:

  • Vendors that are larger than the reporting company, often ignore requests for sharing emissions-related data, or the reporting company is pointed to the disclosures made by the vendor in the public domain.
  • In the case of small-sized vendors that do not have a well-formed sustainability strategy, the vendor simply does not have the wherewithal to collect and collate such data or requests for data sharing are either looked upon with suspicion.
  • In both the above cases, the constrains/ concerns of the vendor are easy to appreciate.  It does, indeed, seem to make little sense that a vendor company should have to disclose the same data to its different customers, in differing formats at multiple instances.
  • Moreover, the reporting company frequently finds it difficult to penetrate beyond its major Tier 1 Suppliers while preparing a Scope 3 inventory.

The above combination of reasons is largely responsible for the failure to prepare a reasonably good Scope 3 inventory, unless the reporting company has the wherewithal to expend significant resources towards such effort.  

The shared responsibility/ shared value approach of the India Greenhouse Gas Program (IGHGP) is ideally suited to deal with the Scope 3 conundrum. 

The Fuftureproof Software 

In order to bring all the vendors of a reporting company on one disclosure platform, IGHGP commissioned the Futureproof Software.  The software, built by Climate Miles, has a user-friendly interface, is accompanied by basic training manual, and is equipped to hold, aggregate and analyse Scope 1 and Scope 2 data from all the vendors of a reporting company.  

However, by itself, a software falls short of achieving the goal of facilitating the inventorying of Scope 3 emissions by companies: while it does act as a receptacle and aggregator of emissions data and an analytical engine, it is still upto the vendor company to enter their data into the software. As mentioned above, the larger vendor companies still cannot be bothered to do this extra task, and the smaller companies are now even more suspicious of giving up data to a cloud-based application.  Expectedly, Futureproof had few takers in the first year of its release.   

The Climate Miles Facilitated Model for Scope 3 Assessment Services: The Indusind Bank Ltd. (IBL) Case Study 

Like many progressive and responsible companies, IBL has been doing its Scope 1 and Scope 2 emissions inventory, but had made only limited headway in estimating emissions along its value chain.  When presented with the offer of the Climate Miles Facilitated Model for Scope 3 Assessment Services, IBL decided to do a pilot project with a single vendor.  

This vendor, a large manufacturer of electronic hardware and software services, is the manufacturer of roughly 80% assets bought by IBL in the category “Electronic Hardware”. This vendor does make detailed disclosures of its emissions profile in the public domain, but data extraction is complicated by the fact that differentiation is not made between the various Divisions of the vendor company.

Climate Miles used benchmarking and modeling methods to estimate the vendor’s emissions that should be attributed to IBL.  The entire process was designed in consultation with IGHGP and complete transparency was maintained with IBL.

At the end of the pilot phase, IBL, satisfied both with the quality of its interaction with the Climate Miles research team, and the value of the service provided, decided to scale up the project to include 100% of its vendors.  

IBL’s vendor profile includes large, small and medium-sized vendors.  For large vendors of the type encountered in the pilot project, most of the data is expected to be based on secondary research and analysis.  From the several medium and small-sized vendors, primary data will be collected within a defined time-frame, and the gaps will be filled up through benchmarking methods.

Data gathered from the project will be entered into Futureproof and will be available to the other IGHG member companies.   

While this is a positive beginning, the true power of the shared-value approach is yet to be manifested.  This will happen only when other IGHGP member companies, and indeed any other company, sign up for the Facilitated Model for Scope 3 Assessment Services, thereby bringing the emissions data of more vendors, small and large, onto a common platform, ready to be accessed by all, dramatically reducing the cost and effort of Scope 3 inventory.

Lets start with this blog in pictures. 
This is what a Scope 3 effort typically looks like:

This is Company A, within the ecosystem of its supply chain.
The size of the circles represents the proportional size of the supplier companies
Company A wants to explore the GHG emissions embedded in its value chain.
As a first step, it examines the Tier 1, Tier 2, and Tier 3 classification of its suppliers 

Let us take a closer look at the Tier 1 vendors of Company A.
The thickness of the connectors represents the volume of transaction between
Company A and the Supplier.  This can be a useful determinant to prioritise which
Suppliers to investigate in the first year of doing Scope 3 inventory

These are the 4 vendors that together account for close to 80% of Company A’s $ transactions. Company A decides to start its Scope 3 analysis with these 4 Suppliers

In the 2nd year, Company A expands the scope to include all its Tier 1 Suppliers

In the next yearCompany A again expands the scope
to include 
its main Tier 2 suppliers as well

Eventually, Company A might be able to go down to its Tier 3 suppliers and beyond

But there is an easier way to do this exercise:

Company A is not the only company in this ecosystem
that wants to assess the GHG emissions of its supply chain!
Company B, C, D and E also embark on a similar exercise.

If Companies A, B, C and D decide to share the data, it will be less effort for everyone.
Suppliers will also prefer it if the all the Reporting Companies agree to deposit their
suppliers data in a common repository, and simply share this data.  
This will mean the supplier only has to disclose their emissions-related data once.

Sunday, 15 February 2015

Roadmap to Sustainable Development : Climate Miles at the Delhi Sustainable Development Summit (DSDS) 2015

Addressing Climate Change through Passion Fashion Action and Transformation at the DSDS
The Delhi Sustainable Development Summit – DSDS at its 15th edition took place between the 4th - 7th of February , 2015 at the Taj Palace Hotel, New Delhi India, hosted under the broad theme ‘Sustainable Development Goals and Dealing with Climate Change’.        
The summit was organized by The Energy Resource Institute (TERI), New Delhi – an independent research institute which promotes knowledge on environment, energy, forestry, biotechnology and conservation of natural resources. Among numerous issues discussed, Global leaders brainstormed on keeping emissions below two degrees, forest contribution in sustainability, addressing skills development and entrepreneurship to address the challenges of climate change on the Road map to 2015 sustainable development.

The summit provided the opportunity for global youth leaders to show their commitment to sustainability by documenting, brainstorming their views on sustainable development goals and addressing the challenges of climate change.

Ann Grace 
DSDS Youth Leader/IDEX Global Fellow
Climate Miles Team Representative


Global DSDS 2015 Youth Leaders gather at New Delhi

Lessons learned from DSDS - As Uganda’s Youth Leader and an IDEX Global Fellow working with Climate Miles, the lesson that echoed deeply for me during the summit is coined in the words of Wangari Maathai ‘We need to promote development that does not destroy our environment", a statement which is a reminder to all developing nations to balance the needs of the environment and development since developing nations suffer adversely from climatic impacts.

The African Union Commissioner Ms. Tumusiime RhodaPeace emphasized stronger efforts for disaster risk reduction initiatives as the path for international development especially for countries whose economies are driven by agriculture/natural resources sensitive to climatic conditions.

Although all countries are at different levels of development, mitigating climate change will require a global collaborative partnership approach because the impacts cut across social, economy and environment; degradation of ecosystems, global challenges in energy, health, economy, education and capacity building, governance, gender, youth (not exhausted) will necessitate SMART policies (Specific Measurable Achievable Realistic Time frame) that work effectively within an individual government while contributing toward the achievement of sustainable development goals. Through inter – governmental collaboration, a framework is important for all governments to prepare their companies, businesses, civil society organizations, key institutions to report on their sustainability practices for an effective approach to be realized.

The increasing population will substantially impact on water, food, forests and other key resources damaging the environment by 2050, therefore comprehensive focus on education – skills development and entrepreneurship to address the challenges of climate change for the present and future generation must be considered as an innovative approach.

Lord John Prescott, the Former UK Deputy Prime Minister/Rapporteur on Climate Change at Copenhagen/Durban was my farvourite speaker at this summit for his critical analysis of how the developed and developing nations are driving the climate to the edge. He highlighted the need for transformative partnerships for creative solutions.

The four words; (Passion Fashion Action and Transformation) was the message that cut across the summit to finalize the sustainable development goals, endorse a global binding agreement that addresses climate change challenges effectively through collaborative partnerships on the road map to Paris and BEYOND.

DSDS High Level Corporate Dialogue (HLCD):
The Delhi Sustainable Development Summit commenced on the 4 February 2015 with the corporate vision on mitigating climate themed under ‘Delhi to Paris’ change The High Level Corporate Dialogue attracted 1500 International and Indian Chief Executive Officers, industry captains and government officials to brainstorm ideas and measures of implementing sustainable businesses that equally protects the environment.

The thematic areas of the discussion during the High Level Corporate Dialogue revolved around the following themes; adapting to the impacts of climate change, expanding access to energy, increasing the use of renewable energy, improving energy efficiency use, financing energy transition and sustainable development, low carbon technologies in small medium enterprises, sustainable buildings, availability of water in a changing environment, efficient waste management and the path toward sustainable mobility.
Arnold Schwarzenegger, the 38th Californian Governor graced the 15th Delhi Sustainable Development Summit, where he called upon government leaders and the entire global community to collaborate in terminating climate change. He thanked Dr. R. K Pachauri for promoting sustainability practices globally. The DSDS Youth leaders were inspired by Arnold Schwarzenegger to think differently and focus on combating climate change. tThe Energy Resource Institute considers that the key driver to development is rooted deeply in the sustainable use of natural resources and efficient utilization of energy. Doctor Rajendra Kumar Pachauri, the Chairman of the Intergovernmental Panel on Climate Change who is also the Director/General of TERI gave the welcome address for this summit on 5 February 2015.

In the photos below, Dr. Rajendra Kumar Pachauri on the right (Director of TERI) and the VVS Laxman (left) – veteran cricketer

The Veteran Cricketer, VVS Laxman was appointed the Brand Ambassador for the initiative of ‘Lighting a Billion Lives – LaBL’. The initiative is an energy access project that provides access to light using solar lamps to billions of lives. – refer to Lighting aBillion Lives (LaBL).

Ban Ki-Moon, Secretary General United Nations, addressed the participants (via video:) about the need to use a collective approach to mitigate climate change and the value of promoting global sustainability which DSDS implements annually. Proclaiming 2015 as the year of global action, HE Ban Ki-Moon notified government leaders, businesses and civil society sectors to intensify efforts to reduce the Green House Gases – GHG and increase investments in low carbon.

HE Ban Ki-Moon addressing participants at the summit

The 15th Delhi Sustainable Development Summit attracted world leaders and engaged stakeholders from diverse sectors;36 Heads of State, policy makers, ministers from 50 countries, government heads, civil society, academicians, media, business leaders, religious leaders and youth leaders.

It is important to mention that two major developments will be realized in the year 2015, one of which is ensuring that the sustainable development goals are globally agreed upon and endorsed by the United Nations General Assembly. The other initiative is to ensure that the Conference of Parties – COP 2015, which will be held in Paris France later this year, yields a strong global agreement on how to deal with the impacts of climate change.

Therefore 2015 DSDS focused on spreading the message to global leaders and diverse stakeholders; businesses, industries, civil society, research and academic institutions to build momentum and create radical transitions through which paths of actions can easily be defined to achieve sustainable development.

The presence and participation of religious leaders in the summit was highly appreciated by other global leaders and participants. Religious leaders shared their thoughts on climate change and how man’s activities are greatly degrading the environment. Therefore finding lasting solutions to the cries of the environment will demand a collective sustainable approach and the global community must think of the road to sustainability beyond Paris.

Religious leaders share their thoughts on climate change, the relationship between man and the environment at the 2015 Delhi Sustainable Development Summit held at Taj Palace Hotel, New Delhi India

Written by Ann Grace -  Idex Fellow 2015 - Working at Climate Miles Jan - June 2015                                                                                                                                     

Monday, 26 January 2015

Connecting the dots – The Internet of Things, and making sense of your ‘Things’: the Relevance of automating Asset Efficiency analysis

If you have been following the story of the Internet of Things (IoT), you might have heard this little anecdote where the chair in your home will soon be embedded with a chip that will tell you, remotely, when that chair is occupied, and also, by who.  The possibilities are endless.  But if you are a company with hundreds of such chairs, you might have wondered how this information will be of value to you.

The Deloitte TMT 2015 predictions is a list 11-items long. 
They include:

· Despite media focus on consumers, in 2015, over 60 percent of the one billion global wireless IoT devices will be bought, paid for and used by enterprises.

· In 2015, the pendulum of technology adoption will begin to swing back to the enterprise market, reversing a decade long trend that went the other way – when mass adoption of technologies like large screen smartphones and tablets started with consumer adoption first.

If you are an enterprise, your ‘Things’ are your equipment’s, machineries, furniture’s – your Assets.  The IoT is going to unleash an avalanche of information related to these Assets.  To make sense of this information, you will need a framework that is able to collate, analyse, and produce output that is useful for managerial decision-making.

At Climate Miles, we have been investigating the efficiencies of a variety of assets from all possible perspectives – our concerns are not only technical specifications, but also the human issues around the adoption of new technologies, processes and equipment’s.

Evaluating the efficiency of enterprise assets is complicated because they are such an eclectic lot:

-       While some assets use significant amounts of energy over their lifetime (e.g. all electrical appliances), others are associated with resource utilization primarily at their manufacturing and end-of-life stages (e.g. all furniture, building material).
-       They differ by what they consume as INPUT resources – electricity, coal, oil, gas etc.­­­
-       Not only do the different inputs have different costs, they are also costed differently – e.g. electricity tariffs are based on geography-specific slabs, whereas solar power costs derive for the high capital expenses.
-       They differ by what their useful WORK/ OUTPUT is – lighting, cooling, rotating, producing electricity.
-       In addition to their useful work/ output, assets might also produce by-products – which can either be useful – requiring further processing, or waste – requiring appropriate disposal.
-       Within each asset category, they differ by specifications, makes, brands and models.

 Despite all these differences, Assets have some basic similarities, which form the basis of developing a meaningful framework for analyzing them (we will limit the following discussion to those assets that use significant amounts of energy over their lifetime (e.g. all electrical appliances) 

-  Assets consume resources (INPUTS) and produce useful work (OUTPUT).  Both input and output can ultimately be converted into units of energy (Joules or calories)
-       As long as input costs are correctly accounted for, similar outputs from different kinds of assets can be compared in terms of input cost/ unit of output.
-       Similarly, similar outputs from different kinds of assets can be compared in terms of sustainability parameter/ unit of output (e.g. CO2 emissions/ unit of output or energy used/ unit of output)

To be truthful, this apparent simplicity hides many complexities.  That is why we have automated the Assets Efficiency Module as part of our Sustainability Software Usustain.   However, for a small enterprise starting the process of Asset/ Resource efficiency analysis, the above framework provides a starting point from where to begin the efficiency of their Assets.

Accounting for and analysing the efficiencies of the Assets in your enterprise will lead to rational and objective decision making and target setting in sustainability projects  - with or without the Internet of Things.

by Jaya Chakravarty, Co-Founder & Director of Operations at Climate Miles

Wednesday, 7 January 2015

What we learnt from 2014, What we will do in 2015 - Our CEO's message

For me, the year ends on the 6th of January of every year and so my 2015 begins today. Over the years I have inculcated a habit where I melt into a contemplative state from the 25th or so of December to my end of year. The 6th of January is also the day I was born, 43 years ago, so it all neatly stacks up. 

All that matters to me is to be able to build a sustainable future and so my reflections will remain in the corridor of Climate change and Sustainability. 

Some highlights from the year 2014:

2014 was the hottest year recorded in the past 150 years and the world is convinced that there is a steady increase in global temperatures.

Water crises was recorded in many countries and underlying social tensions were revealed the need for us to view water as a finite resource.

Food security is tightly linked to climate justice whose lever is climate change. If we have to produce food in ever increasing rate we need to view climate change in a different light.

A decisive report concludes that business need not be fearful of environmental regulations and that it works in their favor.

A climate accord was signed by 364 investor groups in a high profile event in New York hosted by Ban ki Moon who said ‘The more we delay, the more we will pay,’ (You can view our short study on the signatories here)

In the background of the various events that marked 2014, we here at ClimateMiles chipped into the discourse and moved a snail step forward. 

The year 2015 will witness:

Formulation of an approach to tackle the challenge of calculating Scope 3. We believe there, lies an opportunity in calculating vendor emissions. We will work closely with WRI/India and further develop our product “FutureProof”.

An Emission factor database will be built and released where scientists and other GHG experts will participate.

In order to build human capacity in India we will launch a tool called “Project Saraswati” to be used by professors and students that are looking to educate themselves with Sustainability.

Calculation of Climate Risk is a complex challenge that needs to be met immediately and we will be doing just the same. We will transform the BSE-GREENEX to embrace Climate Risk.

India is transforming itself under the leadership of Mr. Modi and the time to build a world class Sustainability research institute is NOW. We will assist ORF in the formulation, launch and operation of this institute. 

The world is stuck in the mud called climate change for a long time now. We as humans have taken our own time to establish wisdom in action. We will see an acceleration of human resolve in the coming years which might not avert the disasters to come but surely we will be ready to respond. Finally, I dismiss the idea of Climate change as a human-made event as it separates human from nature. Nature and human is one and thanks to climate change we will understand that concept intuitively.

by Mohan Polamar, CEO of Climate Miles