Late last month, we participated in a webinar hosted by the WWF and Global Compact Network Australia. The theme of the webinar was the “localising” Science Based Targets (SBTs) – i.e. the role of planning, analysis and implementation within Australia as part of international initiatives. Unfortunately, the recording of the webinar is only available to attendees, but to prevent the insights being lost to everyone else, here’s a brief summary of what was covered.
The importance of local analysis in target setting…
Edge Senior Consultant and Economist Maisie Auld opened the main part of the discussion with a dive into the importance of local participation in the target-setting process.
Firstly, targets based on global footprint analysis may not account for local factors and therefore may over- or under-estimate emissions, or wrongly categorise them. For example, the carbon intensity of electricity varies significantly across countries, with Australia likely to be higher than European counterparts. Previous Edge projects have also highlighted regional differences such as the treatment of emissions from tenant energy use in property which, due to the differences in lease arrangements, tends to be Scope 2 in countries such as the UK, while falling into Scope 3 here in Australia.
The next issue arises when it comes to mitigation analysis. Again, Maisie noted, what is possible in one country might vary significantly compared to another, due to the availability and costs of different technologies, access to capital, or relative influence over supply chains. As such, targets that are easy to achieve in one jurisdiction may be tough going in another.
Finally, and perhaps most important of all is the issue of engagement. Setting an SBT is one thing, but delivering it is quite another. Making sure that there is buy-in is vital to success, and as such it can be a substantial barrier if national teams are excluded from the development of a global target and mitigation strategy. “You really need to make sure that any strategies put in place at the global level… have support at a local level”, said Maisie.
Local target setting in practice…
Next to speak was Lok-Man Shu, Group Environmental Manager David Jones and Country Road Group, who focused on their recent input into Woolworths Holdings Limited’s Science Based Target development (WHL being their South African parent company).
Lok’s presentation brought home the reality of Maisie’s points, particularly the importance of accounting for the nature of local businesses. He pointed out that, in contrast to the largely food-focussed South African business, the Australian group was much more slanted towards apparel and homewares. This, he said, led to significant concerns over the size, breakdown and opportunities to influence Scope 3 emissions.
Lok commissioned Edge to undertake a detailed assessment of David Jones and Country Road Group’s Scope 3, with some surprising results. While Scope 3 was confirmed as making up about 90% of the company’s overall footprint, downstream, customer emissions were found to be a much larger component than expected. This included a significant contribution from the use of electrical appliances such as fridges and heaters, and the washing of clothes.
But while many baulk at tackling emissions that are often seen as outside a company’s control, the size of the prize is huge if opportunities can be found.
“When we went through the list of all the mitigation opportunities, we found that there is about 20% of our Scope 3 that we really could influence”, said Lok. “Whilst 20% doesn’t really sound that much, a reduction of that size is more than double what we can achieve by moving our Scope 1 and 2 emissions to zero.” Key abatement opportunities they found included consumer education, low carbon store fit out, and an increased focus on low impact product sourcing.
The analysis has now being fed into WHL’s target setting, as well as David Jones and Country Road Group’s own sustainability strategy development process.
The final speaker was Kirsten Sturzaker, Sustainability Manager at Carlton and United Breweries (CUB), discussing how they have implemented the Science Based Target set at a global level by their owner, AB InBev.
In 2018, AB Inbev Group, announced some ambitious global goals as part of their 2025 strategy. “When it comes to climate action, we have a goal of that 100% of our purchased electricity will come from renewable sources, and a 25% reduction of carbon emission intensity across our entire value chain by 2025”, said Kirsten.
Like David Jones and Country Road Group, CUB decided that they needed local analysis to get a clearer idea of what a 25% reduction would mean for them. As expected, they discovered that the vast majority of their GHG emissions fall into Scope 3, with major components including packaging, product cooling and logistics.
These findings subsequently informed the development of their key Focus Areas, which include, due to the size of their Scope 3, a significant focus on procurement, supplier engagement and communications. In delivering against these, Kirsten noted, the capacity of suppliers to respond varied greatly. This, she said, puts a significant emphasis on building understanding and capacity, and working closely with suppliers to build specific roadmaps and strategies.
But internal engagement is also vital, suggested Kirsten. “It’s important to teach each and every person throughout the business what our Science Based Targets are, what climate action is so that they take these goals into account in their day-to-day roles. For example, if they’re launching a new product, they need to think about what type of packaging to use.”