Carbon emissions have, in the years following the ratification of the Paris Climate Agreement (2015), been established as the predominant issue in corporate sustainability discourse and strategy. One recent study found that net zero commitments now cover at least 68% of the global economy.
But for all the progress that businesses have achieved on carbon over the past several years, it is clear that more needs to be done. The sixth Intergovernmental Panel on Climate Change (IPCC) report, published last August, was unequivocal that without an unprecedented, rapid reduction in emissions, the world is on track to exceed 1.5 °C warming by mid-century – a development that would irrevocably compromise climatic stability. And while UN Secretary-General, António Guterres insisted that last November’s COP26 summit had succeeded in its principal aim of maintaining as viable the target of limiting global warming to 1.5°C above pre-industrial levels, he conceded that the target is presently on “life support”.
The imperative that business leaders act urgently to cut carbon emissions can thus scarcely be overstated. Now, more than ever “impact” must be the watchword for effective carbon management: That means measuring and disclosing progress against published emissions reduction targets across all Scopes in order to generate tangible benefits for the planet and society. Gladly, as outlined in the latest EcoVadis Network Impact Report, EcoVadis’ range of ratings and intelligence solutions are already helping companies of all sizes to achieve tangible progress on emissions reporting and reduction, not least by harnessing the tools embedded in the Carbon Action Module.
What is the Carbon Action Module?
The EcoVadis Carbon Action Module empowers sustainable procurement and climate change leaders with insights on supplier GHG/carbon management practices. It further provides a toolkit to prioritize, engage and drive emissions reductions to meet decarbonization goals.
At the heart of the solution are carbon scorecards: These detailed assessments enable customers to quickly gauge the maturity of their GHG management systems and identify opportunities to improve their performance. Our customers also use carbon scorecards to monitor the performance of their trading partners, as they embark together on a decarbonization journey.
Learn more about how the Carbon Action Module is helping companies drive positive, sustainable impact at scale in the 2022 EcoVadis Network Impact Report
To support disclosure and capacity building, we have further developed a set of tools for those getting started on the decarbonization journey. For example, we embedded a simple carbon calculator to help companies accurately quantify their emissions and introduced a dedicated GHG management module in our new e-learning platform, the EcoVadis Academy.
The Carbon Action Module, thus, provides companies with a robust framework to drive emissions reduction practices at scale, generating positive impact for the planet and society.
Room for Improvement: Initial Maturity Levels
One year on from the launch of the Carbon Action Module, an analysis of the first 5,000 carbon scorecards produced reveals two predominant, interrelated trends.
The first is a low level of maturity with respect to carbon measurement and reporting among companies engaged in the ratings network. Of the scorecards published to date, more than half exhibit a low level of maturity in regard to their relevant management and reporting processes, while only 13% are recognized as possessing a high level of maturity.
Learn more about carbon management maturity in the EcoVadis network in the 2022 EcoVadis Network Impact Report
Secondly, there is a lack of publicly shared or even internally determined ambition to reduce emissions. For instance, just 7.5% of businesses with carbon scorecards have published a GHG emissions reduction target, while only 2% of rated companies have committed or established targets in line with the Science Based Targets initiative (SBTi).
Assessed together, these trends indicate that a majority of the companies that have so far received a carbon scorecard either lack any GHG management capacity or possess only a basic level.
EcoVadis classifies company size according to the following criteria:
• Large = 1,000+ employees
• Medium = 100-999 employees
• Small = 0-99 employees
Room to Grow: How SMEs Can Drive Impact
However, this level of relative immaturity on carbon management needs to be understood in context. Almost 90% of the businesses that comprise the EcoVadis ratings network are SMEs and have, therefore, traditionally been subject to less regulator and stakeholder pressure on carbon than their larger counterparts. Consequently, such organizations are inevitably starting from a lower baseline when it comes to integrating carbon measurement and reporting processes into an overarching sustainability governance system.
Learn more about the level of carbon management maturity in the EcoVadis network in the 2022 EcoVadis Network Impact Report
That said, small and mid-size enterprises tend to benefit from certain structural advantages when it comes to acting quickly on carbon that are not generally available to large corporations. For instance, despite having fewer resources available to them, SMEs are able to introduce company-wide initiatives far more quickly than their larger counterparts. Equally, their smaller supply base means that they are able to share their sustainable procurement strategies more flexibly with trading partners and with less pressure from shareholders, enabling them to more quickly scale positive impact throughout their value chain.
Therefore, although much work remains to be done in scaling the positive impact generated through the Carbon Action Module, significant progress has been achieved over the past year. Indeed, the first step towards implementing and measuring the consequences of actions intended to reduce carbon emissions and generate positive impact is to quantify current outputs and plan and institutionalize robust governance reforms accordingly. These essential early developments are already occurring at an impressive pace across the ratings network.
To find out more about how the EcoVadis ratings network is supporting companies in driving positive social and environmental impact at scale, download the EcoVadis Network Impact Report 2022.
About the AuthorMore Content by Sean Donnelly