Why Account for Greenhouse Gas Emissions?
The logic is simple: From a pure operational perspective, Greenhouse Gas Emissions (GHG) are simply a measure of energy consumption from various fuel sources – electricity, gas, petroleum, etc. High GHG emissions are clear indicators of high energy usage, and when measured against key performance indicators, like revenue, expenses, or other operational metrics, can show you where there is inefficiency. We see a clear correlation, that when a company lowers its GHG emissions it results in more efficiency and reduced cost. Through our work in GHG accounting, feasibility studies, and decarbonization strategies, our largest clients are set to achieve a combined $3.9 billion in savings over the next two decades while reducing greenhouse gas emissions (GHG) by over 12.9 million MT CO2e (equivalent to the emissions from 2.5 million cars driving for a year).
While some people are still skeptical about the cause of the changing climate or the advantages of new electrification technologies, it’s hard to deny cost savings and increased profits. If you are a climate skeptic, we believe that skepticism is crucial to good science. Read our blog series on this topic. If you are an electrification skeptic, we get it. There are still a lot of unknowns in this space and some of the new technologies, are working the kinks out. But there are a lot of proven technologies that have been available for years, like electric dryers, induction stoves, and all-electric heat pumps, which provide both heating and cooling (even in extremely cold temperatures) – you can attain up to four times more efficient than fossil-fueled alternatives. And this saves you money.
Scale that up and add a team of engineers and scientists that are looking for the latest proven large-scale technologies and breakthroughs to happen. We are seeing very clearly that lowering emissions and increased profitability go hand-in-hand. Our clients, some of the biggest mining and manufacturing companies, are finding innovative ways to significantly reduce emissions while at the same time increasing profits, improving company morale, and achieving greater overall performance.
Why Does Measuring Lead to Lowering Emissions?
Reduced costs and increased profits are clearly desired, but why care about measuring GHG emissions? Measuring lets you see where your operations may be most inefficient. Plus it is difficult to manage something if you don’t know what it is. Plus, you can’t see evidence of the efforts made in moving the needle. By quantifying emissions, you are quantifying your energy efficiency and arming yourself with the necessary information to address it, optimize systems, and reduce impacts as well as costs – which then enables you and your team to see how much of a difference you are making. But often measuring isn’t just for improving internal operations.
Why Report GHG Emissions?
Around the world, companies are being asked to measure and disclose their GHG emissions. Not only is the SEC requiring companies to report their GHG emissions, but most large investment firms request this of their portfolio companies. The mining sector is under particular scrutiny at the moment. According to McKinsey, “Mining is responsible for four to seven percent of global GHG emissions in terms of the sector’s Scope 1 and Scope 2 emissions. Including Scope 3 emissions links, the sector contributes to around 28% of global emissions.” This scenario has created an increased demand for transparency, traceability, and lower emissions by mining customers, investors, and government entities. And, as always, money talks; while regulatory bodies may move slowly in their efforts to curb emissions, shareholders are not as patient.
If a move toward more sustainable operations can help ease public pressure, build trust, reduce scrutiny and, in turn, improve the bottom line, shareholders will demand it. Investors are placing pressure on mining companies to take responsibility for Scopes 1, 2, and 3. Larry Fink, chief executive at BlackRock, the world’s largest fund manager, said “climate risk is investment risk,” and in 2020 published a letter stating the group would “place sustainability at the center of its investment approach.”
Climate Action 100+, an investor-driven initiative, already has 450 signatories and represents over $40 trillion in assets. The initiative is focused on getting high-emission companies to agree to net-zero targets. Allison Forest, responsible investment officer at Resource Capital Funds, and giving the keynote talk at the American Exploration & Mining Association (AEMA) Conference in Reno, Nevada, stated “if mining companies want to get capital from us and other institutions like us, climate disclosure is important.”
If you would like support in measuring and communicating your impact, CONTACT US. We are excited to help you tell your story through some simple calculations and messaging or via a full GHG inventory and ESG report.