If we are going to keep global warming within two degrees, companies will need to set emission reduction targets that are in line with what science says we need. Many companies have already set targets: 93 of the FTSE 350, 102 of the S&P 500 and 206 of the Global 500. Of all the companies reporting to the CDP, 74 percent have targets. But although this is a great start, not all of these targets are ambitious enough to get us to where we need to be.
Many are too short term to really tackle the challenge of climate change. Some are intensity-based targets which allow a company’s emissions to grow as its production or profits rise. And often it’s difficult to follow progress, because targets aren’t annualized.
Software company Autodesk might have a solution. It has come up with a target-setting method called C-FACT (Corporate Finance Approach to Climate-Stabilizing Targets). The method recognizes that businesses contribute to both the economy and emissions, so the targets it produces cut emissions in proportion to a company’s contribution to global GDP. As the company’s contribution to GDP grows, its emission reductions have to keep up. Autodesk’s C-FACT methodology has been recommended by the Science Based Targets Coalition.
Putting it in place
Because it’s compatible with accounting and environmental management systems, C-FACT is easy for companies to put in place. It happens in four stages: first, calculating the target; second, committing to it publicly; third, annualizing the target and publishing the results regularly; and fourth, adjusting the calculations using the company’s latest data.
To make sure it’s consistent and rigorous, C-FACT is based on three main principles:
- It’s fair. C-FACT is based on the idea that corporate commitments should be in proportion to a company’s contribution to GDP and not its existing size and footprint. It works for companies of different sizes, with different greenhouse gas footprints and growth prospects.
- It’s verifiable. It uses available information about the company’s finances and emissions, which means the method itself—and the company’s progress against the targets—are 100 percent verifiable.
- It’s flexible. C-Fact is flexible enough to be used by different types of organizations and Autodesk has recently launched a new web-based tool for use by all, as well as a C-FACT for cities. The methodology adapts to inaccurate financial forecasts, economic uncertainty and changes in the business. And the model is flexible enough to allow for short-term ups and downs: for example, if a company missed its target one year but went on to achieve it over a longer period (say, five years).
Practicing what they preach
Now that it has created this model, Autodesk needs to make sure it’s keeping its own emissions in check.
The company’s committed to reducing its carbon intensity by 9.08 percent each year to 2020. In 2010, the first year it evaluated, it needed an absolute reduction of 4.52 percent.
In the 2014 financial year, it cut its absolute emissions by 38.1 percent compared to 2009—beating the C-FACT target of a 23.4 percent reduction. Not only that, Autodesk has calculated that if leading technology companies globally used C-FACT, they would address 10 percent of the global emissions challenge.