Companies have been setting greenhouse gas (GHG) reduction goals and targets for decades. At first, the goals tended to be incremental, based on reducing energy consumption where it was technically feasible. And these goals were often normalized – i.e., per unit of production – so they measured efficiency yet allowed for a net increase in emissions if the company grew.
More recently, science-based targets have become the norm among the more ambitious sustainability leaders. These targets entail absolute emission reductions, and they are set in the context of restricting global warming to 2.0 or 1.5 degrees Celsius.
Going even further, some companies are now establishing “climate positive” goals. In November 2019, for example, Ikea committed to invest 200 million euros ($220 million) to accelerate its transition to a climate positive business by 2030. In early 2020, Microsoft went even further by pledging to achieve carbon negativity (“climate positive” by a different name) by 2030 and, by 2050, to removing an amount equivalent to all the GHGs the company has put into the atmosphere since its founding. The blog post announcing this pledge is well worth a read – and notable in its completeness and transparency. Even more recently, Starbucks announced a set of “resource positive” commitments.
Defining climate positive
Climate positive is an example of a regenerative economics strategy, around which an entire school of thought is emerging. Put very simply, the idea is that humans have done such extensive damage to natural systems that it’s not enough to slow or even stop the rate of harm; we need to allow the ecosystems that sustain us to regenerate, in a way that supports healthy and thriving human communities, too. This recognition has spawned lively conversation around how to grapple with the complexity required to achieve a regenerative economy, and more specifically how to measure and track progress toward regenerative goals. The climate positive conversation helps illuminate some of the questions involved in wrestling with regenerative strategies.
One of the leading initiatives around climate positive strategy and performance management has emerged from companies in Sweden. IKEA, along with H&M Group and MAX Burgers AB and facilitated by the World Wildlife Fund, has developed a draft for a global climate positive framework. The framework, which was the subject of a session at COP 25, sets out three basic elements for companies committing to be climate positive:
- Consider the climate impacts of the entire value chain (Scopes 1–3);
- Advocate support for the Paris Agreement, the Intergovernmental Panel on Climate Change, the Science-Based Targets initiative and relevant sectoral road maps; encourage sustainable customer purchases and enable necessary behavioral changes;
- Only purchase carbon credits (i.e., “offsets”) in addition to needed reductions of GHG emissions within the value chain.
More details on the full draft framework can be found here.
To help consumers support these efforts, MAX Burgers and others have created clipop.org, a registry of climate positive products, services and companies that includes, among other things, climate positive footwear. Clipop’s “steps” are simple: measure, reduce and offset 110% of the company’s or product’s climate footprint, while more detailed criteria are used to screen participants.
What does it mean for ESG reporting?
As the reporting landscape continues to shift and evolve, we offer a few recommendations related to the emergence of the climate positive concept:
- With the arrival of 2020, many companies that set incremental goals five or 10 years ago are considering their next set of goals. We recommend considering a climate positive goal. We expect the reputational and business risks and opportunities posed by climate change to continue to amplify – potentially faster than many have planned for until now – so company goals should be set with that pace of change in mind.
- Given continued debate around measuring and defining climate positive impacts, companies should strive for maximum transparency in their reporting by clearly distinguishing between emission reductions and offsets and specifying the standards used to measure their footprints and calculate and certify offsets.
- Similar considerations apply to any climate-related claims for particular products so that consumers can make informed choices and companies can avoid greenwashing. It should be clear whether the claims apply to a particular product or to the company as a whole.
- We also recommend applying the Task Force on Climate-related Financial Disclosures’ (TCFD’s) framework for analyzing and reporting on a company’s climate risks and opportunities. Companies that have agricultural, forest-based or other natural products in their value chains may have significant opportunities to increase carbon sequestration through promoting healthy soils and ecosystems. And all companies stand to benefit from scenario planning across different warming trajectories, as outlined in the TCFD recommendations.
Transparent reporting on how climate-related information is communicated at the board level, as well as how it informs strategic decisions, is becoming both an increased expectation of stakeholders such as investors, as well as a more valuable internal tool for executive teams. This is a step-change well beyond the incremental energy efficiency gains and cost-savings of previous decades’ climate disclosures.
In some ways, “climate positive” and “carbon negative” could be seen as just the latest in a long line of green buzzwords. But as a goal, the terms represent an important shift in thinking about how we can collectively stop exploiting the earth and start to regenerate and heal the systems on which we depend.