In 2019, the UK amended the Climate Change Act 2008 to include a national target of ‘net-zero’ emissions by 2050, becoming the first major economy to adopt net-zero legislation. In 2020 49 per cent of the world’s GDP was under net-zero goals and in March this year a third of the UK’s largest companies had made commitments to net-zero.
Recently, the government announced its intention to take account of suppliers’ net-zero carbon reduction plans in the procurement process of major contracts for all central government departments, their executive agencies and non-departmental public bodies in England.
The Procurement Policy Note (PPN) will go into effect on 30th September 2021 and requires suppliers who wish to bid for government contracts worth over £5 million per year to provide a Carbon Reduction Plan (CRP). This plan should confirm commitment to achieving net-zero by 2050 (at the latest), in the UK and must detail the supplier’s operational emissions.
Net-zero commitments are essential to halting the progress of climate change and project managers have a critical role in this process. At the forefront of delivering projects, the influence of project managers will ultimately determine the success or failure of organisations and clients in achieving these ambitions. A clear understanding of the concepts and processes fundamental to net zero is crucial.
Defining emission scopes
For net-zero to be understood and implemented, the emission sources associated with a company’s operations and wider value chain need to first be defined and categorised. This is done through scopes, the basis for mandatory greenhouse gas (GHG), reporting in the UK.
- Scope 1 emissions: direct emissions relating to activities owned or controlled by the company
- Scope 2 emissions: indirect emissions relating to consumption of purchased fuel (eg electricity) which is controlled by the company
- Scope 3 emissions: associated with activities controlled by third parties which the company can guide and influence
For many businesses, Scope 3 emissions will account for more than 70 per cent of the company’s carbon footprint. For example, for a product manufacturer, there will often be significant carbon emissions from the extraction, manufacture and processing of the raw materials. However, these are emissions the company can nominally only guide and influence. Businesses looking to adopt best practice will commit to tackling Scope 3 emissions as part of their carbon reduction plans.
The path to net-zero
Net-zero is achieved when all of a company’s Scope 1 and 2 emissions are minimised as far as practicable with any residual emissions offset. Net-zero is different to ‘carbon neutral’, as the latter signifies that all scope 1 and 2 emissions will be offset rather than minimised. Offsetting is the practice of reducing greenhouse gas emissions in one area to compensate for emissions made elsewhere, and can be controversial.
Naturally, there is no defined path for achieving net-zero across all industries and business sectors. It can be challenging to know where to start and businesses need a framework. At Wood, we developed our SCORE methodology for decarbonisation as a roadmap to setting and delivering emissions reduction targets, and our digital ENVision tool provides the governance and insight to understand baselines and progress, bringing clarity to the process for our clients across all sectors of industry and infrastructure. However, with companies looking to achieve on their net-zero ambitions, certain key steps apply:
- Develop a baseline. Attempt to quantify average emissions each year. As 2020 was an unusual year, consider for example the company’s activities in 2019 and calculate the associated emissions, identifying emission hotspots and considering the emissions of critical suppliers and products.
- Form a strategy. Identify the key areas the company will target as part of its decarbonisation plan, referring to the results from the baseline for areas of critical emissions as well as areas where transitions can be more easily made for emission savings. Consider how these plans will impact and change projects. Consult relevant stakeholders during the process of outlining the strategy.
- Take a systems level approach. Work with partners across your value chain to drive emission reductions, building alliances within your industry and across your industry to create meaningful carbon reductions and share knowledge of best practice.
- Share your vision. Share the company’s decarbonisation plan to engage your stakeholders, keep the company accountable and contribute to a change in industry norms.
As a global challenge, climate change ultimately requires a global response. The goal of limiting global temperature rise to 2°C - ideally 1.5°C - above pre-industrial levels as outlined in the Paris Climate Agreement, requires decarbonising the world economy by the middle of the century.
Indeed, as the latest report by Intergovernmental Panel on Climate Change, the IPCC notes, delayed actions to reduce greenhouse gas emissions raise the risk of cost escalation, locked-in carbon-emitting infrastructure and stranded assets, whilst reducing flexibility in future response options in the medium to long term.
The role of project managers
The scale and complexity of achieving net zero will require multiple industries, from aviation to agriculture, to simultaneously introduce changes to how things are done. Of course, many in the Association for Project Management will have direct involvement; planning, organising, and directing the completion of these projects.
However, all project managers will ultimately influence the extent to which the UK is able to decarbonise its economy. As well as a clear understanding of net zero, we must have a clear awareness of emission sources, basing our understanding on a thorough baseline assessment, and invest in ongoing emission measurements.
With awareness and data, we can better assess and incorporate emission impacts in decision-making along each phase of the project cycle to the benefit of the environment, energy-use, resources and stakeholders, successfully charting the path to net zero.
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