“We are at a crossroads,” said Hoesung Lee, Chair of the UN’s Intergovernmental Panel on Climate Change (IPCC), on April 4, 2022. “The decisions we make now can secure a livable future. We have the tools and know-how required to limit warming.”   Lee made the announcement on the day the IPCC published a stark warning to the world: without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C – a central goal of the 2015 Paris Agreement – is beyond reach. Cities, urban areas, and buildings were highlighted as offering opportunities to reduce carbon emissions: “We see examples of zero energy or zero-carbon buildings in almost all climates,” said Jim Skea, Co-Chair of IPCC Working Group III. “Action in this decade is critical to capture the mitigation potential of buildings.”
Construction is an industry with a heavy footprint
In banking sector, here are some specifics related to the financial industry, when it comes to Scope 1,2,3 emissions:
- The time dimension, which is related to:
● The long cycle of certain products (loans, investments), that requires considering the full- time horizon of both the financial service life-cycle (real-time updating of the outstanding amounts and corresponding emissions), and the time stamp of the carbon emissions accounted for (by considering the life-long impact of the financed assets or projects on carbon emissions)
● The net impact of the financial product, by measuring the levels of emissions in “before v. after” moments.
- The complex nature of the relationship with the clients and suppliers and their activity, which leads to the necessity of using technology to properly connect to this ecosystem, in order to exchange data and information in an effective and efficient manner.
The time dimension when addressing the banking sector is reflected the status of the bank’s client that should be evaluated at two different moments: before and after the bank assistance, more precisely, by the net impact on the emissions allocated to the service. The logic of the calculation is based on the value chain as follows:
Based on this approach, the net impact is calculated as follows:
● EP is Emission Performance of the services (loan, investment, project)
● EI 0 is the Emission Intensity of the client before the bank assistance
● S3E is the operational Scope 3 emissions of the internal ecosystem of the bank such as the emissions related to employees, operational waste management and business travels
● EI 1 is Emission Performance after the bank financial assistance
For controlling reasons, the planned emission intensity can be added to the calculations based on the presented formula. The scheme below summarizes the logic behind the formula
One of the most important aspects when tackling the carbon print challenge is thinking in ecosystems. No company can exist without its clients and suppliers and the environmental impact must be considered along the complete value chain in order for societies to obtain a real image.
Mutual accountability is actually one of the intended dimensions of Scope 3 approach in GHG Protocol, which basically affirms that a company’s carbon print should include emissions from both the suppliers and the clients (upstream and downstream emissions). The message is that a business is responsible for selecting more desirable (“greener”) suppliers, but also for designing and delivering products and services that do not generate many additional emissions by intermediary and end-users, in order for them to use or dispose of those products.
This means that a company needs to collaborate tightly with businesses in its ecosystem, in order to accurately estimate its carbon print, to be fully compliant and to know where to optimize. In the case of Construction and Banking, The Building System Carbon Framework document published by WBCSD (see document and source pictures here: https://www.wbcsd.org/Programs/Cities-and-Mobility/Sustainable-Cities/Transforming-the- Built-Environment/Decarbonization/Resources/The-Building-System-Carbon-Framework ) clearly illustrates the extended structure of the shared ecosystem, when looking at all participants in the value chain of the Constructions economical area:
Sharing data in an efficient and safe manner within an ecosystem is much easier when all parties are using the same platform. This is why, our platform was designed to encourage the enrollment also of a company’s business partners, in order to easier capture data and to generate knowledge at the level of each partner about their own carbon emissions.