3 Things This Week: S&P & Net Zero; It's the Supply Chain, Stupid; The TCFD... for the Birds

The path to net zero; we’re all going there, just at different speeds.

S&P Global Gauntlet: Net Zero 2040; reduce 25% by '25
​Not satisfied with a mere 2050 net zero target, S&P Global* throws down the gauntlet this week, by setting its net zero clock to 2040 and committing to a Science Based Targets (SBTi) 25% reduction in emissions by 2025. These ambitious targets are consistent with reductions needed to keep warming to 1.5°C, which is the most ambitious scenario available in the SBTi process. We bow to S&P Global, for leading by example and having the gumption to set moonshot interim targets!
*S&P Global provides credit ratings, benchmarks and analytics for global capital and commodity markets; divisions include S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices and S&P Global Platts.

It’s the Supply Chain, Stupid (so says some very smart people)
For years now, global companies have been dialing down on the GHG emissions in their operations (aka Scope 1 and Scope 2). Currently, the World Economic Forum’s new rallying call is to tackle supply chain emissions (Scope 3). In their hot-off-the-press report, ‘Net Zero Challenge: The Supply Chain Opportunity’, co-authored with the Boston Consulting Group,  they make a compelling argument as to why: “Addressing supply-chain emissions enables many customer-facing companies to impact a volume of emissions several times higher than they could if they were to focus on decarbonizing their own direct operations and power consumption alone – and achieving a net-zero supply chain is possible with very limited additional costs.” World Economic Forum and Boston Consulting Group, Jan. 2021
 
Some other  Scope 3 myth-busting data points..
Eight supply chains generate more than 50% of global emissions!

• Can you guess which ones? Go to the end of this article for the answer – at least one of them will surprise you. What does this mean? It means, with a bit of coordination and application of known solutions, supply chain carbon could be tackled.

Net zero supply chains would have a negligible impact on end-consumer costs!!

• According to these very smart people, +/- 40% of supply chain emissions could be avoided through circularity programs, efficiency measures and switching to renewables. Even a 100% net zero supply chain would only add 1-4% to end costs, and that would work its way out of the equation over the medium term.

For the Birds: Task Force on Nature Related Financial Disclosure (TNFD)
Just when you thought you were on top of your ESG acronym game, having mastered how to say 'Task Force on Climate Related Financial Disclosure' outloud, and spell the acronym in the intuitively wrong, but factually correct way, along comes another one to mess you up!
 
The Task Force on Nature Related Financial Disclosure (TNFD) is in early days, having launched on September 30, 2020 at the UN Biodiversity Summit, where the UN Secretary General said: “the new Task Force on Nature-Related Financial Disclosures will help financial institutions to shift finance from destructive activities and toward nature-based solutions.” Fear not, you have a bit of time to get this rolling off your tongue–maybe a year before you start seeing it everywhere and 2023 for take-up by your financial institutions.
 
To read more and get ahead of the significant impact this will have on corporate reporting and access to capital, go here for the TNFD website, which also lists the heavy-hitter financial institutions in the 'Informal Working Group'.  For those who want to dig in further, go here for the just released report “Unearthing investor action on biodiversity” prepared by the esteemed Responsible Investor, in partnership with Credit Suisse.

**8 GHG-heavy supply chains: food, construction, fashion, fast-moving consumer goods, electronics, automotive, professional services and freight.

---