The Challenge
Global companies with complex value chains face an array of difficulties when managing their ESG programs, projects, and data. Wrangling facilities across multiple countries and countless environmental data points makes identifying and successfully executing ESG strategies complicated. Moreover, companies are held to an increasingly high standard by external stakeholders—including investors, regulatory bodies, and the public at large—to make meaningful ESG commitments and demonstrate progress toward them.
Our client, an international restaurant company with thousands of locations worldwide, puts sustainability at its brand core. After setting and achieving short-term environmental milestones in previous years, the company felt ready to forge a path forward on its Sustainability Journey and develop strategic plans for long-term commitments.
As organizations’ existing goals are achieved and new ones are made, there is increasing expectation that they are done so in line with a science-backed commitment to maintain global temperatures. In 2021, our client set its sights on science-based target (SBT) approval for its greenhouse gas (GHG) emission reduction targets. SBTs—approved by the Science Based Targets initiative (SBTi), a partnership between CDP, the UN Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature—are emissions reduction targets set in line with the level of decarbonization required to keep global temperature increase below 1.5°C. This allows companies setting targets to understand the global context of their emissions and operations and creates an environment for innovation and collaboration on carbon reduction.
Concurrently, our client sought to expand its carbon reduction and water management programs, and needed guidance on setting baselines and evaluating improvement strategies. ADEC ESG’s experience with sustainability program management, large-scale data, and science-based targets provided a distinct ability to develop highly technical analyses and insights to support our client’s ambitions.
Our Solution
Science-Based Targets: From Analysis to Approval
The first step in developing a science-based target is having reliable, consistent, and accurate data—both as a means of establishing a baseline and for the purpose of demonstrating progress going forward. To get started, we ensured that all critical components were ready and adequate for the SBTi approval process. This included evaluating and reviewing the client’s existing scope 1 and 2 GHG inventory and closing any gaps.
We recommended the most feasible and appropriate SBT for our client by conducting a screening of several acceptable SBT methods. Each method was analyzed based on boundary, timeframe, indicators, ambition, and methods of target development.
From there, we supported our client in the development of its SBT, advising on appropriate methodology, metrics, and activity drivers based on company-specific factors such as industry, business growth expectations, and desired scope. We facilitated consensus among multiple client departments to formulate a step-by-step plan to set these targets, factoring in efficiency, sustainable investment, renewable and clean generation sources, and renewable energy credits. Finally, we walked the client through the submission and revision process to completion and approval, including any necessary changes to address SBTi’s feedback and comments.
Successful SBT approval lends more than just validation to ESG programs. Making such a commitment enables a company to demonstrate, internally and publicly, that its carbon reduction program is credible. The adoption of a longer-term strategic view also aids in reducing costs and identifying risks and opportunities associated with the shift to a low-carbon economy.
Determining Scope 3 Materiality
For many companies, scope 3 GHG emissions are often the majority of their carbon and environmental footprint, as it includes emissions from within the company’s value chain (i.e. many other companies). This category of emissions is a key component of developing a science-based target.
Our team worked to review all scope 3 categories with our client to determine materiality and develop an improvement roadmap for data management. We analyzed our client’s current scope 3 calculation methods and made recommendations to advance, in line with the WRI’s Corporate Value Chain Scope 3 Accounting and Reporting Standard. The improvement roadmaps can also be used to demonstrate the client’s commitment to emission reduction in future CSR reporting, CDP reporting, or other annual reporting. Our client leveraged these to advocate for further resources for ESG and plan initiatives with more confidence.
Carbon Mitigation Planning: Potential and Feasibility Assessments
Determining emission sources, defining feasible strategies, and identifying projects to implement are key steps in decarbonization planning. Our client’s internal sustainability committee needed support to execute.
We worked with the committee to evaluate potential decarbonization strategies and pilot projects by identifying the biggest emissions “offenders” with the highest potential for reduction, to ensure effort was concentrated where it could do the most good. In addition, we assessed the potential scalability of the pilot projects. This work enabled client decision-making by illuminating the best options to choose from, along with their level of effectiveness in the short and long-term.
Managing Water Risk
A water risk assessment (WRA) is a crucial tool in environmental risk management and reporting, giving insight into the water-related impacts a company has, from issues such as local water stress, water quantity and quality disruptions, and water-related political challenges. For companies that rely heavily on water for their operations, understanding and managing water risk is critical and increasingly expected, if not mandated by regulation.
ADEC ESG Solutions used an array of global WRA tools to assess our client’s current and future exposure to drought, flood, and related water impacts under different climate and socio-economic scenarios. Due to our client’s expansive global value chain, we worked closely with diverse stakeholders to ensure accurate data inputs and define risk profiles using company-specific data.
The WRA provided guidance from identification to action. This included a water risk roadmap outlining top risks, a reduction framework, and recommended options and feasibility. Our team provided a roadmap for future mitigation projects, giving the client a clear, actionable plan to achieve its water-related goals.
Our client is on a mission to create meaningful change, and our work with them is just one part of a growing, ambitious sustainability program led by an accountable committee. We look forward to seeing them achieve their goals, create new ones, and continue to set the bar for their peers.
Results and Deliverables
- Scope 1 and 2 GHG emissions science-based targets approved by the Science Based Targets initiative
- Scope 3 GHG emissions calculations and roadmaps for improvement
- Carbon mitigation potential and feasibility assessments for potential strategies and projects
- 2022 Water Risk Assessment and Mitigation Roadmap
