Carbon footprint: the impact of very large companies

📝 Comply with regulations

Since the law of July 12, 2010, known as the " Grenelle II Law", it has been compulsory for companies with over 500 employees, including large corporations, to draw up a greenhouse gas emissions balance sheet. Since the promulgation of the BEGES decree onJuly 11, 2022, scope 3 has been included in the calculation of the balance sheet, thus including indirect emissions that are not under the company's control. Including scope 3 gives a more complete and accurate picture of a company's GHG emissions. The GHG balance sheet must be published on the ADEME website, and accompanied by a decarbonization strategy.

As of January 1, 2024, a new European directive CSRD, or Corporate Sustainability Reporting Directive. This new directive replaces the NFRD and sets new standards and targets for extra-reporting. Companies with more than 250 employees, listed SMEs, local authorities with more than 50,000 inhabitants, and non-European companies with sales in excess of 150 million euros are now concerned. This represents some 50,000 companies, which are legally obliged to report on their environmental impact and their impact on respect for human rights.

Large companies are therefore subject to strict reporting and transparency regulations in France and Europe, and it is essential to decarbonize their activities in order to meet these requirements.

🌐 Meeting media and public expectations

Large companies are the focus of much media and consumer attention, not least because of their importance to the economy and society. Their activities(events, digital services, production, etc.), strategic decisions and financial performance have an impact on civil society and the global economy. This makes it all the more important for a major corporation to have commitments that resonate with its consumers and contemporary issues (including climate change, with a decarbonization approach for example), and to stick to them so as not to lose public opinion.

💨 A significant carbon footprint

According to a survey published in the British newspaper The Guardian, 20 companies have emitted 35% of total carbon dioxide emissions since 1965, or 480 billion tonnes of CO2.
Following on from this figure, according to a report published in 2017 by the NGO Carbon Disclosure Project in partnership with the Climate Accountability Institute, 100 companies are said to have been responsible for 71% of greenhouse gas emissions since 1988.

❌ Avoiding greenwashing

While major companies are sometimes quick to commit themselves to the environmental cause, some analyses show that the reality does not always match these commitments.

A report by the New Climate Institute examined the commitments of 25 major companies and concluded that they are not fully meeting the goal of carbon neutrality, despite their best efforts. Only 40% of emissions can be reduced. To keep pace with their commitments, these organizations are also relying on carbon offsetting, rather than reduction: they plan to offset between 23% and 45% of their greenhouse gas (GHG) emissions.

Climate Action 100+, a coalition of investors specializing in shareholder engagement, has also published a benchmark of 170 companies in 2023, analyzing their ecological and energy transition strategy. According to the coalition, the results are far from satisfactory.

In France, the same discrepancy can be seen in the publication of GHG emissions reports: despite the obligation to draw up and publish their GHG emissions report on the ADEME website, along with their emissions reduction strategy, some major companies were still missing the mark in January 2023, according to Le Monde.
The best way to avoid greenwashing is to put in place a relevant and impactful emissions reduction plan based on an accurate and precise GHG emissions report!

🚀 Attracting the young talent of today and tomorrow

Major corporations are constantly on the lookout for the young talent of today and tomorrow. Today, these young talents are sensitive to environmental issues and are more likely to join a company with a genuine commitment to the climate and taking a decarbonization approach.

👥 Internal mobilization difficulties

Internally, the emissions reduction plan, which aims to define carbon targets and the measures to achieve them, is often led by a CSR (Corporate Social Responsibility) department. However, between 60 and 90% of the company's GHG emissions reduction potential depends on its suppliers, a source over which CSR has no direct control.
CSR and Purchasing must therefore learn to work together to steer the emissions reduction plan. A lack of coordination during the steering phase can make it difficult to achieve objectives.

📊 Data collection difficulties

A GHG emissions balance is divided into 3 scopes: scope 1, the company's direct emissions, scope 2, the company's indirect emissions (emitted by energy suppliers), and scope 3, indirect emissions not controllable by the company.
Large companies often have hundreds of suppliers, and encounter several types of difficulties in collecting the data needed to produce a complete GHG emissions balance.

• • On the one hand, there are problems due to the number of suppliers: it's difficult to coordinate effectively to collect data on time.
  • On the other hand, not all suppliers have the same level of maturity, i.e. the same degree of expertise in decarbonation and climate issues, and will therefore not all provide data of the same quality.

Large companies are also finding it difficult to enlist suppliers in their decarbonization drive:

🚚 Logistical difficulties Data collection: collecting this data internally (for suppliers) requires time, money and resources that suppliers don't necessarily have at their disposal.

📋 Methodological difficulties: Until recently, there was no standard for calculating the PCF (product carbon footprint, or carbon weight of a product/service), and the data collected by large companies was not homogeneous. The ISO 14067 standard now exists, setting out the framework for calculating the carbon footprint of a product or service.

If large companies are encountering difficulties in setting up an emissions reduction plan, certain obstacles are being overcome.
The difficulties linked to suppliers mentioned above can be partly resolved thanks to a platform dedicated to the collection and processing of the data concerned: a platform like GCI, financially accessible for large companies and free for suppliers.

When it comes to enlisting suppliers, there is a growing trend towards positive carbon discrimination. If a large company has a choice between products or services of the same price and quality, their carbon weight can be a third criterion of choice. This trend encourages suppliers to calculate their PCFs and commit to a decarbonization approach, to make their product more attractive and improve their carbon competitiveness.

Finally, a regulatory obstacle to the calculation of a complete GHG emissions balance sheet and to effective decarbonization by large companies was the fact that scope 3 was not required to be included in the balance sheet, even though it accounts for the bulk of a company's GHG emissions. It has been mandatory since July 2022, encouraging more effective decarbonization.