During a recent webinar, Schneider Electric was joined by HP and World Wildlife Fund (WWF) to discuss the Science-Based Targets (SBTs) Initiative. David Eichberg, Global Initiatives Lead of Sustainability and Social Innovation at HP is back with the answers to questions asked by attendees during the live event. As someone who’s been there, done that, David provides an exceptional perspective for companies starting out on their SBT journey.
How were the costs of achieving the SBTs estimated? Were they estimated before committing to setting a target?
HP evaluated costs before committing to our science-based target. We use our annual energy/sustainability project budget to implement efficiency projects that will yield a <3.5 year simple payback. It’s expected that this budget will provide a year-over-year 1% energy reduction. In 2016, we also committed to achieving 100% renewable electricity usage in our global operations, with plans to reach the 40% renewable electricity mark by 2020. The combined greenhouse gas (GHG) emission reduction from the projects and the renewable electricity increase will allow us to achieve the SBT and meet the 25% GHG reduction goal by 2025.
What was the biggest challenge in getting C-Suite approval on reduction strategy?
Science-based targets are inherently long term, and it can be challenging to get leadership to commit to a goal that is 10 or more years out. Planning time horizons will vary by industry and the nature of a company’s operations, investments, and regulatory environment. Markets and products will change dramatically over a decade, as will company management. These factors and others can make securing a long-term commitment challenging. To overcome this, we found that you must engineer a combination of big picture thinking and strategic drivers. It is important to understand and portray both the risks of not acting—and the rewards if you do. Look at these risks and rewards through the lens of climate risk and opportunities, various stakeholder expectations—especially customers and investors—and the aspects of your company that can be leveraged, protected or enhanced by adopting and pursuing a science-based target.
Is there a data-heavy form that I can use to reliably convince sub C-Suite leaders?
Rather than taking a data-heavy approach, we built a high-level business case for our senior leaders, along with a plan for achieving our GHG emissions goal. We used data to back-up the rationale for the plan and the steps we must take to reach our goal. There were several lessons learned during this process. First, you must focus on the bigger picture and context in which your business operates to answer the core question of why your company should set a goal and how it can get there. You must present a succinct and compelling picture of the business value of your target and the path to achieve it. And you must be clear on what business risks the target and its supporting strategy will mitigate, where efficiency and innovation can be realized and what needs and opportunities achieving SBTs will help your business address. Finally, you must be able to demonstrate how emissions reductions factor into customer and investor relationships and how a company’s current efforts look in comparison to competitors, especially in terms of perception as an industry leader or a laggard.
How are you dealing with Renewable Energy Credits (RECs) associated with the SBTs, especially considering the RECs HP generates from owned solar?
At HP, we use the World Resources Institute’s (WRI) GHG accounting protocol for reporting. While we report on both location-based and market-based Scope 2 emissions, the market-based method is used to measure progress against our SBT. Our progress includes energy consumption reductions resulting from efficiency projects, as well as emission reductions from renewable electricity. Our renewable electricity portfolio consists of renewable electricity purchases directly from utility suppliers, Power Purchase Agreements (PPAs), owned onsite solar generation, and REC purchases. The owned onsite solar generation is validated by sub meters, not by RECs.
Is it possible to account for future renewable energy purchasing when setting targets?
Yes. We connected our plans to increase the use of renewable energy in certain geographies and at certain facilities to our projected reductions in Scope 1 and 2 emissions. This allowed us to map a pathway that would help us meet our target in accordance with our business plans and strategy.
How did you gather Life-Cycle Analysis (LCA) data on enough of your diversified portfolio to create a reasonable estimate of product use phase emissions in order to set a target you felt comfortable about?
As part of HP’s Design for the Environment program, we use life-cycle assessments extensively across our product groups to quantify the environmental characteristics and impacts of our products and solutions, including design tradeoffs and changes. We also conduct product carbon footprints (PCFs), a subset of LCA, to advance work to reduce product GHG emissions. LCAs and PCFs are also used to secure product eco-label certifications and provide customers with product eco declarations. Using LCA and PCF methods, we can measure product emissions that represent more than 99% of our product units shipped each year.
We set a goal to reduce the GHG emissions intensity of our product portfolio by 25% by 2020, compared to 2010. This goal describes the performance of the portfolio by measuring GHG emissions during product lifetime use, per unit for personal systems and per printed page for printers. These values are then weighted by contribution of personal systems and printing products to overall revenue, allowing us to take into account changes to product mix and business growth. In addition to product mix, the goal is affected by the energy efficiency of PCs and printers, and paper consumption for printers (we include paper consumed in our total product use phase GHG emissions). In order to set our goal and project how product use emissions will change over time, we must understand how our portfolio is evolving, the major drivers of GHG emissions associated with the use of these products and what product design changes the business will implement.
How do you measure before/after status of implemented initiatives; for example, actual impact of LED “relamping”?
The measurement process really depends on the type of project. For simple LED upgrade projects, the energy savings are calculated based on the wattage of the old lights minus the wattage of the new LEDs. For more complex projects, such as air compressor plant upgrades, we use electrical sub meters to capture before and after readings to confirm the savings.
How can you have a target on scope 3 when you don’t control the companies emitting those scope 3 emissions? What is the level of commitment and responsibility behind them?
With the supply chain, control is really about influencing your suppliers—and you shouldn’t underestimate the powerful influence you can have on companies that supply your business. Within the supply chain, we proactively engage with our suppliers and integrate key performance indicators into our supplier scorecards, including those for environmental performance and emissions management. This makes GHG emissions management one of the important social and environmental topics central to the overall supplier evaluation process and to maintaining a strong business relationship with HP.
HP’s strategy for achieving our scope 3 emissions reduction goals focuses on 4 key pillars:
- Incentivizing suppliers to set and achieve their own GHG emissions reduction goals
- Expanding existing supplier energy efficiency programs
- Deploying efficiency initiatives for transportation suppliers
- Providing suppliers with support tools, guidance, and education to build their capabilities to achieve GHG emissions reductions.
Do you collaborate with other companies to accomplish Scope 3 emissions with suppliers?
We collaborate with several partners to help suppliers reduce GHG emissions. For example, the energy efficiency program in China and Southeast Asia is a leading initiative for reducing production suppliers’ utility costs and environmental footprint. Implemented in partnership with NGOs such as BSR, WRI, and WWF, the program helps suppliers build capabilities, improve energy efficiency and explore the use of renewable energy. The results are reduced GHG emissions and water use, as well as cost savings. Since 2010, more than 200 first-tier and sub-tier supplier sites in China and Southeast Asia have joined and benefited from the program. As a result of the program, supplier sites have saved more than 576 million kWh of electricity, prevented a cumulative 940,000 tonnes of CO2e emissions and saved a cumulative amount of roughly $73 million.
Should companies be viewing our industry competitors as competitors when it comes to SBTs? What are the new boundaries for this type of project? For example, should we share our individual industry (CSR) research with competitors to build a more collaborative image and help us all reach our SBT goals?
We’ve found that collaboration is especially important within the supply chain where our Scope 3 emissions are greater than Scope 1 and 2. In many instances, we share the same suppliers with our competitors, making it important that we coordinate and leverage efforts to help our suppliers succeed and collectively make progress. For example, we are a founding member of the Responsible Business Alliance (previously known as the Electronics Industry Citizenship Coalition), which has developed an industry-wide supply chain responsibility code of conduct and tools for elevating social and environmental practices in the supply chain. This includes tools and training to support supplier GHG emission tracking, reporting, and goal setting. Through the Alliance, we work with both industry competitors and suppliers to advance standards in the industry by sharing knowledge and best practices.
To learn more about HP's journey with Science-Based Targets, we invite you to watch the full webinar below. For any further questions on how to set and achieve SBTs, contact us.
