An introduction to TCFD- your questions answered
Following on from our well-attended TCFD webinar, here is a summary of the questions that were asked during the Q&A session, along with answers from presenter, Dan Crewe, Senior Consultant.
Could you explain what residual emissions and biogenic emissions are?
This is a great question – residual emissions are what the SBTi target setting framework refer to as the emissions which remain once you have reduced your emissions to near enough net zero – typically -90% of base year emissions. These are the emissions for which it is permitted to neutralise via carbon removals (including via the purchase of removal offsets) as a contribution to meeting a science-based target(s).
As for biogenic emissions, these are emissions from land use sources e.g. CH4 or N2O from agriculture. In some cases, these do not fit into the conventional Scope 1, 2 and 3 categories of the GHG Protocol Standard, in which they are covered by the GHG Protocol’s new Land Sector and Removals Guidance or described as ‘outside scope’ emissions. These include CO2 fluxes from land use change and emissions from biofuel combustion.
We are currently doing some baselining - Do people ever change the base line year - for example, 2020 /21 may not be representative for your business due to covid-19? If we look again next year and its different can we/ should we switch?
This is a very pertinent question for many companies, and the SBTi have actually offered guidance for companies in your position. Click here for SBTi guidance. Ultimately, companies do change their baseline years for a range of reasons. If you are planning to take the Science-Based Targets approach however, it is certainly worth considering your options before committing due to the costs involved in application (time to complete and fees to submit)!
This is all really interesting but it’s very theoretical. I run a small business, can you give an example of what a SBT would look like in real-life terms? How would I apply a SBT to my business?
I certainly sympathise, and I couldn’t agree more – corporate disclosure practices and initiatives (such as both TCFD and SBTs) are often aimed at large public companies which typically have environmental footprints far exceeding that of most small businesses.
To set an SBT, the first step would typically be complete a carbon footprint for the business and set your baseline emissions. You would then need to consider emission reduction pathways and set an emissions reduction target which is in line with the science of the Paris Agreement – there are a range of guidance/tools available on the SBT website here . As I say – most of this is aimed at larger companies. However, if you are interested, the SBTi does have a streamlined targets setting approach for SMEs, which focuses on Scope 1 and 2 (i.e. operational emissions) with less focus on indirect (scope 3) emissions. There is this guide for small and medium sized enterprises which you may want to start with.
What kind of adjustments will we be allowed/advised while already running toward the near term targets when a new drastic emission source is found? We are still gathering information for Scope 3 as we are gradually widening the review to the whole value chain. In case we find something drastic that will affect the near term SBTs, can we expect your advice in re-doing those target figures and reduction tactics?
In terms of expanding your emissions calculations to include a broader set of emissions sources, the SBTi target setting standard has criteria around when a company must ‘re-baseline’ (meaning to recalculate the base year emissions) their target and re-submit a target application. Specifically, the target validation protocol states that:
- Targets need to be reviewed and (if necessary) recalculated at minimum every 5 years
- Targets need to be recalculated to reflect any significant changes in emissions (i.e. new sources or altered calculation methods).
- Targets should be recalculated as soon as possible to reflect significant changes to remain relevant to the current company structure and operations.
The SBTi also give some examples of specific triggers for target recalculation:
- Scope 3 rising to 40% of combined scope 1, 2, and 3 emissions.
- Exclusions in the inventory or target boundary changing significantly.
- Significant changes in company structure and activities (e.g., acquisitions, divestitures, mergers, insourcing or outsourcing, shifts in product or service offerings).
- Significant changes in data used to calculate the targets such as growth projections (e.g., discovery of significant errors or several cumulative errors that are collectively significant).
- Other changes to projections/assumptions used with science-based target setting method.
Note – SBTi define ‘significant change’ as something which affects 5% the total base year emissions.
In case you missed it, the full webinar can be viewed on demand here:
Should you like to speak to us regarding TCFD within your business, or in fact anything else mentioned in this article, feel free to get in touch: