The Importance of Decarbonisation

Written by James Beiny, ESG Manager

From more severe flooding to declining biodiversity, the effects of climate change are now being experienced across the globe. With temperatures continuing to rise — 2024 has been confirmed as the hottest year on record — the impact of climate change will only worsen. According to the latest climate science, we need to limit the global temperature increase to 1.5°C above pre-industrial levels, as well as reach net zero carbon dioxide (CO2) emissions by 2050, to avoid catastrophic consequences from climate change. While everyone needs to contribute to solve the problem, businesses play a crucial role in enabling net zero to be achieved within the advised timeframe.

According to a recent survey by Deloitte, 70% of businesses believe that corporate strategies will be strongly impacted by climate change over the next three years, with 45% of them revising their business models to adequately respond to the climate crisis*.

As a first key step, businesses must measure their carbon footprint. In line with the GHG Protocol, which provides a standardised methodology for carbon accounting and reporting, emissions are divided into three categories: scopes 1, 2 and 3.

• Scope 1: direct emissions from owned or controlled sources. This includes stationary and mobile combustion sources, such as boilers and company vehicles.
• Scope 2: indirect emissions from the generation of purchased energy, including electricity, heating, cooling and steam.
• Scope 3: all other indirect emissions that occur in the company’s value chain, including both upstream and downstream emissions.

While calculating scope 1 and 2 emissions is a relatively straightforward task, it is a significant challenge for businesses to measure their scope 3 emissions. This is mainly because, in order to obtain an accurate and representative scope 3 emissions profile, businesses need to engage and collect relevant data from its suppliers. As scope 3 emissions account on average for over 75% of a company’s carbon footprint, it is a pivotal assessment for businesses to undertake. By doing so, a company will be able to effectively prioritise its decarbonisation efforts to achieve net zero in line with climate science.

Ward has made bold climate commitments. We have implemented a net zero roadmap to achieve net zero by 2050, consisting of five key steps to guide our approach. We have also been measuring our scope 1 and 2 emissions since 2020, which we have offset since 2021 by investing in Gold or Verified Standard carbon offsetting projects. Additionally, in 2023, we collaborated with our key clients to obtain an initial estimate of our scope 3 emissions; we are currently working hard to obtain a more accurate and comprehensive understanding of our scope 3 emissions, which will help us to set practical milestone emission reduction targets.

By working together, we will play our part in tackling climate change and supporting the creation of a low-carbon future.

*Deloitte. Deloitte 2024 CxO Sustainability Report. Available at: https://www.deloitte.com/content/dam/assets-shared/docs/about/2024/deloitte-2024-cxo-sustainability-report.pdf.