Biocapacity describes the ability of ecosystems to produce biologically useful material and to absorb man-made waste. Furthermore, an “ecological deficit” is defined as the ecological footprint of a population exceeding its biocapacity. Accordingly, an ecological reserve can be identified. The ecological deficit in Germany corresponds to the factor 2.33. If the entire world population were to live as the Germans do, we would need 2.33 Earths to maintain the ecological balance.
The biocapacity is normally expressed in global hectares (gha).
According to the European Union’s Renewable Energy Directive, biomass is the biodegradable part of products, waste, and residues from agriculture, forestry and related industries (including fisheries and aquaculture). Unlike coal, oil, and natural gas, biomass is a renewable resource and the bioenergy produced from it has a good carbon balance: when biomass or biogas is burned, only about as much carbon dioxide is released as was removed from the atmosphere during the plant growth. Bioenergy is extracted from the raw material biomass, i.e. plants, biowaste, wood, or liquid manure and can be divided into solid, liquid and gaseous biomass. The first includes wood and straw, which are used to produce electricity and heat through combustion. Liquid biomass in the form of vegetable oils can be used as fuel for vehicles and in CHP plants. The latter, also called biogas, is produced by the fermentation of biowaste and plant/animal residues. It can hereby be burned in CHP plants, or refined and fed into the natural gas grid.
The carbon budget indicates the amount of greenhouse gases that humanity “is allowed” to emit into the atmosphere in order to reach the 1.5°C target of the Paris Climate Convention. According to the Mercator Research Institute on Global Commons and Climate Change, with current emissions, this budget will be exhausted by early 2028, whereas for the 2°C target we still have until the end of 2045. The basis for this calculation is an annual global emission of 42 Gt per year and a carbon budget of 420 Gt or 1160 Gt according to the scenarios.
The terms 'carbon offset' and 'carbon offset credit' (or simply 'offset credit') are used interchangeably, although they can have slightly different meanings. A carbon offset refers to a reduction in GHG emissions - or an increase in carbon storage (e.g. by restoring land or planting trees) - that is used to offset emissions that occur elsewhere. An offset credit is a transferable instrument certified by governments or independent certification bodies that represents an emissions reduction of one tonne of CO2 or an equivalent amount of other greenhouse gases and can be used by businesses or individuals to offset their unavoidable emissions.
Carbon dioxide (CO2) is a molecule in the air consisting of carbon and oxygen. Although air consists of only 0.038% CO2, it is one of the most important greenhouse gases and contributes significantly to climate change. In the atmosphere, carbon dioxide absorbs part of the heat radiation from the sun that was emitted from the earth to space, and radiates it back to the earth. This is a natural and necessary process. Once released into the atmosphere, carbon dioxide does not decompose on its own. Within the natural carbon cycle, carbon dioxide is stored by various processes or decomposed by photosynthesis. Apart from the natural greenhouse gas effect, there is the anthropogenic greenhouse gas effect, which results from the combustion of fossil fuels. This leads to an increase in the concentration of carbon dioxide and to a rise in global temperature, as even less heat radiation is returned to space. The ensuing warming of the oceans and deforestation intensifies the process.
In addition to carbon dioxide, there are other greenhouse gases such as methane (CH4), nitrous oxide (N2O) or F-gases, all of which have a different impact on the climate. These are expressed in CO2-e (equivalents) to make the effect comparable and to be able to state climate impact in a single number.
Carbon dioxide equivalent, or CO2e, is a metric measure representing all greenhouse gases by converting them to the equivalent amount of CO2.
According to the Kyoto Protocol, there is not just one, but 6 greenhouse gases which all contribute to the greenhouse effect and thus to global warming: carbon dioxide (CO2), methane (CH4), nitrous oxide (laughing gas, N2O), hydrofluorocarbons (HFC/HFC), perfluorocarbons (PFC/PFC) and sulfur hexafluoride (SF6).
For easier understanding and because the greenhouse gases have a different effect on the climate, they are compared with the effect of one unit of CO2. So when we say your carbon footprint is, for example, 100 t CO2e, we are also accounting for the other climate relevant gases.
The Carbon Disclosure Project (CDP) is an independent and non-commercial organisation. The organisation has the largest database on companies’ greenhouse gas emissions and their climate change strategies. The aim of the project is to provide information for investors, companies and governments. The organisation asks companies, cities and countries for data on their respective environmental impact. This data includes, for example, greenhouse gas emissions and the use of resources such as water. Submission of the data is voluntary. In addition to a critical review, suggestions are made on how the company or city can act even more sustainably.
On the one hand, the aim of the CDP is to increase transparency regarding the environmental impact. On the other hand, investors should also make investment decisions based on the emission data. Furthermore, companies should be motivated to reduce their influence on the climate and to set a good example to other companies in the same sector.
The measures set out by the Kyoto Protocol limited the amount of carbon that can be emitted and decided that greenhouse gases can only be released into the atmosphere with a permit. The required carbon certificate allows a company to emit one ton of carbon dioxide in a certain period. At the end of the period, the issuer must prove that all emissions of the company were covered by certificates. However, this obligation does not apply to all companies: According to the UBA (German Environment Agency), large energy and industrial plants in Germany and air traffic operators within the EU are obliged to do so. Certificates can be traded between states or between companies. Carbon dioxide emissions are thus reduced where it is economically efficient. The number of certificates is to be gradually reduced. For further details see Carbon market.
What is ESG reporting?
ESG reporting involves the disclosure of data explaining a business’s impact in three areas: Environment, Social, and Governance. It provides criteria, especially for investors, to help find companies with values that match their own and to take not only the economic performance but also environmental and social performance into account for their investment decision.
What does ESG stand for?
Environmental criteria may include the energy use of a company, the amount of waste and pollution, natural resource conservation, and the treatment of animals. This can also help to evaluate any environmental risks and how the company manages those.
Social criteria focus on the working conditions, for example, equal opportunities, health and safety at work, human rights, product portfolio, social responsibility and supply chain management.
Criteria for governance can include business ethics, compliance, independence of the Supervisory Board, salaries, and shareholder structure.
Not a single company will pass every test in every category, so the investors need to decide what their priority is. ESG investing is also sometimes referred to as sustainable investing, responsible investing, impact investing, or socially responsible investing.
ESG reporting is important in understanding a company’s full risk profile, but it can also lead to a better company reputation.
Is ESG reporting mandatory?
Companies can voluntarily disclose their ESG efforts in a number of places and formats, like corporate social responsibility (CSR) reports, company websites, proxy statements and other regulatory filings, and as part of sustainable share indices such as FTSE4Good or DJSI (Dow Jones Sustainability Index). Even though ESG reporting is still voluntary in most countries, global regulations regarding corporate ESG data reporting are increasing.
Forestry describes the management of forest land including associated water bodies and wasteland. Forest clearing and the replanting of trees are the primary activities of forestry. The main objective of forestry is to maintain a continuous supply of wood through carefully planned harvesting and replacement.
In terms of climate change and nature conservation, forestry makes an enormous contribution: not only are forests home to 80% of the world’s terrestrial biodiversity, they are also one of the most important carbon sinks, absorbing carbon dioxide from the atmosphere and releasing oxygen. They also contribute to natural water quality and reduce erosion.
By restoring 350 million hectares of degraded land in accordance with the “Bonn Challenge”, up to 1.7 gigatonnes of carbon dioxide equivalent could be bound annually.
Greenhouse gases (GHG) describe (trace) gases that are responsible for the so-called greenhouse effect, which is considered the main cause of climate change. They can occur both naturally and anthropogenically. According to the Kyoto Protocol, greenhouse gases include carbon dioxide (CO2), which is considered the reference value, methane (CH4), nitrous oxide (laughing gas, N2O) and other less unknown gases such as H-FKW/HFC, FKW/PFC, sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). In addition, fluorinated greenhouse gases (F-gases) are regulated under the protocol. Other greenhouse gases such as carbon monoxide (CO), nitrogen oxides (NOx) or volatile hydrocarbons excluding methane (so-called NMVOC) are considered indirect greenhouse gases and are regulated by the Montreal Protocol. The latter are the main causes of the destruction of the ozone layer.
As mentioned above, carbon dioxide (CO2) is the most common greenhouse gas and is considered to be the reference for the other GHGs. Their global warming potential (GWP) is expressed in carbon equivalents (CO2e), firstly to facilitate comparison and secondly to indicate the gases emitted as one value. The GWP for 100 years of the various gases according to the IPCC is shown in the following table:
Carbon dioxide CO2 1
Tetrafluoropropene C3H2F4 4,4
Methane CH4 28
Nitrous oxide (laughing gas) N2O 265
Tetrafluoroethane C2H2F4 1300
Chlorofluorocarbons (CFCs) e.g. CClF3 13900
Fluorocarbons (PFC, HFC) e.g. CHF3 12400
Nitrogen trifluoride NF3 16100
Sulphur hexafluoride SF6 23500
These values should be understood as following: If a ton of SF6 is released into the atmosphere, the greenhouse effect of this ton is as great as 23500 tons of carbon dioxide in the atmosphere. Accordingly, it quickly becomes clear why it is so important not to focus only on carbon dioxide, but to reduce the concentration and the output of all GHGs.
What is the GHG Protocol?
The GHG Protocol (Greenhouse Gas Protocol) is a globally recognised standard for measuring and managing greenhouse gas (GHG) emissions from companies and their value chains, as well as emission reduction measures. The GHG Protocol was established in 1990 out of the need for a consistent framework for greenhouse gas reporting. Today, it collaborates with governments, industry associations, NGOs, corporations and other organisations to provide the world’s most widely used calculation guidelines for emissions. In 2016, 92% of Fortune 500 companies that responded to CDP used the GHG Protocol directly or indirectly through a program based on the GHG Protocol. In addition to companies, cities around the world also use the GHG Protocol and national emissions programmes are developed based on it.
GHG Protocol Corporate Standard
The GHG Protocol Corporate Accounting and Reporting Standard provides guidance for companies on how to quantify and report their GHG emissions. The GHG Protocol Standard hereby makes use of standardised approaches, which help direct companies, for instance, in order to increase transparency and consistency in the accounting and reporting of their GHG, as well as in the reduction of costs for putting together a GHG inventory.
What are the GHG Protocol Scopes?
The GHG Protocol Standard distinguishes between 3 scopes to which emissions can be allocated. Included are direct emissions, which are described in Scope 1, and the indirect emissions in Scope 2 and Scope 3. The GHG Protocol requires its users to report the Scope 1 and 2 emissions of their company, whereas the reporting of Scope 3 is voluntary, yet recommended.
The scopes can be seen in the following graphic:
In short, hydropower is the energy obtained from moving water. Hydropower was one of the first sources of energy to be used to generate electricity. Its principle is based on the water cycle, which consists of three steps: Solar energy heats water on the surface of rivers, lakes and oceans, causing the water to evaporate. The water vapor condenses and falls as precipitation, which collects in streams and rivers and the cycle repeats. The amount of precipitation that accumulates in an area, in rivers and other streams, determines the amount of water available that can be used for hydropower. This form of energy production is therefore susceptible to seasonal fluctuations in precipitation or long-term changes in the amount of precipitation. The amount of energy depends on the volume flow and the gradient. In general, the greater the water flow and the drop height, the more electricity a hydropower plant can produce. In hydropower plants, the water flows through a pipe or a pressure pipe socket, which presses against a turbine and thus sets the blades in motion, which in turn drives a generator. Pumped storage power plants can store excess energy in the network: The energy is used to pump the water from a water source to a higher storage basin. If the electrical energy is needed, the water can flow down the slope to the power plant or the turbine.
Indirect emissions includes Scope 2 and Scope 3 emissions. Indirect GHG emissions result from the activities of the reporting company, but occur elsewhere and are owned or controlled by another company. The reporting organization has no direct influence on the emissions.
Joint Implementation (JI) is a project-based mechanism based on Article 6 of the Kyoto Protocol. A project that is carried out jointly by two developed countries, both of which have pledged to an emission mitigation target under the Kyoto Protocol, falls within the scope of Joint Implementation.
In case an industrialised country implements or finances a climate project in another industrialised nation, it can have the resulting emission reductions counted towards its Kyoto target in the form of Emission Reduction Units (ERUs). Of course, the host country cannot credit these units, which means that it has to reduce its own units by the exported amount.
Joint implementation is a flexible and cost-effective method for Parties to meet part of their Kyoto commitments. At the same time, the host Party benefits from foreign investment and technology transfer.
The Kyoto Protocol was adopted on 11 December 1997 and is an additional protocol to the United Nations Framework Convention on Climate Change (UNFCCC). It was the first agreement to provide legally binding commitments for developed countries to limit and reduce emissions.
For the Protocol to come into force, a minimum of 55 Parties had to ratify the Convention, collectively accounting for at least 55% of all carbon emissions by industrialised countries (so-called Annex I Parties) in 1990. After a complex ratification process, it came into effect on 16 February 2005. There are presently 192 Parties to the Kyoto Protocol, including all EU members and key developing countries like Brazil, China, India and South Africa. The United States of America still not confirmed the Kyoto Protocol. In 2013, Canada withdrew the agreement.
Initially, a commitment period of 2008-2012 was planned. The participating industrial countries committed to reducing their annual GHG emissions by 5.2% compared to 1990 levels within this period. This target did not apply to newly industrialising and developing countries. At the end of the commitment period, the set target was achieved.
After renewed negotiations, targets were set for “Kyoto II”, the second commitment period, which spans from 2013 to 2020. More European countries and Australia participated this time. During this period, the parties committed to reducing their emissions by at least 18% below the levels in 1990. Additionally, the EU states (together with Iceland) set their own 20% reduction target. They also added new rules for developed countries to include emissions from land use and forestry.
In addition to reducing their own emissions, the countries can use three Kyoto mechanisms to reach their climate target:
What does net-zero emissions mean?
Net-zero emissions describes the general objective to combat climate change. The need for net-zero has been underlined in the Paris Agreement, which states that a balance of emissions production and emissions removal from our atmosphere has to be achieved to stop global warming.
How can net-zero be achieved?
Net-zero emissions can be achieved when any remaining human-caused GHG emissions (e.g. from burning fossil fuels for transport, electricity, factories…) are neutralised by removing GHG from the atmosphere. So this does not only mean the necessary and drastic reduction of emissions, which are especially caused by the combustion of fossil fuels, but also the remaining emissions that cannot (yet) be avoided are to be reduced as close to zero as possible in the net-zero emissions' scenario. This can for example be achieved by restoring forests or through direct air capture and storage (DACS) technology.
How can companies achieve net-zero emissions?
Being a net-zero company means that the company manages to achieve a good balance between the GHG they produce and the ones they take out of the atmosphere. This implies that a company, in order to be considered net-zero, cannot emit more greenhouse gases than it removes.
Below you can find a few steps for companies to achieve net-zero:
What is the difference between net-zero and carbon neutral?
Net-zero is a state that is reached when emissions have been reduced as much as possible and the remaining emissions are neutralised by carbon removal projects. The SBTi speaks of net-zero being achieved when 90-95% of emissions have been reduced.
Carbon neutral is on the way to net-zero when the emitted emissions are compensated for with carbon reduction or carbon removal projects
Substances that have a positive ozone depletion potential (ODP) can thin the stratospheric ozone layer. Most of the ozone-depleting substances (ODS) are controlled by the United Nations Environment Programme (UNEP): The „Montreal Protocol on Substances that Deplete the Ozone Layer”. ODS include chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), halons, and methyl bromide. The most commonly used HCFCs today are HCFC-22 or R-22, which are still used in existing air conditioning and refrigeration equipment. Nevertheless, many ODSs are banned today and more are following.
Carbon offsetting is a way to pursue carbon neutrality. Therefore, emissions from one company / country / industry sector are countered by an emission reduction somewhere else. Examples include investments in renewable energy, energy efficiency and other low-carbon (clean) technologies, restoring forests, or sequestering carbon in soil.
What is PAS 2060?
As an internationally recognised standard, PAS 2060 has been developed by the British Standards Institution in 2010 in order to provide businesses with guidance on how to quantify, reduce and offset carbon emissions for organisations, products, services or events.
The PAS 2060 standard provides a framework for certification and accuracy that enables organisations to show that their claims to be climate neutral are credible and verified. Building on existing standards, such as PAS 2050 and ISO14001, PAS 2060 allows organisations to demonstrate voluntary and earnest commitment to take climate action. It is also the only internationally recognised certification for corporate carbon neutrality.
PAS 2060 benefits
While the adoption of the standard remains voluntarily, the usage of it holds a variety of benefits for organisations and can help them:
- reduce greenhouse gas (GHG) emissions
- quantify their carbon footprint
- increase environmental transparency
- strengthen customer loyalty and brand image
- direct their business strategy towards carbon neutrality in the short, medium and long run
- support meaningful carbon offset projects, bringing environmental and social value
- comply with current and future environmental regulations
PAS 2060 requirements
The standard provides 4 main steps to be taken on the way to carbon neutrality:
It is important to note that although PAS 2060 allows for the purchase of carbon offset credits, organisations cannot obtain this certification by offsetting only.
The Representative Concentration Pathways (RCPs) were developed for the 5th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). They are values which represent four future scenarios of changes in radiative forcing due to anthropogenic greenhouse gasses: RCP2.6, RCP4.5, RCP6 and RCP8.5. These values stand for the change in radiative forcing expected in 2100 in contrast to pre-industrial forcing (1850).
RCP 2.6, for example, represents a forcing of 2.6 W/m2. This scenario would lead to an increase in global temperatures of 1°C relative to 1996–2005 to 2100. If the other scenarios are true, different increases in temperatures would arise. RCP4.5 would lead to an increase in global mean temperature of anywhere from 1,9°C RCP6 to +2.4°C. RCP8.5 would lead to an increase of 3.5°C. However, the global mean values reveal relatively little about the geographical distribution of the temperature increase. It is assumed that the temperature will rise significantly faster in the interior of the continents and in the high northern latitudes. The Arctic Ocean, northern Siberia and northern Canada will be particularly affected.
REDD+ stands for Reducing Emissions from Deforestation and forest Degradation in developing countries. It was developed by the parties to the United Nations Framework Convention on Climate Change (UNFCCC).
Forests represent one of the largest carbon stores globally. Deforestation and forest degradation are responsible for about 11% of global carbon emissions.
REDD+ projects provide incentives for developing countries to reduce their emissions from forest and rainforest areas and invest in low-carbon pathways for sustainable development. Accordingly, developing countries receive payments based on the results of their actions. In this way, REDD+ establishes a financial value for the carbon stored in forests. REDD+ goes beyond protection against deforestation and forest degradation to include the role of conservation and biodiversity, as well as support to local communities to foster sustainable forest management and thus increase forest carbon stocks.
The carbon market is used to support these efforts and to bring direct benefits to communities. REDD+ Voluntary Emissions Reductions, (VERs), are issued on an annual basis by third party verifiers only after the forest has been successfully protected and sustainable economic alternatives have been created for the community, such as job creation initiatives and agricultural intensification programs.
Planetly’s offset project portfolio also features several high-quality REDD+ projects - feel free to reach out to us for more details.
What is a Science Based Target?
Science based targets are a set of goals with well-defined guidelines that help companies reduce their greenhouse gas emissions in order to prevent the negative impact of climate change. According to the Science Based Target initiative, those targets are considered to be science-based if they are in line with the goals of the Paris Agreement to limit global warming to 1.5°C.
What is the Science Based Target initiative?
The Science Based Targets initiative, launched in 2015, promotes science-based targets to strengthen the competitive position of companies that (want to) move to a low-carbon economy. The companies participating in the initiative’s call-to-action commit themselves to setting a science-based climate target within the next two years. In line with the results of the Paris Agreement, they attempt to limit global warming to 1.5°C or well below 2°C. The overall goal is for science-based targets to become standard practice in businesses and for companies to play an important role in reducing global greenhouse gas emissions. In order to achieve this, the embedding of these goals in sustainability management is of central importance.
The initiative is a collaboration between the Carbon Disclosure Project (CDP), the United Nations Global Compact (UNGC), the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) and is one of the commitments of the ‘We Mean Business Coalition’.
Setting targets according to the Science Based Targets is already part of the annual reporting practice of companies, as it is included in the CDP questionnaire and assessment.
The initiative supports the integration of science-based targets into existing climate leadership platforms, including UN Caring for Climate, WWF Climate Savers and others. Science-based objectives are included in the CAIT climate data.
How to set Science Based Targets?
If a company wants to set a science based target, it should follow the following steps:
Why should my company set a Science Based Target?
By setting a science based target, companies can show customers their commitment to sustainability and their combat against climate change more concretely, while becoming a pioneer in their industry. This might also encourage other companies, customers and suppliers to join in and push governments to take further action in the battle against global warming. According to the SBTi, setting science based targets will also help companies to ‘save money, provide resilience against regulation, boost investor confidence, and spur innovation and competitiveness’.
What are Scope 1 emissions?
Scope 1 emissions are direct emissions that include greenhouse gases (GHG) that arise from the combustion of fuels owned or controlled by the reporting organisation. Examples can be on-site combustion, organisation-owned fossil-fuel power plants or the emissions from the company fleet.
What is included in Scope 1 emissions?
Scope 1 emissions can be divided into three categories:
- Stationary combustion of fossil fuels at a facility (such as boiler, combustion turbines, process heaters, incinerators)
- Fugitive Emissions, which result from leaks of greenhouse gases over the operational lifetime of the equipment (refrigerated transport, industrial process refrigeration, cold storage warehouses, mobile air conditioning)
- Mobile combustion of owned or leased mobile sources (on-road vehicles, non-road vehicles (mobile machinery)
How to measure Scope 1 emissions?
The GHG Protocol provides a thorough guidance which includes all necessary steps to measure the Scope 1 emissions that are related to your product or corporation.
What are Scope 2 emissions?
Scope 2 emissions include greenhouse gas (GHG) emissions that result from the consumption of purchased or acquired energy such as electricity, heating, cooling, and steam. They are called indirect emissions because the organisation doesn’t burn the fuels directly, but because of their consumption, they are made responsible for the equivalent amount of emissions that arise directly, for example at the power plant owner.
What is included in Scope 2 emissions?
Scope 2 emissions can be divided into market-based and location-based emissions. The market-based approach hereby refers to the emissions of the electricity supplier or an individual electricity product, whereas location-based figures refer to the average emission factors of the area where the electricity consumption takes place.
How to measure Scope 2 emissions?
When setting a Scope 2 target, a company should first choose either a market-based or a location-based approach. Once this has been decided, the emission factors per emission source are to be determined. The GHG Protocol provides clear guidance on how corporations can measure their emissions stemming from purchased or acquired energy.
What are Scope 3 emissions?
Scope 3 emissions include the remainder of indirect GHG emissions which cannot be categorised as energy-related emissions in Scope 2. Scope 3 emissions occur outside the organisation, e.g. in the supply chain, as well as during transport and distribution (by subcontractors), business travel, employee commuting, and waste.
What is included in Scope 3 emissions?
The GHG Protocol lists 15 different categories that are included in the Scope 3 emissions. The categories are as follows:
- Purchased goods and services
- Capital goods
- Transport and delivery (upstream and downstream)
- Waste generated in operations
- Business trips
- Employee Commuting
- Upstream and downstream leased assets
- Use of sold products
- End-of-life treatment of sold products
How to measure Scope 3 emissions?
The GHG Protocol provides a thorough guidance which includes all necessary steps to measure the Scope 3 emissions that are related to your product or corporation.
Solar power uses the sun’s energy. To do this, photovoltaic (PV) cells convert sunlight into electricity. The process looks like this: Sunlight consists of photons or particles of solar energy. The photons contain different amounts of energy, depending on the wavelength. A PV cell consists of semiconductor material. If a photon hits a PV cell, there are three possibilities: Either they are reflected by the cell, pass through the cell or are absorbed by the semiconductor material. Only in the latter case do the photons provide usable energy. Electrons from the atoms of the material are removed, causing a current flow. This in turn leads to a potential difference and a current circuit is created.
The efficiency of photovoltaic systems varies depending on the type of photovoltaic technology. Ultra-modern modules now reach 20%, the average efficiency of newer modules is around 15%.
Photovoltaic cells generate a direct current that can be used to charge batteries, which in turn supply devices with direct current. However, since almost all devices require alternating current, inverters are needed to convert the direct current into alternating current.
Not only the size of the PV modules defines their power capacity, but also the amount of energy from the sun, which varies geographically with the radiation intensity (W/m2), and the angle between radiation and module. Ideally, the module should be located at southern latitudes and there should be a 90° angle between the radiation and the module.
A tipping point is described as a “point of no return” in the Earth’s climate system which denotes a threshold value - the exceeding of which leads to irreversible changes. Exceeding these limits will transform a gradual, linear process into a very steep exponential course. This collapse of the entire system of our earth can lead to a global temperature increase of 5°C, the oceans would rise between 6 and 9 meters and all coral reefs and the Amazon rainforest would be lost. Under these circumstances, large parts of the earth would be uninhabitable.
What is TCFD Reporting?
In 2017, the Task Force on Climate-related Financial Disclosures (TCFD) released a number of recommendations on climate-related financial disclosures to provide financial markets with clear, comprehensive and high-quality information on the impact of climate change.
The information helps investors gain an understanding of how reporting organisations think about and assess climate-related risks and opportunities. Moreover, it provides guidance to assist all businesses in developing climate-related financial information that is consistent with the recommended disclosures.
Is TCFD Reporting Mandatory?
From April 2022 onwards, TCFD reporting will become mandatory for around 480 premium listed companies and more than 1,500 UK registered companies with more than 500 employees and more than £500m in annual turnover. Organisations affected by that mandate will be required to list in their annual report whether their disclosures are consistent with the recommendations of the TCFD. The UK becomes the first G20 country to mandate large businesses to disclose their climate-related risks and opportunities.
The TCFD has developed 4 recommendations on climate-related financial disclosures that are applicable to organisations across a range of sectors.
Governance: Disclose the board’s and management’s role in assessing and managing climate-related risks and opportunities
Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses and strategy
Risk Management: Disclose how climate-related risks get identified, assessed, and managed by the organisation
Metrics and targets: Disclose the metrics and targets that are used to assess and manage relevant climate-related risks
What are the TCFD Reporting Requirements?
Premium Listed Companies & Standard Listed Companies:
- Disclosure on a “comply or explain basis”
- Including a detailed Compliance Statement
Traded companies with >500 employees or Public Interest Entities (PIEs) or
UK registered Co. and LLPs with >500 employees and a turnover of >£500m or
UK registered Co. with securities admitted to AIM (>500 employees):
- Disclosure on a “comply or explain basis”
- Not as granular as the Premium Listed Companies
If you would like to learn more about UK carbon reporting requirements, head over to our blog.
The energy of wind power comes from moving air. The natural process is the following: wind is caused by uneven heating of the earth’s surface by the sun. Since the surface of the earth consists of different types of land and water, it absorbs the sun’s heat at different speeds. An example of this uneven warming is the daily wind cycle: during the day, the air over land heats up faster than the air over water. Warm air over land expands and rises, and heavier, cooler air flows in its place, creating wind. At night, the winds reverse because the air cools faster over land than over water, and so do the atmospheric winds that circle the earth because the land near the earth’s equator is hotter than the land near the North Pole and the South Pole.
Today, wind energy is mainly used to generate electricity. Wind turbines use rotor blades to harness the kinetic energy of the wind. Wind flows over the blades and creates lifting force (similar to airplane wings), causing the blades to spin. The rotor blades are connected to a drive shaft that rotates an electrical generator that generates electricity.
The generation of electrical energy from wind power has increased significantly in the last decades. Technical progress in particular contributed to this, which also enabled the costs of wind power to be reduced. In addition, many countries provide financial incentives to promote the expansion of wind turbines.
Almost 5% of global electrical power usage currently comes from wind turbines.