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A Large Manufacturing Company Looks to Carbon Offsets to Meet its Net Zero Goals

A Large Manufacturing Company Looks to Carbon Offsets to Meet its Net Zero Goals

“Race to Zero” is the UN-backed global campaign rallying non-state actors – including companies, cities, regions and financial and educational institutions – to take rigorous and immediate action to halve global emissions by 2030 and deliver a healthier, fairer zero carbon world in time.1 Members are committed to the same overarching goal: reducing emissions across all scopes swiftly and fairly in line with the Paris Agreement, with transparent action plans and robust near-term targets.

As of early 2021, at least one fifth (21%) of the world’s 2,000 largest public companies had committed to meet net zero targets.2 The companies together represented sales of nearly $14 trillion. However, to keep global warming to no more than 1.5°C as called for in the Paris Agreement, emissions need to be reduced by 45% by 2030 and reach net zero by 2050. Strong action plans need to be put in place to meet these ambitious goals.

Global emissions at this large manufacturing company stood at approximately 20 million metric tons (MT) in 2021. The company plans to reduce its total emissions to 6 million MT by 2030 and offset this amount to become a net zero emissions company within the decade. The aim is to offset mainly with forestry projects and then with soil carbon sequestration projects.

Pain Points

ESG performance is becoming more transparent as disclosure and reporting takes hold and is increasingly being used to evaluate a company’s potential as an investment option. Given the nature of this manufacturing business, members of the corporate ESG team recognized the need to obtain carbon credits in order to meet the company’s net zero goals. For this to be effective, it was important to have access to:

  • Insights on carbon market developments around the world.
  • A comprehensive picture of prices that capture individual attributes of particular projects, including standard certification, volume, vintage and geography.
  • Credible offset projects that are validated and verified to the highest standards. 
  • An auction platform to view and bid on available offsets, see final prices and have electronic position settlement.
  • Registration capabilities for carbon accounts in different markets, with easy online access to see credits available for sale, along with indicative quantities and prices.
  • Credit tracking from issuance to transfer to cancellation or retirement.

The company was a long-standing client of S&P Global Market Intelligence for credit risk solutions and knew that IHS Markit was now part of the group. It was suggested that the team meet with S&P Global Sustainable1 (“Sustainable1”) to discuss the firm’s extensive capabilities in the carbon market arena. Sustainable1 brings together capabilities from across the enterprise to serve as a single source of essential energy transition intelligence.

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The Solution

Specialists from Sustainable1 spoke to members of the ESG team about their net zero goals and desire to offset emissions. They then described a number of carbon-specific capabilities, including solutions from:

  • S&P Global Commodity Insights. As of March 2022, IHS Markit became part of S&P Global, and S&P Global Platts and IHS Markit Energy & Natural Resources combined to become S&P Global Commodity Insights.
  • S&P Dow Jones Indices.
  • Trucost, the data and analytics engine of Sustainable1.

Together, these capabilities would enable the company to:

Key Benefits

Members of the ESG team thought this comprehensive set of data and tools for the carbon markets would enable them to better understand this quickly evolving space and identify appropriate projects for their offset plans. They subscribed to the capabilities discussed and now have access to:

  • Information to determine their current emissions levels and set goals to reduce them over time.
  • Relevant insights into the trends that shape carbon markets across a large range of project types, geographies and standards.
  • Carbon price assessments that reflect projects certified by established entities: The Gold Standard, Climate Action Reserve (CAR), Verified Carbon Standard (VCS), Architecture for REDD+ Transactions and American Carbon Registry (ACR).
  • Well-tested and secure registry platforms with extensive functionality to efficiently manage carbon credits.
  • Auction capabilities backed by a leading provider that has recognized expertise in collecting, processing and distributing content in the carbon and water marketplaces.

1 “Race to Net Zero”, UN, https://racetozero.unfccc.int/join-the-race/
2 “Taking stock: A global assessment of net zero targets”, Energy & Climate Intelligence Unit, https://ca1-eci.edcdn.com/reports/ECIU-Oxford_Taking_Stock.pdf?v=1616461369
3 Data as of January 2022.