Create an Emissions Reduction Strategy

The below guidance from EDF aligns with other key frameworks in the ecosystem, including Ceres’ Blueprint for Implementing a Leading Climate Transition Action Plan and the TPT Disclosure Framework.   

Your decarbonization strategy outlines the steps you will take to reduce emissions across your company’s value chain. A robust emissions reduction strategy will include a combination of adjustments, innovations, investments, and other actions to reduce Scopes 1, 2, and 3 in line with a 1.5°C pathway.   

It is important to prioritize emissions reduction pathways based on what is feasible and most impactful for your business strategy. For example, for a food and beverage company, procuring ingredients from farms that utilize regenerative agriculture practices can be an effective way to reduce scope 3 emissions. This approach would not be relevant for a software company, which might instead opt for other value chain engagement strategies.  

Emissions reduction strategies are not just good for the planet; they are also smart business. By preparing your company for the green transition, you are also inherently increasing your resilience, mitigating risk, and future-proofing your business operations to ensure long-term, profitable growth. Many companies also report cost savings as a result of their emissions reduction activities and other financial benefits. To learn more, check out Business Case for Sustainability. 

While there are numerous, diverse pathways through which different companies can achieve significant emissions reductions, the basic process to formulate your strategy is consistent across business structures and sectors. A transition plan should translate these ambitious goals into concrete steps that can be taken in the short-, medium- and long-term. The following steps outline how you can develop these steps and identify and implement the best pathways to decarbonize your business.  

Step 1: Identify your largest emissions sources across the full value chain (Scopes 1-3) and assess related transition risks

To come up with concrete actions to reduce emissions, it is critical to first identify your largest emission sources, or “hotspots” across your value chain. Many companies’ largest emission sources come from energy consumption, making energy efficiency measures a critical part of the transition.  

While determining your company’s emission hotspots, it is important to also assess the risks and opportunities related to transitioning to low-emission strategies, such as switching to renewable energy from fossil fuels.  

For more guidance, check out the NZAA’s “Measure Emissions” pathway.

Step 2: Assess what investments you need to take to reduce emissions in line with your targets and develop/disclose the methodology to determine how future capital expenditures will align with your 1.5°c targets

A critical part of your emission reduction strategy will be financing and understanding what investments will be necessary to reduce emissions. This includes resourcing the current and future activities outlined in your climate transition action plan, as well as plans for capital expenditure, major acquisitions and divestments, joint ventures, business transformations, innovation, new business areas, investments into research and development for climate solutions, and asset retirements. 

Step 3: Assess all technologically and financially feasible reduction opportunities and identify the best strategies to reduce your largest emissions sources

Assess how acting on these strategies will reduce risk and provide opportunities. Below is a list of examples of decarbonization pathways.

Redesigning products and services to reduce emissions and/or create new products or business lines

While strategizing how to reduce emissions, companies can get an even more expansive view of their downstream Scope 3 emissions by reviewing product lifecycle emissions. By understanding produce-level emissions, companies can also reduce climate impact at the product level. Whether by redesigning existing products and services or creating new ones, optimizing product-level sustainability can help companies reduce emissions and reach broader climate targets. Industry leaders have already made significant progress in this space, and their strategies can be used by other companies to do the same.

For more information, visit the NZAA’s Building the Business Case for Product Sustainability page and view our Product Design Checklist. 

Engaging your supply chain in climate efforts

Scope 3 emissions can make up as much as 90% of a company’s emissions profile. By engaging your supply chain in climate efforts, you can dramatically reduce your company’s emissions footprint.

For more information, visit the NZAA’s “Reduce Value Chain Emissions” pathway or page 18 of Ceres’ Blueprint for Implementing a Leading Climate Transition Action Plan.

Developing renewable energy procurement targets and strategies

Renewable energy procurement enables companies to reduce their Scope 2 emissions through the purchase of clean energy, and potentially reduce costs through price-stable purchasing contracts. 

For more information, visit the NZAA’s “Transition to Renewable Energy” pathway. 

Developing energy efficiency targets and strategies

By increasing energy efficiency your company can reduce both direct emissions from fossil fuel combustion and indirect emissions from electricity generation. More good news – it can also cut energy costs.

For more information visit the NZAA’s “Business Case for Energy and Water Efficiency” page and “Reduce Facility Emissions” pathway. Also view our Energy and Water Efficiency Checklist, and check out the Harvard Business Review’s Energy Strategy for the C Suite. 

Developing zero-emission fleet targets and strategies

Transportation contributes to nearly 25% of the world’s greenhouse gas (GHG) emissions, with road vehicles being the primary culprits behind these emissions. Regardless of your sector, your company likely owns or leases vehicles – from light passenger to heavy trucks – that contribute to your emissions footprint. Identifying opportunities to decarbonize your fleet will help your company reduce emissions, reduce costs, and demonstrate your commitment to your climate goals.

For more information, visit the NZAA’s “Reduce Transportation Emissions” pathway. 

Using Nature-based solutions

Companies should also consider climate and nature together in their transition planning. Nature is a key climate solution, providing up to 30% of the emission reductions we need by 2050. Your company should set objectives to safeguard and restore nature and share how your business is dependent on nature. A few examples of these objectives include:  

• Regenerative farming practices 
• Forest conservation  
• Land restoration 

Check out the NZAA’s “ Embed Nature in Your Net Zero Strategy” pathway to learn more. 

Step 4: If an emissions reduction strategy is limited by technical or financial feasibility, assess other actions your company could take, such as policy advocacy, to address these limitations

Some emissions sources are deeply ingrained parts of business strategy or operations and may be more complicated to abate. In addition to assessing hotspots, companies must also assess which emissions sources have technically and financially feasible abatement options. To address any limitations, companies should assess other options to contribute to global climate action. For example, they must assess how they can engage in net zero-aligned policy and engagement activities to address limitations, including aligning their actions with business and trade associations with their climate goals.

Companies must not rely on carbon credits or offsets as the primary mechanism to reduce GHG emissions. However, for companies that are using carbon credits to neutralize residual emissions or those that are investing in nature-based solutions in addition to their primary emissions reduction strategies, details on actions related to these investments and projects should be included in a company’s CTAP.

For more information on carbon credits, visit the NZAA’s “Understand the Role of Carbon Credits” pathway and then the “Source, Vet, and Purchase Carbon Credits” pathway. 

Step 5: Identify the just transition implications of the emissions reduction strategies you are deploying 

Ensuring that the transition to a low-carbon economy is just, equitable, responsible, and informed by stakeholders impacted by the shift should be a core consideration of all the strategies in a robust CTAP. Robust plans should include specific strategies and actions to ensure a just transition for workers, suppliers, customers, and communities.

Learn more in Action Step 6: Plan for a Just Transition. 

Continue to Action Step 3: Integrate a CTAP into Core Business Strategy to learn how to make climate a core part of your overall business strategy.