2021年4月15日木曜日

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How to prioritize sustainability initiatives - examples of materiality matrix

There are many ESG initiatives that seem so important to companies, but corporate resources are limited, so trade-offs often have to be made. Balancing long-term environmental and social impacts with short-term profits is one of the biggest challenges for companies. Another example I've seen in conversations with companies was the reduction of Scope 3 GHG emissions versus supplier benefits. One of the ways to prioritize these ESG initiatives is to assess materiality. For reference, I have put together some examples of the materiality matrix from recent corporate sustainability reports. I found that Altria, a tobacco company, has done this materiality assessment on a large scale. They surveyed 9500 people who are stakeholders, such as employees, consumers, growers, suppliers, trading partners, government officials, communities, NGOs, etc. They spend 4 pages explaining the methodology in their sustainability report. If you look at GM's materiality matrix, it says that developing the electric vehicle market is most important, and they use the matrix to support their corporate strategy, which focuses on electric mobility and sends clear messages to readers. Conducting a materiality analysis and communicating about it in sustainability reports becomes very important.



1, Altria 2020 Materiality Matrix


Source: Altria Engage and Lead Responsibility: 2020 - 2021 (P.14) 


2, GM 2019 Materiality Matrix

 Source: GM 2019 Sustainability Report (P.32)


3, PG&E Materiality Matrix (2017)



4, American Express Materiality Matrix


5, eBay Materiality Matrix

Source: eBay Impact 2019 Report  (P.7)

2021年2月5日金曜日

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How environment friendly are the auto makers ? (comparison of sustainability data)

President Biden recommitted the United States to the Paris climate agreement. "Green New Deal"-type stimulus to recover from COVID-19 is being considered not only in the U.S., but also in many other places around the world. As environmental awareness increases, it appears that corporate efforts to reduce greenhouse gas emissions will accelerate in the coming years. 


This time, I compare automobile companies because GHG emissions from the transportation sector are significant and automobile manufacturers play an important role in this. 


First, I compared GHG emissions data from three automakers, Toyota, Volkswagen, and GM, that have disclosed detailed GHG emissions data in their environmental reports. (I also checked Daimler, Ford, and Tesla, but I could not find specific Scope 3 GHG emissions data in their sustainability reports.)


  • Scope 1 emissions - direct emissions including on-site fuel combustion
  • Scope 2 emissions - indirect emissions such as purchased electricity, heat and steam. 
  • Scope 3 emissions - all other indirect emissions from their value chain, including the purchase of materials and parts, use of sold products etc. 

Scope 1 and Scope 2 emissions are emissions from corporate activities. Compared to Scope 1 and 2, Scope 3 emissions are difficult to calculate but very important to capture the carbon footprint.
 
Looking at the CO2 emissions intensity (Scope 1 emissions + Scope 2 emissions per vehicle), the comparison is as follows.

Toyota has a much lower level of Scope 1 emissions compared to other companies. According to its environmental report, this is achieved by introducing innovative technologies and promoting energy savings through daily kaizen. The company plans to achieve zero CO2 emissions at its global plants by 2050.

In terms of water consumption per unit, Toyota's figure seems slightly better. 


When it comes to the use of renewable energies, Volkswagen is ahead of the game. They already achieved 41% renewable energy in their electricity consumption, while Toyota and GM achieved 12% and 22% respectively.

We can see the strengths of each company by comparing their environmental data. For example, Toyota seems to be good at saving energy and improving energy efficiency, and Volkswagen seems to be good at utilizng renewable energy. 

In the future, we can expect the amount of data disclosed in environmental reports to increase. By comparing different KPIs, we may continue to identify companies' characteristics and strengths.

Source:
https://global.toyota/pages/global_toyota/sustainability/report/er/er20_en.pdf
https://www.volkswagenag.com/presence/nachhaltigkeit/documents/sustainability-report/2019/Nonfinancial_Report_2019_e.pdf
https://www.gmsustainability.com/_pdf/resources-and-downloads/GM_2019_SR.pdf
https://www.tesla.com/ns_videos/2019-tesla-impact-report.pdf
https://global.toyota/en/company/profile/production-sales-figures/201912.html

2021年1月27日水曜日

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How environment friendly are the GAFA companies? (Comparison of Renewable Energy)


It seems that GAFA investments in renewable energy will continue to grow in the coming years.


Recently I had the opportunity to look at the ESG reports of GAFA companies (Google, Apple, Facebook, Amazon) and found some interesting facts by comparing numbers. 


First, I compared the percentage of renewable energy in their electricity consumption. Google and Apple achieved a rate of 100% renewable energy on their electricity consumption in 2019. Facebook and Amazon reached 86% and 42% respectively.


Amazon's share of renewable energy in electricity consumption is significantly lower than other companies. Amazon has set a goal to use "100% renewable energy" by 2025, so major investments in renewable energy are expected in the coming years. 

Comparing contracted renewable capacity, it appears that Google maintains its lead, although Facebook added 1.7 GW of contracts in 2019. (Edit: Amazon revised its sustainability report and claims they have 6500MW of solar and wind projects as of Dec 2020.)

Because Apple does not manufacture products in its own facilities, the amount of renewable energy used in Apple's own facilities is relatively small. According to Apple's report, 75% of its carbon footprint comes from product manufacturing. Therefore, Apple introduced the Supplier Clean Energy Program in 2015, and now the renewable energy capacity at Apple suppliers is significant. Apple recently set a more ambitious goal to "transition our entire manufacturing supply chain to 100 percent renewable power by 2030," so renewable energy investment at Apple suppliers is expected to continue growing.

Since 2010, Google has invested "nearly $2.7 billion in large-scale renewable energy projects with an expected total combined capacity of approximately 4.6 GW". (The figure excludes Power Purchase Agreements for their operation.) 

I also looked at the time series data of Google's renewable electricity purchased and found that it grew rapidly over the 2013-2018 period.

As Google's electricity consumption is expected to continue to increase in the coming years, Google's investment in renewable energy is also expected to increase.
  
The installation of EV charging ports at Google also increased at a fast pace. 

Google employees can charge electric vehicles for free as part of their benefits, which has helped reduce greenhouse gas emissions from commuting. Google has installed 2,722 EV charging ports at its U.S. offices through 2018, and Apple has installed more than 2,300 EV charging stations through 2019. 

Speaking of electric vehicles, Amazon announced that it has ordered 100,000 new electric delivery vehicles from Rivian, a U.S. electric vehicle manufacturer, in September 2019. (Amazon led a $700 million round of investment in Rivian in February 2019.)

Although these companies have different business models, they are aggressively committing to reducing GHG emissions and are very good at disclosing the information in their environmental reports. 

Source:
https://rebuyers.org/blog/reba-announces-top-10-u-s-large-energy-buyers-in-2020-2/
https://sustainability.aboutamazon.com/pdfBuilderDownload?name=sustainability-all-in-december-2020