Transition to low carbon economy

Does your company provide goods, products or services that through their utility enable us to adapt, mitigate or remediate the impacts of climate change, resource depletion or environmental erosion?

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A low carbon economy (LCE) is an economy powered by low carbon energy where a business' mix of the goods and services it delivers is increasingly 'green'. That is, the goods and services they sell are those which, through their use, enable the adaptation, mitigation and/or remediation of the impacts of climate change, resource depletion and/or environmental erosion.

Climate change threatens the basic necessities of human life all around the world - access to water, food production, health, land, biodiversity, peace and stability. Climate change is an unprecedented issue, unique to our civilisation, and action is needed to prevent dangerous anthropogenic (human induced) interference with the climate system.

Without a rapid transition to the low carbon economy, continued emissions of greenhouse gases (GHG) will cause further planetary warming and irreversible damage to ecosystems and society. Buoyed by political agreement in at COP 21 in Paris at the end of 2015, thousands of businesses around the world are designing and implementing their LCE transition strategies, supported by forward thinking investors.

Setting and achieving emissions reductions (see R100's question on reducing GHG emissions), greening the products and services mix, and engaging suppliers and other stakeholders are becoming necessary to enable the LCE transition. Decarbonisation of the energy supply is another powerful tool at the disposal of businesses with an increasing number switching partly or wholly to renewable power.

This question currently relies on FTSE Russell’s defined ‘LCE’ products, goods and services, which are split into eight sections and 60 sub-sections (see glossary). While some businesses may not feel able to participate in any of them and thus that they are unfairly discriminated against, the demand from the investment community to be able to allocate greater funds to the LCE and its reliance on hard, actionable financial data in order to do so creates the rationale for use of these definitions. Whether or not a company markets LCE products, goods and services thus defined, it may nonetheless also contribute to and be part of the low carbon economy by reducing its GHG emissions, using energy from renewable sources, and by developing 2-degree transition plans detailing how it makes informed and strategic decisions in respect of its investments, operations, innovations, collaborations and more. Responding to this question will enable it to describe such activities.

Low carbon economy (LCE)

A 'low carbon economy' (LCE) is an economy powered from low carbon energy sources, delivering goods, products and services which, through their use, serve to adapt, mitigate and/or remediate the impacts of climate change, resource depletion and/or environmental erosion.

LCE goods, products and services

FTSE Russell define 60 different types of 'goods, products and services that through their utility enable the adaptation, mitigation and remediation of the impacts of climate change, resource depletion or environmental erosion under eight topic areas, as follows: ENERGY GENERATION, which includes BioFuels, Clean Fossil Fuels, Geothermal, Hydro, Integrated LCEG, Nuclear, Ocean and Tidal, Solar, Waste to Energy, and Wind; ENVIRONMENTAL INFRASTRUCTURE, which includes Carbon Capture & Storage, Desalination, Flood Control & Land Erosion, Integrated LCEI, Logistics & Support, Pollution Management, Recyclable Products, Recycling Services, Waste Management, and Water Management; ENERGY EQUIPMENT, which includes BioFuels, Clean Fossil Fuels, Geothermal, Hyro, Integrated LCEC, Nuclear, Ocean and Tidal, Solar, Waste to Energy, and Wind; ENVIRONMENTAL RESOURCES, which includes Agriculture, Aquaculture, Integrated LCER, Mining, Minerals and Metals, Source Water, and Sustainable Forestry; ENERGY MANAGEMENT, which includes Combined Heats Power, Controls, Fuel Cells, Integrated LCEM, Logistics and Support, Power Storage, and Smart Grids; MODAL SHIFT, which includes Aviation, Integrated LCMS, Railways, Road Vehicles, and Shipping; ENERGY EFFICIENCY, which includes Advanced Materials, Buildings and Property, Industrial Processes, Integrated, IT Processes, Lighting, and Video Conferencing; OPERATING SHIFT, which includes Finance/lnvestment, Integrated LCOS, Retail/Wholesale, and Property.

Answering YES

All Businesses MUST

Reveal the proportion of the goods and services they currently sell which adapt, mitigate and/or remediate the impacts of climate change, resource depletion or environmental erosion, as a percentage of all goods and services sold (see FTSE Russell’s qualifying goods, products and services in the glossary)

Explain their plans and the targets they have set for increasing this proportion in the future

Explain whether they belong to any trade associations that are actively opposing specific policies to reduce GHG emissions and/or LCE, and what actions they have taken in response to this

All Businesses MAY

Explain the extent to which their business plans and models are consistent with maintaining global temperature increases below two degrees Celsius

Explain any commitments to renewables they have made including the proportion of total company energy usage they constitute

Explain how they are remediating goods and services which may be contributing to climate change, resource depletion, and/or environmental erosion, with reference to the entire product lifecycle

Describe any activities that encourage their customers to use their products more thoughtfully or efficiently in order to reduce their use-phase carbon emissions

Describe how they work with suppliers or channel partners to influence the shift to a low carbon economy

Describe any activities that show leadership in shifting other stakeholder groups towards a low carbon economy

Describe any future plans regarding the transition to a low carbon economy

Describe any other relevant issues

Large and Multinational Corporations (MNCs) MUST

Explain whether they have been engaging with policymakers over any legislation to reduce GHG emissions and what policy outcomes they have will advocate for

Explain, if they operate internationally, whether their practices differ from one country to another, and if so how and whyclimate change policy positions are aligned across different geographies, and if so, what policies and practices they have in place to ensure this

Answering NO

All Businesses MUST

Explain why they do not or cannot answer YES to this question, listing the business reasons, any mitigating circumstances or other reasons that apply

All Businesses MAY

Explain how they are remediating goods and services which may be contributing to climate change, resource depletion, and/or environmental erosion

Mention any future intentions regarding this issue

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 1

To receive a score of 'Excellent'

Clear commitment to the transition to a low-carbon economy at all levels of management and within the supply chain. Complete compliance with the UK regulations, provides numerous positive examples of the use of renewable energy in respect to its investments and operations. Very high proportion of qualifying goods, products and services and/or very ambitious commitments to increase this proportion as a total of the company goods, product and services mix.

Examples of policy and practice which may support the EXCELLENT statement:

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To receive a score of 'Good'

Demonstrable commitment to the transition to a low-carbon economy. Compliance with the UK regulations. Able to provide some examples , providing positive examples of the use of renewable energy in respect to its investments and operations. Near complete compliance with UK regulations. High proportion of qualifying goods, products and services and/or ambitious commitments to increase this proportion as a total of the company goods, product and services mix.

Examples of policy and practice which may support the GOOD statement:

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To receive a score of 'Okay'

Some steps taken towards a low-carbon economy. Display of positive intentions towards the transition to a low-carbon economy and increasing commitments OR transition to low carbon economy is not relevant to the business.

Examples of policy and practice which may support the OKAY statement:

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To receive a score of 'Poor'

The business acknowledges performance below expectations or no action evident.

Examples of policy and practice which may support the POOR statement:

  1. no evidence of practices or policies to remediate the output of carbon in the LCE
  2. little understanding of issue evident
  3. no statement of future intent to improve