First public consultation of ACT Pulp & Paper Methodology - Short Version - Accepting comments until July 9, 2021

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We understand the original ACT Pulp & Paper Methodology is long, therefore we developed this short version of the methodology that contains key sections to focus on during the public review.

 

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Pulp and Paper sector methodology

Short version of the methodology

Public consultation – June 2021

 

1. Introduction

 

1.1. General introduction

The pulp and paper sector has an important role to play in the global decarbonization and thus represents an interesting target for ACT. In 2014, the sector consumed 5.6% of the total energy required by the industrial sector. Although energy efficiency measures already contributed to a GHG emission reduction of the sector, additional efforts are needed to be on track with the Paris mitigation objectives. Energy efficiency measures are needed for energy intensive steps such as wood chipping, heating through boilers during the pulping process or drying during the paper-making stage.

The main challenges for the sector include increasing the use of recycled fibre coupled with the decarbonization of the energy used for the industrial processes, ensuring the sustainability of the wood used as a primary input and exploring new business models such as the development of products with alternatives fibres or the substitution of plastics.

 

1.2 Principles

The selection of principles to be used for the methodology development and implementation is explained in the general ACT Framework. Table 2 recaps the principles that were adhered to when developing the methodology.

Table 2: PRINCIPLES FOR IMPLEMENTATION

RELEVANCE - Select the most relevant information (core business and stakeholders) to assess low-carbon transition.
VERIFIABILITY - The data required for the assessment shall be verified or verifiable.
CONSERVATIVENESS - Whenever the use of assumptions is required, the assumption shall be on the side of achieving a 2° maximum global warming.
CONSISTENCY - Whenever time series data is used, it should be comparable over time.
LONG-TERM ORIENTATION - Enables the evaluation of the long-term performance of a company while simultaneously providing insights into short- and medium-term outcomes in alignment with the long-term.

 

2. Construction of the ACT score

The ACT rating shall comprise:

a. Performance score as a number from 1 (lowest) to 20 (highest)

b. Narrative score as a letter from E (lowest) to A (highest)

c. Trend score as either “+” for improving, “-” for worsening, or “=” for stable.

 

 

In some situations, trend scoring may reveal itself unfeasible depending on data availability. In this case, it should be replaced with a “?”.

The highest rating is thus represented as “20A+”, the lowest as “1E-” and the midpoint as “10C=”. to their customers.

 

2.1. Performance scoring

The performance score assesses the company on the 9 modules listed above. Each of these modules contains a number of indicators, which are either generic or sector-specific, quantitative or qualitative. This score is the direct assessment of the company’s data that are reported in the ACT questionnaire or in other available sources (CSR report, CDP questionnaire…). This score aims at reflecting the company’s low-carbon strategy on most of its aspects: targets, means to achieve the targets, integration of climate change in the company’s management, etc.

 

Figure 1: Example of module scores breakdown and weighting associated

 

2.2. Narrative scoring

Narrative scoring assesses the company on the 4 following criteria:

  • Business model and strategy
  • Consistency and credibility
  • Reputation
  • Risk

 

2.3. Trend scoring

To apply the trend scoring methodology, the analyst should identify the trends from the existing data infrastructure based on the data points and/or indicators that can indicate the future direction of change within the company.

Trend scoring shall be performed in compliance with the ACT Framework.

 

3. Scope and boundaries

 

3.1. Scope of the Pulp & Paper sector

As shown in the figure below, the companies that are part of the scope of the sector are:

  • Integrated paper and board companies
  • Semi-integrated paper and board companies
  • Pulp companies
  • Paper and board manufacturers
  • Paper and board converters

 

 

Figure 2: Scope of the players

 

The ACT methodology defines an integrated paper and board company as a company performing the three following activities (pulp production, paper & board manufacturing, and paper & board converting), and, in addition, operating at least another activity (e.g., forest tending and harvesting, transportation, etc.) within the pulp and paper value chain.

A semi-integrated paper and board company is defined as a company performing the three following activities: pulp production, paper and board manufacturing, paper and board converting.

Companies that are not included in the scope of the sector, nor covered by another sectoral ACT methodology, can be assessed with the ACT Generic methodology.

 

3.2. Boundaries

The boundaries are defined as the main GHG emission sources along the value chain that are included in the ACT Pulp and Paper methodology. To cover relevant GHG emission sources and to facilitate the data collection on the companies’ side, the ACT methodology focuses on the largest GHG emission sources throughout the value chain. These are included in the boundaries if the two following criteria are fulfilled:

  • Significant climate impact (more explanation on how the significance of emissions was determined is given throughout the methodology).
  • At least one player within the scope of the sector has a minimum level of control, and thus levers to reduce them.

The emissions sources included in the methodology are, as described on the following figure:

  • Forest tending and harvesting (including management carbon impacts from land-use management)
  • Chip production (wood sorting, debarking and chipping)
  • Non-fibrous material production (chemicals, additives, clays, starches, fuels, etc.) to be used for pulp production, paper and board making, and paper and board converting
  • Pulp production
  • Paper and board manufacturing
  • Paper and board converting
  • Transportation

 

 

3.3. Sector, activity and company benchmarks

 

3.3.1. Sector benchmark

The sectoral benchmark is based on IEA scenario (Energy Technology Perspectives 2017 – ETP 2017). The scope of IEA scenario includes the 3 following activities: pulp production, paper and board manufacturing, and paper and board converting (ISIC Division 17). This scenario provides both sector annual scope 1 emissions and annual sector electricity consumption related to pulp and paper processes.

To calculate annual sector scope 2 emissions, annual total electricity consumption of the sector from ETP 2017 is multiplied by the World electricity CO2 emission factor for the inherent year (in gCO2/kWh). The latter is calculated by dividing the total sub-sector CO2 emissions of the power utilities sector by the total electricity generation.

Then, annual sector scope 1 and 2 emissions are divided by the estimated material production of paper and board from 2014 to 2050 (provided by IEA) to compute the annual scope 1 and 2 emission intensity (in tCO2 / ton of paper and board).

This methodology is aligned with SBTi approach for the Sectoral Decarbonization Approach (SDA).

 

3.3.2. Activity benchmark

As it stands, the IEA scenario provides aggregated data for 3 activities and the CO2 emissions per activity are not publicly available. Hence, there is a need to disaggregate the initial scenario into 3 scenarios in order to compare companies to an appropriate and specific benchmark (e.g., a company producing pulp only against a benchmark on pulp activity only).

This disaggregation is still under development. Please find below the methodology that we plan to use.

Questions:

Q1: Does the methodology explained below and in Annex seem relevant to you?

 

Q2: Do you know other trustworthy databases that could be useful for the disaggregation?

 

To create a proper activity benchmark for each of the 3 activities within the scope of IEA ETP 2017 scenario / ACT Pulp & paper methodology we need:

 

Starting point (2014)

Goal: defining the scope 1 and 2 emissions (in MtCO2) of each of the 3 activities at the initial year of the IEA scenario (2014) based on IEA scenario.

Methodology: for that, we need to estimate the share (in %) of each of the 3 activities at the initial year (2014) regarding the 2 following data categories in IEA scenario:

  • Sub-sector CO2 emissions (scope 1 emissions related to pulp and paper manufacturing processes)
  • Electricity consumption (in PJ – activity data used to calculate scope 2 emissions by multiplying it to the World grid intensity in gCO2/kWh also using IEA sector on Power Utilities sector)

Example with the first data category (% and figures below are fictitious)

  • Sub-sector CO2 emissions in 2014 (230 MtCO2):
    • 10% pulp production (so 23 MtCO2)
    • 75% paper & board manufacturing (so 172 MtCO2)
    • 15% paper & board converting (so 35 MtCO2)

Scope 1 emissions will be estimated using either RISI, Ecoinvent or FAO databases (see Annex for more details)

Then, to estimate the scope 2 emissions of the activity in 2014 based on IEA dataset, we multiply the estimated total electricity consumption of the activity in 2014 (provided by the calculations using the database above – see Annex for more details) by the World grid intensity (in gCO2/kWh, also calculated using IEA dataset on Power Utilities – as SBTi does).

This way, we extrapolate from IEA scenario the scope 1 and 2 emissions of each activity in 2014.

 

Projected pathway (from 2015 to 2050)

Goal: defining the scope 1 and 2 emissions (in MtCO2) of each of the 3 activities from 2015 to 2050 based on IEA dataset.

For each of the 3 activities, we apply to their 2 data categories (below) the same annual rate as the one provided by IEA dataset for the sector (% below are fictitious):

  • Sub-sector CO2 emissions (scope 1 emissions related to pulp and paper manufacturing processes): -3,5% between 2014 and 2015, […], -4,5% between 2024 and 2025, etc.
  • Electricity consumption (in PJ – used for scope 2 emissions calculations): +1% between 2014 and 2015, […], +0,8% between 2025 and 2026, etc.

Example with Pulp production for the first data category (% allocation and figures below are fictitious)

  • Pulp production accounts for 10% of the sub-sector CO2 emissions (so 23 MtCO2) in 2014. Applying the sectoral annual decarbonization rate for scope 1 emissions between 2014 and 2015, pulp production accounts for 22 MtCO2 in 2015. Pulp production still represents 10% of the sub-sector CO2 emissions.

As activity scope 1 emissions are provided by the calculations above, we need to estimate the scope 2 emissions of the activity for each year from 2015 to 2050 based on IEA scenario. For that, we multiply the estimated total electricity consumption of the activity for each year (provided by the calculations just above) by the World grid intensity of the inherent year (in gCO2/kWh, also provided by IEA in ETP 2017 for Power Utilities).

This way, we extrapolate from IEA scenario the scope 1 and 2 emissions of each activity for each year from 2015 to 2050.

 

The Scope 1 and 2 emission intensity of each activity from 2014 to 2050

IEA provides the estimated paper and board production from 2014 to 2050.

We have, for each activity, and for each year from 2014 to 2050:

  • The estimated total scope 1 emissions
  • The estimated total scope 2 emissions
  • The total paper and board production

Thus, we can calculate the scope 1 and 2 emission intensity (in tCO2/t of paper and board) for each activity, for each year from 2014 to 2050.

 

3.3.3. Company benchmark

The company’s benchmark is derived from the sectoral benchmark, using the convergence mechanism of the Sectoral Decarbonization Approach (SDA).

This allocation takes the company’s emissions intensity in the initial year and converges it to the sector’s emissions intensity in 2050 at a rate that ensures that the corresponding sectoral carbon budget is not exceeded. The rate of convergence is determined by a market share parameter that will require the company to reduce faster its carbon intensity if its market share increases (based on projections on the total amount of paper and board production), and a convergence index based on the emissions reduction pathway of the sector benchmark.

 

Figure 3 - Illustration of the convergence mechanism

 

The example above shows that companies starting from a higher emissions intensity compared to the sector will have a steeper decarbonization pathway than companies starting from a lower carbon intensity. This way, past action or inaction to reduce emissions intensity is considered.

  • The company’s benchmark is used as a reference for a couple of quantitative indicators in the methodology: alignment of future targets with low carbon scenario, past performance, trend in future emissions intensity…

 

4. Performance indicators

 

4.1 Indicators table

 

 

4.2. Description of the performance indicators

 

4.2.1. Module 1 Targets

 

4.2.1.1 - PP 1.1 Alignment of emissions reduction targets with low carbon scenario

A measure of the alignment of the company’s emissions reduction targets with its decarbonization pathway. The indicator will identify the gap between the company’s target and the decarbonization pathway as a percentage, which is expressed as the company’s commitment gap.

 

 

Question 3:  How does your company define the targets: do they include Scopes 1+2+3? Scope 1+2 and Scope 3 separately? Scope 1+2 only?

 

4.2.1.2 - PP 1.2 Time horizon of endpoint and intermediate targets

A measure of the time horizons of company targets. The ideal set of targets is forward looking enough to include a long-term horizon that includes the majority of a company’s assets lifetimes (lifetime of infrastructural assets such as process machines), but also includes short and mid-term targets that incentivise action in the present.

Dimension 1 (50%): Target endpoint

A comparison of: (a) the longest time horizon of the company’s targets, and (b) an average lifetime of company’s asset. Considering that this data might be difficult to obtain a default value of lifetime of assets will be proposed

Dimension 2 (50%): Intermediate targets

To get full score, the company must not have time gaps larger than 5 years between targets horizons, starting from the reporting year as baseline.

 

 

 

4.2.1.3 - PP 1.3 Achievement of previous and current targets

A measure of the company’s historical target achievements and current progress towards active emissions reduction targets. The ambition of the target is not assessed here with this indicator.

 

 

4.2.2. Module 2 - Material investments

 

4.2.2.1 - PP 2.1 Past performance

 

Dimension 1 (50%): comparison of recent company’s emission intensity with its decarbonisation pathway

The analysis is based on the difference between the company’s recent (reporting year minus 5 years) past emissions intensity trend gradient and the company’s decarbonization pathway trend gradient during the same period.

 

 

Dimension 2 (50%): alignment of past performance with carbon budget

This metric assesses the alignment of the company’s recent absolute emissions with the past carbon budget. The recent emissions and carbon budget are measured over a 5-year period before the reporting year (reporting year minus 5 years). For this dimension, we use data on past emissions from the assessed company and compare it to the sector benchmark.

 

 

 

4.2.2.2 - PP 2.2 Trend in future direct emissions intensity

A measure of the alignment of the company’s projected Pulp and Paper production assets emissions intensity with its decarbonization pathway. The indicator will identify the gap in 5 years after the reporting year between the company’s performance and the decarbonization pathway as a percentage, which is expressed as the company’s ‘action gap’.

 

 

4.2.2.3 - 2.3 Locked-in emissions

A measure of the company’s cumulative GHG emissions from the reporting year to reporting year + 15 years from installed and planned plants. The indicator will compare this to the absolute emissions budget entailed by the company’s intensity decarbonization pathway and projected trends in the sector at the country/regional level.

 

 

4.2.2.4 - 2.4 Share of low-carbon CAPEX

This indicator brings a qualitative measure of how the company is switching its production to more low-carbon pulp and paper products.

 

4.2.3. Module 3 - Intangible investments

 

4.2.3.1 - PP 3.1 R&D investments in mitigation technologies

A measure of the ratio of R&D investments in mitigation. The indicator identifies the ratio between the company’s R&D investment in technologies for mitigation and total R&D investments.

Climate mitigation technologies for the Pulp and Paper sector may include enzymatic pre-treatment, new drying technologies, deep eutectic solvent pulping, flash condensing with steam, black liquor gasification…

 

4.2.4. Module 4 - Sold product performance

 

4.2.4.1 - PP 4.1 Trend in past emissions intensity of purchased pulp and paper products

This metric assesses the alignment of the company’s recent pulp produced or market pulp purchased with its decarbonization pathway. The indicator will compare the gradient of this trend over a 5-year period to the reporting year (reporting year minus 5 years) with the decarbonization pathway trend over a 5-year period after the reporting year. This indicator allows to measure efforts from pulp and paper company is switching its production to more low-carbon products.

 

 

4.2.4.2 - PP 4.2 Share of certified and recovered fibre in paper and paperboard products

This metric allows to measure of the share of recovered fibre and sustainable fibre in paper and paperboard products from the pulp and paper sector. Using recovered fibres substantially contributes to a sustainable global fibre supply and contributes to sustainability, encouraging a cascading system of wood fibre utilization.

Question 4:  What is the maximum share of recycled fibre per broad product category (household and sanitary paper, packaging material, graphic papers, other paper and paperboard) in terms of share (in %) of recovered fibre in the paper and paperboard products? What is the average of recovered fibre per region in the word?

 

4.2.4.3 - PP 4.3 Action on deforestation and sustainable procurement of wood

This indicator integrates two dimensions. The first dimension is based on Forest 500 methodology to evaluate the level of company’s commitment to ban deforestation, track progress and incentivize reforestation in the short term. The second dimension is loosely based on the environmental paper company index developed by WWF

Dimension 1 (50%): Action on deforestation

Dimension 2 (50%): Sustainable wood procurement

Question 5: What actions do you implement to ensure the sustainability of the woody biomass used for energy purposes? If woody biomass comes from a forest you own/manage, have you developed specific guidelines regarding woody debris (branches, tops etc….)? Do you conduct a regular assessment of carbon stocks at the landscape level for the forest you own/manage?

 

4.2.4.4 - PP 4.4 Biogenic carbon storage in final product

This indicator assesses the carbon stored in final products from pulp and paper industry.

Question 6: If you are a company, do you calculate, and report carbon stored in final products? If yes, which guidelines do you use to calculate and report carbon stored in final products?

 

4.2.4.5 - PP 4.5 Increase low carbon energy

This indicator is an analysis of the decarbonization of self-generated electricity of the company.

Dimension 1 (35%): Low carbon electricity strategy

Assessment of the current level of low carbon self-generated electricity and of investments aiming at increasing the share of low carbon electricity.

Dimension 2 (35%): Electricity carbon intensity from the company’s assets

Comparison of the projected self-generated electricity with the company’s benchmark between the reporting year and 5 years after the reporting year.

Dimension 3 (30%): Share of low carbon heat

Assessment of the company’s low carbon heat assets.

Question 7: For companies in the sector producing electricity, are you able to calculate the carbon intensity (in gCO2/kWh) of the electricity you generate, especially when you use Combined Heat and Power (CHP)? Which guidelines do you use to allocate CO2 emissions between heat and electricity?

 

4.2.4.6 - PP 4.6 Inbound and outbound transportation carbon performance

The purpose of this indicator is to analyse the strategy and implemented actions to reduce GHG emissions due to inbound/outbound transportation (including internal transportation, transport of material produced by same company from one mill to another, such as pulp to the paper mill).

When the company totally outsources its transportation activities, the indicator assesses how robust is the reporting of GHG emissions from transportation companies, if the company has defined a specific GHG emission reduction target or included it in a global GHG emission reduction target, and the past and present actions that the company implemented to reduce these emissions.

When the company partially performs the inbound/outbound transportation related to its pulp and paper activities (more than 25% of the GHG emissions is due to transportation performed with the company’s own vehicle fleet), then the company is also assessed on the following topics: how robust is the GHG emission and fleet carbon efficiency (in gCO2e/t.km) measurement, and the past and present actions that the company implemented to reduce these direct emissions (actions on both material and operations).

When the company totally performs the inbound/outbound transportation related to its pulp and paper activities, then the company is not assessed on the outsourced transportation topics.

 

Question 8: Do you think of any other action with significant climate impact that companies in the sector can implement to reduce their GHG emissions regarding outsourced transportation? (11 eligible actions for now)

 

4.2.5. Module 5 - Management

 

4.2.5.1 - PP 5.1 Oversight of climate change issues

The company discloses that responsibility for climate change within the company lies at the highest level of decision making within the company structure.

 

4.2.5.2 - PP 5.2 Climate change oversight capability

Company board or executive management has expertise on the science and economics of climate change, including an understanding of policy, technology and consumption drivers that can disrupt current business.

 

4.2.5.3 - PP 5.3 Low-carbon transition plan

The company has a plan on how to transition the company to a business model compatible with a low-carbon economy.

 

4.2.5.4 - PP 5.4 Climate change management incentives

The Board’s compensation committee has included metrics for the reduction of GHG emissions in the annual and/or long-term compensation plans of senior executives; the company provides monetary incentives for the management of climate change issues as defined by a series of relevant indicators.

 

4.2.5.5 - PP 5.5 Climate change scenario testing

Testing or analysis relevant to determining the impact of the transition to a low-carbon economy on the current and projected business model and/or business strategy has been completed, with the results reported to the Board or C-suite (CEO, CFO, etc.), the business strategy revised where necessary, and the results publicly reported.

 

4.2.6. Module 6 - Supplier engagement

 

4.2.6.1 - PP 6.1 Strategy to influence suppliers to reduce their GHG emissions

The company has a strategy, ideally governed by policy and integrated into business decision making, to influence, enable, or otherwise shift suppliers’ choices and behaviour in order to reduce GHG emissions.

 

4.2.6.2 - PP 6.2 Activities to influence suppliers to reduce their GHG emissions

The company participates in activities that help, influence or otherwise enable suppliers to reduce their GHG emissions. The indicator aims to be a holistic measure of these activities to assess how active the company is in reducing the emissions of their products in the value chain across all products.

Question 9:  What type of actions/collaboration could a company from pulp and paper engage with their suppliers, to encourage and increase the recovery rate of wastepaper and paperboard?

 

4.2.7. Module 7 - Client engagement

 

4.2.7.1 - PP 7.1 Strategy to influence customer behaviour to reduce their GHG emissions

This indicator measures whether the company has a strategy, ideally governed by a clear policy and integrated into business decision making, in order to influence its clients to reduce their GHG emissions.

 

4.2.7.2 - PP 7.1 Activities to influence customer behaviour to reduce their GHG emissions

This indicator measures whether the company has a strategy, ideally governed by a clear policy and integrated into business decision making, and activities to influence, enable, or otherwise shift customer choices and behaviour in order to reduce GHG emissions.

 

4.2.8. Module 8 - Policy engagement

 

4.2.8.1 - PP 8.1 Company policy on engagement with trade associations

The company is not on the Board or providing funding beyond membership of any trade associations that have climate-negative activities or positions. It should also be considered if the company is supporting trade associations with climate-positive activities and/or positions. The company has a constructive policy on what action to take when industry and trade organisations to which it has membership are found to be opposing “climate-friendly” policies.

 

4.2.8.2 - PP 8.2 Trade associations supported do not have climate-negative positions

The company is not on the Board or providing funding beyond membership of any trade associations that have climate-negative activities or positions. It should also be considered if the company is supporting trade associations with climate-negative activities and/or positions.

 

4.2.8.3 - PP 8.3 Position on significant climate policies

The company is not opposed to any significant climate relevant policy and/or supports climate friendly policies.

 

4.2.8.4 - PP 8.4 Interaction with local public authorities and NGOs

The company has established an effective dialogue with local public authorities to improve the implementation of measures to reduce emissions from the overall food value chain.

 

Question 10: [if you are from the pulp and paper industry, please precise if you are a pulp maker, paper manufacturer or paper converter] What kind of collaborations do you develop with local authorities? What relevant actions/collaborations could be implemented with local authorities from the pulp and paper sector?

 

4.2.9. Module 9 -  Business model

 

4.2.9.1 - PP 9.1 Business activities shifting supply from highly emissive to low-carbon products

An assessment of the company preparedness to be profitable and viable in a low-carbon economy by supplying low-carbon products. Relevant business activity areas for this indicator could be for example:

  • Development of low-carbon pulp and paper products: lightweight papermaking, reusable packaging, development of products as substitute to use of plastics, products integrating new raw material…
  • Development of products based on cellulosic fibres for other industries: bio-chemicals, pharmaceuticals, textiles…
  • Development of biorefineries and, eventually, selling biofuels/biogas to other sectors
  • Selling waste heat from pulp and paper process

 

Question 11:  Are there other business models promoting low-carbon products or circular economy, in addition to those provided in the list?

 

OTHER QUESTIONS

 

Question 12: Do you think that it would be relevant to include an indicator on chemicals and other additives in the module 4 “Sold Product Performance”? If so, how would you assess qualitatively companies?

 

Question 13: When using chemicals for your processes, do you have a choice of products? (e.g., can you substitute current chemical inputs by other ones less GHG intensive)

 

Question 14: What are the levers that you identified to reduce those indirect emissions? (in terms of sobriety, efficiency, or sourcing)

 

 

4.3 Weightings

 

4.3.1. Rationale for weightings

The selection of weights for both the modules and the individual indicators was guided by a set of principles. These principles helped define the value of the indicators.

Principle Explanation
Value of information The value of the information that an indicator gives about a company’s outlook for the low-carbon transition is the primary principle for the selection of the weights.
Impact of variation A high impact of variation in an indicator means that not performing in such an indicator has a large impact on the success of a low-carbon transition, and this makes it more relevant for the assessment.
Future orientation Indicators that measure the future, or a proxy for the future, are more relevant for the ACT assessment than past & present indicators, which serve only to inform the likelihood and credibility of the transition.
Data quality sensitivity Indicators that are highly sensitive to expected data quality variations are not recommended for a high weight compared to other indicators, unless there is no other way to measure a particular dimension of the transition.

 

6. Aligned state

The table below presents the response of a low-carbon aligned company of the sector to the 5 questions of ACT:

→ What is the company planning to do? [Commitment]

→ How is the company planning to get there? [Transition Plan]

→ What is the company doing at present? [Present]

→ What has the company done in the recent past? [Legacy]

→ How do all of these plans and actions fit together? [Consistency]

Figure 3 : ALIGNED STATE FOR COMPANIES IN THE SECTOR

 

 

 

6. Integration of Physical risks and Adaptation in ACT

 

7.1 Introduction and context

This is a first version of a maturity matrix that aims to integrate climate physical risks and adaptation in ACT.

A specific method will be developed with a separate score, modules specific to climate risks and adaptation, and a possible joint assessment with the mitigation part of ACT. This is a first draft of its integration in ACT historical assessment method.

To be noted :

Each line (row) of the matrix corresponds to a category that is independent from others. Categories are just grouped by module. The matrix is composed of two dimensions, the physical climate risks and adaption. Each of these dimensions contains several modules.

Scores and weightings are detailed in this document.

The lists of impacts and vulnerabilities for the different activities of a company along its value chain are not exhaustive. Any other impact or vulnerability that is relevant for the company can be considered and analysed.

Any comment or feedback is welcome.

Two questions are for consultation.

A glossary of climate physical risks and adaptation terms is available in the longer version of this document.

Maturity Matrix

The two dimensions of the maturity matrix are climate physical risks and adaptation.

Physical climate risks correspond to the potential for negative consequences from physical climate events or trends. Risks from climate change impacts arise from the interaction between hazard (triggered by an event or trend related to climate change), vulnerability (susceptibility to harm) and exposure (people, assets or ecosystems at risk).

Hazards refer to the potential occurrence of a natural or human-induced physical event or trend or physical impact that may cause loss of life, injury, or other health impacts, as well as damage and loss to property, infrastructure, livelihoods, service provision, ecosystems and environmental resources. In this note, the term hazard usually refers to climate-related physical events or trends or their physical impacts. Thus, it includes processes that range from brief events, such as severe storms, to slow trends, such as multi-decade droughts or multi-century sea level rise.

Exposition is the degree to which a company’s value chain (e.g., assets, operations, supply chain, customers) has the potential to be impacted by physical climate hazards due to its geographic location. These metrics should link part of a company’s value chain (e.g., physical assets) with specific physical climate hazards (e.g., tropical cyclones).

Vulnerability is the propensity of different parts of a company’s value chain to suffer negative impacts when exposed to and then impacted by physical climate hazards. These metrics should assess specific characteristics of a company’s value chain (e.g., water intensity) that may make that part of the value chain more or less likely to suffer negative impacts from physical climate hazards.

The second dimension of the matrix is adaptation. It is the process of adjustment to actual or expected climate and its effects. In human systems, adaptation seeks to moderate or avoid harm or exploit beneficial opportunities. In some natural systems, human intervention may facilitate adjustment to expected climate and its effects.

Adaptation options exist in all sectors, but their context for implementation and potential to reduce climate-related risks differs across sectors and regions. Some adaptation responses involve significant co-benefits, synergies and trade-offs.

Here is presented a summary of the maturity matrix with a short description of each indicator. You can find the full maturity matrix in the longer version. Any comment or feedback regarding these indicators is welcome.

 

6.3 Weightings

The weightings on 100% are distributed equally among Physical risks and Adaptation dimensions. Analysis and Organizational capacity modules are both fixed to 25%. If a company is not concerned by one or several modules between Supply chain, Production, Logistics or Demand, the analyst can decide

  • To attribute a weighting of 0% for it and to redistribute the corresponding weightings
  • To change marginally the weightings between these four modules for another distribution that could be more appropriate for the company

The final score of the complete matrix will be computed on 20 thanks to a weighted average. Two other scores will be computed, the physical risks score on 100% and the adaptation score on 100%.

Any comment or feedback regarding these weightings is welcome.

 

 

 

6.4 Questions on physical risks/adaptation

 

Question 1: How do we want to assess the “Demand and sales” (5) aspect for the company?

 

OPTION 1: keep the module as it is now

OPTION 2: Modify the « Demand & sales » module (5) to make it more business related and integrate more in it the notion of climate-related opportunities, as well as keeping the risks analysis dimension

 

Question 2: How do we want to address the notion of climate-related opportunities in the matrix?

 

Climate-related opportunities in the ACT framework are defined as follow:

It is the potential positive impacts related to climate change on an organisation. It will vary depending on the region, market and industry in which an organisation operates. In the ACT framework, climate-related opportunity focuses on opportunities to adapt to market shifts driven by physical climate impacts and cater to any resulting new market needs, that is to say, the fundamental shifts in climate over the longer term may affect value chains and drive new consumer needs. For example, technology to keep buildings cool, along with water- and energy-efficient technologies, or crops that are better suited to chronic changes in precipitation and temperature. (EBRD)

OPTION 1: Add « Identification climate-related opportunities related to climate change » at the low-carbon aligned level in the matrix for

  • Analysis module (1)
  • Production module (3)

OPTION 2: Modify the « Demand & sales » module (5) to make it more business related and integrate more in it the notion of climate-related opportunities, as well as keeping the risks analysis dimension.

 

7. ANNEX

 

7.1 Sector, activity and company benchmarks

Explanations on how we plan to disaggregate IEA scenario into 3 scenarios in 2014 using different databases.

7.1.1. Defining the starting point of the 2 data categories in 2014 for the 3 activities

 

We have identified 3 databases to disaggregate the IEA values in 2014 for sub-sector CO2 emissions and sector electricity consumption.

  • RISI database, which provides energy consumptions for close to 7000 pulp and/or paper & board facilities across the world (but not paper and board converting facilities)
  • Ecoinvent database, which provides average scope 1 emission intensity (in tCO2/t of material) and electricity consumption intensity (in kWh/kg of material) for different industrial processes in different regions of the world. The database is widely used by Life-Cycle Analysis (LCA) analysts.
  • FAO database, which provides 2014’s volume of production for the different pulp processes (output of the pulp production activity) and 10 general grades of paper and board (output of the paper & board manufacturing processes).

The methodology would be:

1.Calculate the total scope 1 CO2 emissions and total electricity consumption of each of the 3 activities in 2014 using the databases above.

  • Using RISI databases for pulp production activity, and paper and board activity, and Ecoinvent coupled with FAO for the converting activity (see the bullet point below for the methodology)
  • OR using Ecoinvent to get the scope 1 emissions intensity and electricity consumption intensity of the different pulp production processes, paper and board manufacturing processes (per grade of paper and board), and paper and board converting processes that we multiply by the related volume of production provided by FAO

2.Then, calculate the share of each activity (in %) regarding the total sector scope 1 CO2 emissions, and total sector electricity consumptions from calculations using the databases above (e.g., for scope 1, and for pulp production, the share in % = total scope 1 emissions due to pulp production using the databases divided by the sum of scope 1 emissions of the 3 activities using the databases).

3.At last, apply this share (in %) to the 2014 value provided by IEA for the sector (in MtCO2 for scope 1, and in PJ for electricity consumption) to get the starting point of the 3 activities for the 2 data categories.

As activity scope 1 emissions are provided by the previous calculations, we need toto estimate the scope 2 emissions of the activity in 2014 based on IEA scenario. For that we multiply the estimated total electricity consumption of the activity in 2014 (provided by the previous calculations) by the World grid intensity (in gCO2/kWh, also calculated using IEA scenario for the Power Utilities sector – as SBTi does).

This way, we extrapolate from IEA scenario the scope 1 and 2 emissions of each activity in 2014.

 

 

 

Technical coordination and ACT Co-founders
   
supported by:

 

 

   
Technical assistance

 

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