Why Decarbonization?

Why do I need to decarbonize?

Let’s be real: before starting your decarbonization journey, you’re going to need to understand why reducing your carbon footprint is so important. So, here are a few reasons:

• It’s the right thing to do. There is growing concern that increasing greenhouse gas emissions are causing irreversible damage to our climate.
• Governments are legislating for it. Law makers around the world are imposing stricter legislation to reduce national carbon emissions to net zero, in line with the Paris Agreement. For example, the USA has a strategy for achieving net-zero emissions by 2050, and many other countries, including Canada, Japan and the United Kingdom, have written 2050 net-zero targets into law.
• Customers expect it. End users increasingly prefer purpose-driven brands with more environmentally friendly products. This means that suppliers and their customer are striving to offer lower-carbon, more circular goods.
• Shareholders are demanding it. Shareholder activism is on the rise as investors seek lower-risk, climate-aligned opportunities. Almost 75% of investors state that the environmental, social and corporate governance (ESG) performance of a company is an important or very important factor when making investment decisions.

Should my company have a decarbonization target?

Well, that’s a question for each individual business to evaluate for itself.

But Shell does: Shell’s target is to become a net-zero-emissions energy business by 2050. This supports the more ambitious goal to tackle climate change laid out in the UN Paris Agreement: to limit the rise in average global temperature to 1.5°C above pre-industrial levels.

By achieving this target, we will contribute to a net-zero world where society stops adding to the total amount of greenhouse gases in the atmosphere.

This means net-zero carbon emissions from our operations – known as our Scope 1 and Scope 2 emissions. It also means net zero from the end uses of all the energy products we sell, which are our Scope 3 emissions and account for more than 90% of our total.

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What do I need to know about Scope 1, 2 and 3 emissions?

You might be hearing this terminology for the first time, but it probably won’t be the last.

A company’s total greenhouse gas emissions can be divided into three categories – Scope 1, 2 and 3 emissions – and this is useful in helping to understand where your emissions are actually coming from.

To explain this, let’s imagine that you are the owner of a plastic converter company.

Your Scope 1 emissions are the direct emissions that occur in your facilities or from your business activities. That includes the emissions from your plant’s boilers and furnaces, for example. It also includes emissions from your company-owned vehicles – provided they run on gasoline or diesel.

Your Scope 2 emissions are the indirect operational emissions created offsite. These include emissions from the generation of electricity (including electricity used to, for example, heat extruders and charge company-owned electric vehicles), steam, heat or cooling that you purchase.

Your Scope 3 emissions are the indirect emissions produced in the full supply chain, both upstream and downstream, from your specific business. So, this would include:

• Upstream: The emissions produced during the production and transportation of resin to your facility, and also those produced during the manufacture of the equipment that you use in your facility. Additionally, emissions from business travel using vehicles not owned by your company (for example, taxis, planes and trains) and employee commuting are part of your upstream Scope 3 emissions.
• Downstream: The emissions that occur during the transportation of your products to buyers, and also those produced during your products’ end-of-life recycling or disposal.