Smarter Grid Solutions’ mission is to deliver the software solutions that enable a decarbonized, decentralized and more democratic and participative energy system. Our products provide the connections from customers and energy assets into electricity grids and markets to enable the optimization of energy, carbon, and financial values. That mission has a clear climate focus, and we expect carbon reduction goals to manifest themselves in several new ways as a cleaner, more sustainable electricity system is brought into being. We also anticipate the massive growth in transportation and heating electrification as a primary route to decarbonize those sectors. We are already committed to programs that enhance our products and bring value to our customers while tackling the climate challenge. Our product climate delivery credentials are in the public domain and it is or goal to see much more clean energy brought onto the electricity system and into markets to further fulfil our mission.
But we also want to be a model for low carbon operation at a company level. Prior to 2019 we had a set of company policies to reduce waste and to encourage cycling to work, as well as to manage our environmental impact in a positive way. As a primarily office based, digital technologies company, we did not burn primary fuels, we did not mine minerals, we did not manufacture physical goods and we did not use harmful materials or produce particularly challenging wastes. In that regard we were like a lot of office-based organisations where our main activities were using IT equipment, running our offices, and moving our people around to be an effective participant in our markets and serve our customers at their sites.
However, throughout 2019 we undertook our first carbon footprint estimation exercise to put ourselves on a clearer route to carbon neutrality in our business operations. That exercise captured our scope 2 (energy for office heating, cooling and power) and a limited set of our scope 3 emissions for business travel. We learned a lot from that process and took our first serious step towards net zero carbon.
2020 was an unusual year and we, like many others, focused on protecting our business and making sure all our people, and their families, were safe and got through the Coronavirus pandemic.
To coincide with COP26 in our hometown of Glasgow and to get back up to date and build on our 2019 footprint estimate, we have undertaken a more extensive carbon foot-printing exercise for the year of 2021. This includes projections to the year end, corrections to the 2019 estimate and back-casting to 2019 for the extended scopes of our 2021 estimate. All of this was made easier by having a good starting point from 2019. We expect many businesses will be in a similar position to ourselves, developing a growing awareness, taking the first steps, and looking to build on those and get serious about real action to make a difference in a meaningfully short time frame.
Specifically, we have now included in our 2021 estimate home-working scope 3 emissions to reflect our staff working from home in a new hybrid working model. We have also included staff commuting as a scope 3 emission, basing the modes of transport on a 2019 staff survey and the proportion of office days across our staff. We now also have better information on shared office building energy supplies which is a 100% green REGO certified tariff but includes 25% wood pellet power (an acknowledged topic of dispute) in our UK HQ. Our model now has a range of inputs and data links (e.g. office electricity metering, carbon intensity in the UK and the US states where we operate), variables (e.g. home working rates, office and home energy sources, staff headcount) and assumptions (e.g. staff commuting mode, office and data centre energy supply). This allows us to improve the model further and project the impact of our action plan to get to 50% and 100% reductions in line with our climate pledge.
Our 2021 estimated year-end gross annual total carbon footprint is 76 tCO2e. We report gross carbon emissions (using the “location based” approaches for scope 2 emissions) so that a true picture of our footprint is attained, ahead of reductions for clean energy supplies or offsets which have a degree of complexity associated with them. That 2021 provision outcome (to be updated when actual year-end data becomes available) compares to 249 tCO2e in 2019 (a figure corrected downwards with new data). It is important to note that all carbon footprints are estimates since no direct measurement is possible – the right sources of data, assumptions and standards are a source of intense debate within SGS with a desire for both analytical rigour and making justifiable claims and scientifically founded action plans.
The two major differences between 2019 and 2021 are the significant reduction in travel and commuting resulting from coronavirus restrictions but an increase in home working where power and heat in homes attributable to work is around 54 tCO2e – something like two thirds of the overall footprint. Amazingly, the like-for like comparison between 2019 and 2021 (discounting the new impact of home-working) is a reduction from 249 tCO2 to 21 tCO2e so an approximately 200 tCO2e mostly arising from reduction in travel and commuting (with air travel and transatlantic flights making up a large proportion).
The only offset, adjustment or reduction modelled in the 2021 estimate is the verified Glasgow Office 100% renewable electricity supply which would reduce the actual 2021 net carbon footprint from 76 tCO2e to 67 tCO2e.
Staff commuting in 2021 is modelled but this is very small (0.4 tCO2e) as a result of the still dominant home working and the majority of staff commuting via walking, cycling or public transport to city centre (Glasgow and New York City) offices.
In 2021 we have also added a company-wide action plan to our model to achieve our 50% carbon reduction pledge and put us on pathway to net zero (100% reduction). The first step was creating a 2019 Baseline from the corrected 2019 estimate and the additional scope 3 sources now modelled in 2021. This 2019 baseline of 249 tCO2e will act as the anchor point for our science-based action plan and any % reduction reporting we do. We then used our model to identify the carbon reduction plan which consists of a target for 50% reduction to our 2019 business travel carbon, maintaining a 100% clean energy supply for our Glasgow office (requiring negotiation with our landlord) and achieving a of 3:2 homeworking to office hybrid model to reduce home carbon emissions. Our model shows that it is better, in carbon terms, for staff to commute to work in our offices than work from home with natural gas heating and average carbon intensity grid electricity (which we assume is the case for most staff). Those measures give a result of 131 tCO2e annual footprint, so a 47% reduction over the 2019 baseline. This shows that a true 50% reduction is immediately achievable through a commitment not to ‘rebound’ to 2019 travel patterns while accounting for staff to work from home in hybrid mode (although less home working is better in carbon terms, especially in winter heating periods).
The path to true net zero will need a firmer commitment to 100% no carbon travel, measures to reduce carbon from home working and gold-standard carbon offsetting for the hard to reduce areas (e.g. essential air travel). We recognise also that a true net zero would need to include all supply chain (equipment, data centres, food and other office supplies) scope 3 emission and we currently do not have data or a plan for those. We are still on a pathway of improving our capability to estimate our carbon footprint and are now deep in the complexities of scope 3 emissions estimation and plan to make further improvements. Our first action plan to get to our first step 50% reduction is relatively simple but effective, based on the data we have. Taking these steps on footprint estimation and action plan creation enables us to monitor our progress carefully in 2022 while embracing the measures required to move beyond 50% towards 100% reduction in our carbon.