Decarbonization is no longer an option—it is a mandate for companies aiming to align with global and national climate goals. A top-down approach to crafting decarbonization pathways involves understanding a country's climate commitments, in line with the Paris Agreement. This includes both short- and long-term climate goals, taking into account the available carbon budget necessary to limit global temperature rise to 2°C, with ambitions to reach the 1.5°C target. This strategic alignment helps companies across sectors, particularly those that own or manage real assets to become future-ready in an era of heightened climate risks and stringent regulations.
How are Decarbonization Roadmaps crafted for Real assets?
Carbon Budget Allocation: The journey begins with determining the share of the global carbon budget that applies to a company’s real assets, focusing on location-specific emissions intensity using a convergence approach. This considers the region’s energy mix, local climate policies, and the asset’s operational footprint.
Asset-Specific Pathways: Each property-type or asset-use (e.g., office, retail, industrial or mixed-use) requires a tailored decarbonization pathway based on its current emission intensity, operational characteristics, and future growth rates.
Portfolio-Level Insights: For companies with multiple assets, we drill down to asset-specific data inputs, generating a holistic portfolio-level decarbonization pathway. This enables tracking of both individual asset performance and aggregate emissions across the company.
Transition Risk Analysis: It's critical to assess current and future transition risks. This includes evaluating the energy mix utilized by each asset, and identifying gaps between the existing carbon intensity and the ideal trajectory targeted.
Integration of Technology: Companies could explore opportunities to integrate low-carbon technologies to reduce operational emissions, improve efficiency, and future-proof assets.
Benefits of adopting Decarbonization Pathways for a Company’s Operations
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This article was written by Swasthi Krithivasan, Head of Decarbonization & ESG at Conserve Consultants Pvt. Ltd.
