"The recommendation we always give is, that corpartes simply cannot afford not to invest in sustainability, as it is a future-oriented, strategic decision."
Interview with Lara Obst, Co-Founder & Chief Climate Officer at The Climate Choice
Source & Copyright by The Climate Choice
Author: House of Eden
The start-up The Climate Choice helps companies to determine their own degree of climate maturity and to find sustainable solutions for a successful climate transformation. For this purpose, the three founders have developed a dedicated software, which evaluates a climate readiness check for companies. This results in recommendations for actions across nine impact categories. From sustainable energy and mobility to industry-specific technologies. Co-Founder and Chief Climate Officer Lara Obst explains to us what this is all about.
Lara Obst, Co-Founder The Climate Choice
The Climate Choice focuses on companies, are they the driving force behind climate transformation?
Looking at climate research, we see that there is only little time left, to meet the 1,5 degree target through real CO2 reductions to reach. In my opinion, companies have the most direct and greatest leverage to change this. Direct by means of starting with themselves, through to the supply chain, and reducing emissions immediately. What does not mean, that politics have no responsibility. I think it always takes the triad of politics, society and business. But corporates definitely can lead the way as a major driver, by making strong reductions possible for themselves.
Many corporations are currently declaring net zero Targets, how do you recognise real impact vs. marketing?
At the moment, complete transparency is relatively difficult as we are still at the beginning. The first step is definitely to set ambitious climate targets. But these should always be science based. For example, there is the initiative called "Science Based Targets", where companies can list their measures and link them to climate targets. That is something that we will have to demand and review in future.
Large corporations have often already recognised, that most of the emissions come from their own supply chains . This means that if you set yourself goals, in order to become climate neutral, you really have to work with the suppliers. Enabling companies to create transparency and collect relevant climate data along the entire supply chain. And this is exactly where we start as The Climate Choice. By giving companies a tool, which first identifies where companies stand at the moment and then provides advice to gradually reduce emissions. To do this, we use our data-driven Climate Readiness Check, a climate-focused ESG rating instrument, which records your own climate maturity level and shows action-oriented, tailor-made decarbonization measures.
For consumer however, it is still very difficult to recognise marketing versus real ambitions. Especially because of the many confusing labels and certificates that exist. The seal "climate neutral" for example, is often not an indication, that can be relied on alone. That's why I would always recommend to do your own research about what companies engage for and committed to. In summary: climate strategies are not particularly transparent and tangible yet. What is needed for this is more climate data and pressure from consumers.
What exactly is behind your Climate Readiness Check?
In principle, at The Climate Choice we try to make existing climate data quantifiable and measurable. In doing so, we follow international standards that show what climate-friendly business looks like. We further look at five areas for impact, involving strategy, transparency as well as climate influence and ecological action. On this basis, we have developed a software-supported questionnaire for companies, which at the end results in an individual scoring - the so called climate performance rating.
With this, companies see how they perform in various areas, where they have strengths and potentials. We then derive measures, that can be implemented directly for decarbonization. In summary, we compare the results of the companies against minimum requirements at regulatory level. Because from next year onwards, companies with more than 500 employees, have to report in accordance with the requirements of the EU taxonomy on financial markets. Companies are often unaware of all of these points.
The measures include quick steps (best practices), but also long-term goals. To do this, we work together with partners in order to take action directly and also give companies easy access to this previously unstructured market. This can be done in a total of nine impact categories energy to mobility through to production.
Your software sounds very automated, is there also a human factor?
We see today that you can't take the human factor out and we don't want that in the first step either. However, we try to map everything in the software as much as possible in order to keep this hurdle that a consulting project would otherwise entail low. We first do an automatic scoring and then a personal review interview. Those responsible then have the opportunity to ask questions or correct information. This gives you another personal exchange. To give a small incentive, we show you quick wins that can be implemented within three months, save emissions and improve your own scoring. The idea is to use this score internally as well as to communicate it externally.
In your experience, where does the greatest complexity lie?
In fact, in many places today we see the supply chain as a black box. Because all companies actually know that this is where most of the emissions occur and that very precise data from the supply chain are required for a reduction. However, this transparency is usually not yet given. That is exactly the step that we support. This means that if you have carried out the Climate Readiness Check for yourself, you can also invite your suppliers to go through the process together and then accept this data. That is practically the idea behind it: to build a network of companies that support each other in implementing decarbonization measures.
Our target group are especially medium-sized companies, as large companies and corporations often have their own sustainability teams. In practice, however, these large corpoartes then work again with their suppliers, who in turn are SME, from whom support is then required to reduce emissions. Thus, the pressure is shifting to medium-sized companies, as they are confronted with the climate goals of large companies, which they have to fulfill if they want to keep business relationships.
Which area has the greatest potential for decarbonisation?
We have developed nine impact categories for recommendations. Within these areas emissions can be reduced the most. Typically, the energy sector has the greatest impact. Of course, that also depends on the business model. If it is a digital company, then it goes back into the server, if it is a consulting company, then there is a lot to do in mobility. But above all the greatest impact can be reached with the energy that is used for production.
What is the average climate score of the companies?
Fortunately it not a shocking score. Currently the result is still following a Gaussian distribution curve. But this is certainly due to the type of companies we currently work with, which have already done a lot to decarbonise and want to see what else can be done. We know that it will take a few more years until we reach the long tail of the market. But these pioneers give confidence and it is nice to see, that the commitment to protect people and the environment is more and more anchored in corporates' culture and spirit.
What about the rumor of high transitioning costs?
Fortunately, all research argues against it. It has been proven, that so-called sustainable products are growing faster on the market, are in greater demand, investors prefer to invest in, employees and business partners request them, and a positive positioning also arises as a side effect. The recommendation we always give is, that corporates can't afford not to invest in sustainability, because it's a future-oriented, strategic decision. It's similar to digitisation, it comes one way or the other - due to the legal situation but also driven by the market. If you don't invest now, it's a missed opportunity. On the other hand, the costs will rise due to higher CO2 taxes and the risk of losing customers or missing out investments.
What is your matchmaking and why is it so difficult to find the right partners?
I believe that companies are often caught between existing standards and their KPI reporting. But that's all more backward-oriented. There is hardly any time for future-oriented decisions, which often affect the budget and purchasing. However, research is required, as the lack of transparency in the market makes it difficult to find the right suppliers and service providers.
After recording your own climate performance, we have access to a database where you can discover solution providers. These are then directly connected to the individual potentials and we will show them again in the review conversation. These are partners who have been validated by us. We have therefore also checked these companies on the basis of our criteria.
Carbon offsetting is part of your portfolio of measures, isn't that greenwashing?
We don't see this as a first step, but as part of the measures. It starts with energy and mobility and then extends to the environment and society in the last few steps. Areas that are not covered by your own potential can be supplemented by voluntary climate protection. However, it must be clear that this will not change anything in your own climate footprint. This is a point that goes as a voluntary donation to places where climate protection would otherwise be difficult to finance. This is a measure that is good for building up your own cost point, where you can feel that there are CO2 areas that cannot be covered and you will then be paid for it. However, the costs by no means cover the actual environmental damage per tonne of CO2 emitted.
How realistic is the 1,5 degree target still?
In the best-case scenario of the IPCC report we exceed the 1,5 degree target, but are able to revert to it. This scenario is just as valid as the other 4 scenarios. If we do not meet the goal, then we have the greatest reasons and motivation, to ensure that we stay well below 2 degree. It is up to us, not only to stick to forecasts, but to work on the best possible, regenerative future.
Thanks for the interview Lara