Mirova and Robeco announce I Care and Quantis to develop a global standard for calculating emissions avoided by low-carbon solutions

The initiative is supported by 9 founding partners¹, representing more than USD 2 trillion of assets under management².

A global standard for evaluating avoided emissions

The energy transition requires us to move away from carbon-based activities, so decarbonized alternatives also need to be available. While the data currently shared by companies on their direct Greenhouse Gas (GHG) emissions and estimated indirect emissions (scope 2, scope 3) is based on solid methodological foundations, other metrics are needed to identify their respective contributions and to be able to compare solutions. For example: if it is relevant to take into account all the resources and the recyclability of components that come into play in the production of an electric vehicle, it is also relevant to understand and measure the carbon emissions that can be avoided by an electric vehicle in a transport sector still very dependent on thermal engines.

The creation of a standard for a global database of emission avoidance factors is therefore a major step forward for many economic players. For the financial sector, this initiative will generate estimates of the emissions avoided by the activities financed, making them transparent and comparable. When such estimates are implemented in a standardized way across a wide range of solutions, they will enable investment to be channeled towards the solutions with the greatest potential for decarbonization, depending on where they are located. For companies, projects’ sponsors or financiers and consultants, this database will enable calculations to be made transparently, with reference to a recognized external standard. Finally, for data providers, the database will enable them to estimate avoided emissions across a wide range of investments, thereby supplementing the existing metrics available on the climate impacts that are currently too imprecise or binary.

A standardized and transparent database

The database built by I Care by Bearing Point and Quantis will initially cover 80 specifically defined low-carbon solutions (examples: biomass energy, recycled plastic, low-carbon concrete, etc.). The geographical differentiation of the reference scenarios taken into consideration for each solution and the various links in the value chains of these solutions will result in the creation of ca. 9,600 distinct avoidance factors during this first phase, which will end in Q4 2024.

The creation of a standardized and transparent database of avoidance factors should make it possible to quantify, compare and audit the emissions avoided by companies and projects, and thus encourage the redirection of financial flows towards assets that promote decarbonization, addressing for example the production of renewable energy, the electrification of transport, low-carbon property, but also recycling or the rare metals needed for the transition.

Each emission factor will contain details of the assumptions made, in particular:

• The functional unit used
• The carbon footprint of the solution
• The reference scenario used
• The lifespan of the solution
• The time value of carbon
• The rebound effect

For all these parameters, precisely sourced default values will be provided and updated on an annual basis. The database will also allow for more detailed calculations depending on the level of access to the data. For example, a company that has carried out a “lifecycle” analysis of its solution will be able to modify the parameters to obtain an avoidance factor that is more precise. The scope of the database will also be gradually extended to include many other low-carbon or green enabling solutions. The development of the database and the choice of methodologies will be overseen by a scientific committee comprising the main organizations behind the current standards for avoided emissions.

Development of the database will commence in January 2024 and a first version will be made available to all stakeholders with a requirement to calculate avoided emissions in Q4. This includes companies, consultants, impact measurement software developers, financial institutions and data providers. The data providers who calculate company and asset-level emissions will be involved in the construction of the factor database and will have to align themselves with a protocol for its application.

¹Listed at the end
²As of December 2023

List of partners of this initiative