Speaking to Alexis Normand, the founder of carbon accounting platform Greenly, Finextra learned how carbon accounting has become a necessity in the banking sector today.
Carbon accounting has become a trailblazing industry in the sustainable finance sector for keeping business’ carbon emissions in check. Carbon management is becoming increasingly important in order to comply with the incoming European Sustainability Reporting Standards (ESRS), that EU businesses will be required to adopt later this year.
Greenly operates by assessing the transactions and all scope emissions from companies and identifying which suppliers perform best in terms of carbon intensity to align with Net-Zero goals and requirements of the Paris Agreement. The platform’s objective is to examine and reduce the carbon footprint of their clients by cutting energy usage, purchasing policies, and travelling impact.
The carbon accounting firm has been working with BNP Paribas and other industry leading companies such as Hello Fresh, Ubisoft, and Aptiv. Greenly currently manages 25 million tonnes of carbon with more than 1,300 clients.
Normand divulged that data is becoming more accurate, which is influencing how companies access and pay for capital. Therefore, what they put their capital into is more transparent and their sustainable impact is more measurable.
Currently only 25% of global emissions are tracked and managed, Normand states, which makes it nearly impossible to reduce all collective emissions by 50% by 2030, or reach Net Zero by 2050. He emphasises that climate strategies have become an ethical and moral quandary that businesses must confront.
“From a commercial perspective, carbon accounting provides long-term insurance for a business against being phased out because its activity is no longer compatible with a Net Zero world. In the short term, it’s a way to grow your business by demonstrating to your customers that you are helping them to further their own decarbonisation objectives. The easiest way for businesses to adapt to this new world is to integrate carbon accounting into their everyday operations. Making it second nature, in the same way that financial accounting is.”
Comparing ESG to carbon accounting, Normand explains that carbon accounting covers a more scientific and specialised view of emissions, whereas ESG is designed to combat a range of shortcomings in business industries. Carbon accounting can be factored into the ESG standards as an essential aspect of the ‘environmental’ to aid companies in standardisation of sustainable practices.
A significant dilemma for sustainable practices amongst all businesses is concern about cost. Though it is not ideal, sustainability often requires more spending to smaller and medium-sized businesses that are seeking greener options, making it less accessible to many.
Normand outlines the issue: “Carbon management is still dominated by large consultancies performing ad-hoc assignments for enterprises. Naturally, this comes at a high financial cost (with one-shot assignments worth anywhere between $20,000 and $100,000) which, in turn, prices small businesses out. And, with small businesses actually making up the larger share of emissions, this is a big issue that needs fixing.”
He states that this is the purpose of Greenly, to democratise the fight against climate change and make carbon management more actionable and affordable for smaller companies. He furthers that younger businesses have an advantage, as larger corporations find greater difficulty in becoming more environmentally friendly due to being more entrenched in their relationships with their suppliers. Whereas smaller businesses use decarbonisation to scale and set themselves apart from competitors from their inception.
Greenly recently launched the Climate App Store, which is an app store focused solely on measuring, monitoring, and reducing carbon footprints. The store offers both free and paid-for apps that manage and assess carbon emissions and energy usage for companies in different situations and industries. The carbon calculators can assess the carbon impact of food, textiles, events, and websites among others.
Normand closes by stating his aspirations for Greenly: “We ultimately want to make carbon accounting as pervasive as financial accounting. It's not just about adding an extra tech stack to every company. It's about fundamentally enriching businesses’ perspective on value creation, factoring in their real impact on climate. We hope to be the driving force of this revolution.”