Season 5, Episode 182 : Who’s Counting the Carbon? An Alliance for Climate Action

Introduction:
This episode of Sustainability Solved is brought to you in association with Business Declares, brining business leaders together to show support for action on climate and nature.

00:00:04 Will Richardson
Hi and welcome to Sustainability Solved. I'm Will Richardson, the founder and CEO of the Green Element Group, incorporating Green Element, Compare Your Footprint, and of course Sustainability Solved. We've been empowering organisations to manage their environmental impacts for a just and sustainable world since 2004.
00:00:21 Charlie Luxton
And I'm Charlie Luxton, a designer who focuses on sustainable architecture. In this episode, Andrew Griffiths joins us to talk about the launch of the Carbon Accounting Alliance, a project which launched last month and aims to collaborate on solving sustainability challenges. It's supported by over 30 organisations and businesses, including Green Element and Compare Your Footprint.
00:00:44 Charlie Luxton
Welcome, Andrew.
00:00:46 Andrew Griffiths
Thank you. Lovely to be here.
00:00:47 Charlie Luxton
So let’s start right at the very, very beginning. What is carbon accounting?
00:00:53 Andrew Griffiths
Very simply, think about what financial accounting is and then substitute money for carbon, to a certain degree. And you know, specifically carbon dioxide, but carbon dioxide equivalent. If you hear someone like me talk about carbon, what I really mean is all of the greenhouse gases. So methane, nitrous oxides, all the greenhouse gases that sort of caused this warming effect that is causing climate change. So carbon accounting is sort of the profession by which we are measuring carbon emissions for organisations, for products, for construction projects, all of those sorts of things.
00:01:29 Charlie Luxton
How did the Carbon Accounting Alliance start and where did this energy to create this organisation come from?
00:01:37 Andrew Griffiths
So actually we’ve sort of been flying under the radar for about a year and it started because I've got friends in sort of different sort of bodies who do carbon accounting and one in particular, Emilian at Climate Partner. He and I sat down on a call and one of the things we discussed was the fact that we were both really recommending that all of the people that we work with, all the companies we support should be collaborating within their sectors to drive change and help reduce emissions. And then we went, wait, are we talking? To other carbon accounting bodies? No. Should we be? Probably. And so you know, we realised that we really should walk the walk on, you know industry collaboration that we didn't really have a forum or a space where we could come together to discuss challenges, opportunities, issues that were affecting our industry and equally other bodies like policymakers, standard setters etcetera, etcetera, really have a place where they can engage our sector on mass, they have to deal with us one at a time. So, we decided to start organising some gatherings that were, you know, pretty informal at first, just a handful of us. And then it has just ballooned since then, and in the last 2 days. You know, we launched 2 days ago, it was 37 organisations is what we started with, as of this morning we’re at 108.
00:03:15 Speaker 2
By the end of this podcast, you're going to be at 115 at that rate.
00:03:18 Speaker 3
Ohh, I've seen a bunch of more applications that have come in this morning that I haven’t dealt with yet but I was up until 1:00 AM last night processing all the ones that came through yesterday because we’ve tripled in size and we’ve gone from, again on Wednesday we started at the point where we were collectively representing around 24,000 well more than 24,000 company carbon footprints. But as of right now, we collectively represent more than 40,000 company carbon footprints. We’ve been overwhelmed.
00:03:49 Charlie Luxton
That is extraordinary. If you could achieve one thing, other than global domination by the sounds of it, if you could achieve one thing, what are you hoping to achieve from this new stricture?
00:04:02 Speaker 3
So it it's really about championing best practise in the industry, you know that's, you know, think of it as you know this is the informal start of a trading body for our sector, so there are four key things that we’ve agreed. When we first got together we said okay what’s the point of this? What are we going to do together? And we came up with a list of things we could do together and then we asked people to vote on them to prioritise them. So the four sort of things are policy and legislation, standards, technical alignment and communications. And so, on the on the policy and legislation front, we are seeking alignment on some policy ask where particularly if we see all the all the everyday we see barriers to measurement that could be addressed by policy. So one clear example is if a company is a tenant and their landlord won't give them energy, water and waste data, they can’t measure their real core scope 1 and 2 emissions. It becomes really, really challenging and so, you know a piece of policy from government that mandated landlords, commercial landlords to share energy, water and waste data with their tenants for the purposes of measuring carbon would be phenomenal and it helps with this sort of drive to try and bring energy efficiency and all those sorts of things. And there are precedents for that, by the way, so France has a law which means that any property over 1000 square metres must report their energy consumption on an annual basis in the public domain. So you know when we see standards, standards is a similar thing, where we seek to sort of understand particularly where new standards have emerged. We seek ways to make, you know, get to grips with it together and kind of understand how are you finding this? What's the problems with it? So like the new Forest Land and Agricultural (FLAG) emissions have standards that have come out of the GHG protocol and from science based targets initiative, we've been able to have discussions about those where we've gone: are you finding that's a problem as well? Should we go as a collective with some asks and say hmm this isn’t working for us. It’s much more powerful if we are a group voice. And then the technical alignment piece, same sort of thing, you know around us discussing which carbon emissions factors we should be using, which is, you know, for those who aren't familiar, it's very simple. We take a data point like the kilowatt hours of energy that you've used in a month and we multiply that by a carbon factor, which is sort of a proxy thing where it says one kWh of energy = X tonnes of carbon, and that’s how your emissions are sort of calculated across all of those different kind of data points. And so we see technical alignment on which proxies should be used, which ones should not be used there. There are some databases that are quite old and some people are still using and so if we form a group statement and go don't use that data set because we don't think it's accurate, again we can drive sort of best practise. And then the final one, communications is really about, you know alignment on to terms that should and shouldn't be used. So discussing and debating use of claims. So we've been having some debates about the use of the term Carbon neutral, for example, that have been really sort of interesting and insightful where we found that the majority, this was back when we were 37, that the majority of the alliance either had never verified people as carbon neutral or had stopped. A couple still are, but we we've had some really interesting discussions based around that going hmm so, are we saying as an industry that we think carbon neutral needs to go and it's all at net-zero now?
00:07:46 Will Richardson
Can I jump in there, Andrew, when you just said net zero, do you mean real net zero or net-zero? What's your definition of that? No, I think that’s really important because people listening will pick up.
00:07:57 Andrew Griffiths
Yes, absolutely. So there's a bit of a challenge in definitions where people are still getting used to it. When I say net-zero, I’m referring to the science-based targets corporate net-zero standard, which basically means that organisations have to set a baseline year and then they have to reduce at least 90% or more of their emissions and then only up to 10% is what they can use carbon removal offsets against for unavoidable residual emissions. So that's the journey that corporates are on that's been set up by science-based targets. But interestingly at you know at a global level, net-zero and carbon neutral are the same thing, which is slightly confusing. It's just that the very simple sort of seesaw that we're trying to address is that emissions are way too high. So nature just cares about two questions. Are we emitting more or are we emitting less? And are we sequestering and storing more carbon or less and currently the scales are so far skewed, that if we don't substantially reduce our emissions, we cannot plant enough trees, we cannot develop enough technologies to remove carbon capture. And that's the reason for this 90-10 kind of split of saying 90% of reductions, 10% is your kind of removals and storage?
00:09:21 Charlie Luxton
While we're in definitions, could you just run scope 1, 2, and 3 past me in a kind of simple layman's terms?
00:09:28 Andrew Griffiths
Definitely so scope 1 is the fuel that you burn. It's your direct emission, so for most organisations that is oil or gas heating system and vehicle fleets. If you have any petrol or diesel cars, if you're directly burning the fuel, that's your scope 1 emission.
00:09:47 Charlie Luxton
That doesn't include electricity, right? Unless it's on site generated from generators.
00:09:50 Andrew Griffiths
No, exactly. Yeah. So it would be only be a scope one if you had like a biomass burner or something like that where you were generating your own energy through burning something. So scope 1 generally you're burning something.
00:10:04 Charlie Luxton
Like it. Keep it simple.
00:10:06 Speaker 3
Yeah, exactly. Scope 2 is the energy that you use and so because, you know if you're sourcing energy from on the grid or from elsewhere, you're not the one burning the fuel to create the energy, but you are the one consuming the energy and you have a lot of control over the amount of energy that you consume. So that’s your Scope 2 emissions. So Scope 1 and 2 together for most organisations is their utility bills and their vehicle fleet if they have any and then scope 3 is everything else. There are 15 categories of scope 3, and I won’t go through all of them, but there are some that are quite easy to measure because you have the data anyway, so things like waste you can use to get to quite quickly and easily water that sort of fall into it. You've got transfer and distribution energy. Franchises are relatively easy to measure because it's sort of this getting business travels. Another easy one, yeah, absolutely. You're measuring it for financial purposes. Anyway. The harder ones are things like going into your products and services, which is all of your supply. Looking at financed emissions category 15, which could include your pensions and things like that, pension choices, so it's yeah, scope threes everything else and you usually represents anywhere from 70 to 99% of an organisations carbon footprint.
00:11:20 Charlie Luxton
Yeah, especially because I come from the architecture background, you know that that's everything. You know what we ask people to build is, you know, everything that we emit really. I mean vast, vast amounts, unfortunately. And we can do everything we can. But it's sort of outside of our immediate control apart from specification which is sort of the challenge for many of us, I suppose, supply chain.
00:11:39 Andrew Griffiths
Yeah, absolutely. I think interestingly, at COP 28, the race to 0, the UN campaign to sort of get organisations assessing their zero targets, we've had a working group who have been developing a set of guidelines for professional services, specifically thinking about advised emissions so thinking, lawyers thinking can you know, management consultants, thinking, financial advisors, people like that. What influence do they have through their advice and what influence can they have to help reduce emissions through giving good advice, not just when someone's asking the question? What can I do about sustainability? But actually, I'm thinking of buying or selling this capital assets, you know going have you thought about the sustainability and net-zero implications of you doing that transaction, you know really leaning in and bringing it up when it hasn't been on the agenda.
00:12:33 Speaker 2
And how much change do you find from the companies that you're working with when they start to get visibility of the of the impacts of their actions. I mean from our perspective, we've been doing carbon modelling on buildings and actually really has changed a lot of our thinking quite rapidly and is that what you're finding within the organisations that you work with and Will this is actually a question to you too mate, cause I mean this is what you do all day, all every day and it seems to me this is an incredibly powerful tool, possibly the most powerful tool in business, but how do you see it?
00:13:03 Andrew Griffiths
I've got 2 answers to this. The Carbon Accounting Alliance answer, and then there's my Planet Mark answer which is more granular because I know it better. The Carbon Accounting Alliance we've started. We're at the very early stages of starting to try and understand the impact of the community where so far and especially now none of the new people have joined in the last two days have answered this question yet but about a little over half of the OR 37 that we originally had responded to a survey we did asking what's the total amount of emissions you've measured and what's the total amount of reductions that you've measured, not offsets actual reductions? And so we know that the alliance so far at least, and it will be way bigger than this now, has measured more than 587,000,000 tonnes of carbon dioxide equivalent and have measured more than 6,000,000 tonnes of reductions.
00:13:58 Speaker 3
Now I wanna get more into that data and I wanna get more of more people reporting against it. But that's already interesting that we are measuring and we are seeing these productions and for those from a planet Mark perspective, so planet Mark, we've gone over 800 members, where we certify them every year and they have to reduce their emissions every year in order to recertify and so we have to be helpful to do that. Last year, 99% success rate, 99% of our Members succeeded in reducing their footprint. On average, they reduced their absolute carbon footprint by 11% year on year. and 14% per employee. We measured over 300,000 tonnes of carbon emission reductions. And you'll like this Charlie, because we also do construction. We certify construction projects. and on average, which we've done, I think we're about 130 construction projects, both residential and commercial. On average, we measure a 25% reduction in whole life emissions from construction projects that we work with where we look at what a baseline would have been if they hadn't done all of the measures to change materials, change processes, transportation, supply chain wastes all of that kind of stuff and we go: what would it have been? What was it? What was the reduction that was achieved in this construction project through using sustainable principle.
00:15:21 Will Richardson
You touched upon how you want legislation to mandate landlords to give data to their tenants. In my experience, in our experience it is really hard to get data, an awful lot of organisations actually need help in order to get that data. Now, that's not going to work ongoing, if we actually need to achieve the admissions. That's the reason why I set up company footprint in the first place. So let's go down the route of we’re not going to get that mandate anytime soon because we know what's going on politically and we know what's going on politically around the world as well. So actually it's business that's driving most of this change. And considering the UK is, I think 99% SME's, is that right? Roughly that let's not get hooked on the figures, so therefore it's actually 99% of businesses in the UK are going to struggle to get hold of data and understand if they can get hold of the data, how to manipulate it. How do you foresee that helping?
00:16:30 Andrew Griffiths
Yeah, of course. I think there's, you know, there’s two sides to the problem right. There is the policy angle of like what people kind of have to do. And then there's what can we do to make it as easy and seamless as possible? And that's partially about alignment, but also. And it's also partially about interoperability. Making it so that our systems evolve to a point where they can talk to each other, and then the third is automation of data gathering, which I'll sort of come on to in a second. On the policy front. The good news there is that actually, although we've only just officially, officially launched, we've actually already been doing some stuff because we wanted to have some proof of principle of what would a collaboration with this kind of group of people look like. So our first Test of that was we developed a cosigned letter that we sent to the UK's Department for Energy Security and Net Zero, which the UK Government Department DESNES who are doing that. They lead the sort of the net zero energy policy development in the UK. We sent them a letter and they invited us in for a meeting. We were very pleasantly surprised with the sheer numbers of Directors and Heads of that were in the room. They brought sort of every sort of major sort of person from different departments in seemingly including the deputy director of net-zero who heads up net zero policy. And so they seem certainly seem to take our letter very seriously, and that included that, that recommendation. And I know that they have reached out since asking for clarifications on what do we mean by commercial landlord and we're talking to Defra about this and I know the Climate Change Committee, which sort of is the sort of independent body that scrutinises UK climate policy in an official way, they are also exploring particularly that recommendation because a there's precedent we see it it's happening in France and B they see that it could have a you know a very positive impact on something that's quite frustrating for a lot of businesses at the moment. So the policy angle I do actually hold some hope in. But on the other end of the spectrum, sort of what can we do? There's an initiative called Project Perseus, which I'm also feeling very positive about, which is being led by icebreaker one and bankers for net-zero. I Co chair, the policy group of Project Persaus and very simply, Ice breaker one are the same people who developed the open banking standard, the one that means that you can go onto QuickBooks or Zero click a button saying. I would like to connect my bank account and it just does it. It just it just everything comes through. And it does it the same way, no matter what bank. They've created that framework for data sharing that's just permission based and clear APIs that just work the same way everywhere. We want to do the same thing for open carbon data. Right. And so we're starting with energy. That's the first point. By the end of the year, we want to have a demonstrator and then next year, we'll be looking to scale that demonstrator. And the idea is that that what we're working towards doing here is that we're working with the- and this is UK government backed by the way they’ve got ministerial backing to drive this, and they've got all of the big banks are involved. There's a lot of different players and essentially what we do is you, you know, a company an organisation and SME would come on to Compare Your Footprint or Planet Mark or whatever tool they're using. They'd click a button saying I would like to connect my energy data. They have some form of verification check in with their energy provider and or smart metre provider and that data would then simply pull through into our systems and can be automatically analysed at a much more granular level than we currently do, because currently, certainly most of us are calculating energy emissions based on, OK use that much in a month and the average grid intensity was that therefore this? This will be 30-minute interval data with the grid intensity measures of that time and location paired with the data coming through, so we'd have much more accurate data and critically, that data would be assurable meaning it could be audited, it could be sourced, there's no risks of human error and things like that coming through. And that's really the reason the banks are so interested in this Is that they need assurance data in order to prove that when they give a green loan, green financing products and things like that to an SME or to a bigger business, they need to be able to prove that it actually is, the financing they're giving actually is green, and the only way they can prove that is to have data that that is assurance that shows we gave them a loan to help them with their insulation and or, you know, installing solar panels or whatever it might be. And we've seen that their energy consumption has gone from that to that in the in the emissions that sort of have happened. And that means that we can now certify this is a green financing product that we're giving people investors you can invest in our green Linked sort of products. That's one of the reasons that banks are so interested. So it's this thing has legs for sure how fast it will be able to happen and scale. We're starting with energy data for SME's and then we'll see where we get to from there. It might go to business travel next. It's just all what makes most sense for automating.
00:22:09 Charlie Luxton
So fundamentally, the upside that you're saying is that despite recent rhetoric there is genuine interest in the government for this issue?
00:22:15 Speaker 3
Yes, it's yeah for sure. Yeah, I had a I did a round table with Chris Skidmore, the MP who did the net-zero review in Parliament last week. So we sat down with Chris and also Kerry McCarthy, who's the Shadow Minister for climate. And we had deputy director of net-zero from DESNES, we had the climate Change Committee, and so we've had they, they are leaning in. There are lots of interested parties within both Conservative Party and Labour Party and Lib Dems. You know, wherever you look. And so it's going to next year is going to be critical because you know election year we need you know we need to see that if anyone chooses to run on the ticket of weakening environmental and you know climate legislation, we need to, as a society demonstrate that you that's not how you win elections. Yeah, there are definitely there are especially within the civil service. I can wholeheartedly attest that there are really good people with their hearts in the right place, pushing for all of the right things and a lot of the time it's that they just can’t get stuff through ministers and it’s really frustrating.
00:23:26 Charlie Luxton
So what would be? I mean you're literally 2 days old, you’ve already grown a gazillion percent, I can’t keep up with the numbers it’s probably changed to a gazillion and 1% by now. What would you like to achieve in the next 12 months? And you know in 5 years, do you have headline ambitions?
00:23:28 Speaker 2
You're literally two days old. You've already grown a gazillion percent I.
00:23:31 Speaker 2
Mean. See I.
00:23:32 Speaker 2
Can't keep up with the numbers. It's probably changed from my gazillion and 1% by now. What would you like to achieve in the next 12 months? And five years, let's say, have you got sort of headline ambitions?
00:23:46
To a certain extent. This is definitely gonna need to evolve, and because one of the key things key principles underlying this is that you know, although you know Emilien and I started it, we are not planning to be dictators determining what everyone should be doing. We very much do want to operate through group sort of processes so that people kind of choose what our priorities are and have a say in what we do and what will be most impactful. So that caveat right in there because we've got a lot more people to understand the interests of now, I think the first thing is going to be getting some structures in place because there's just too many people for us to have on sync, we've been having what monthly Microsoft Teams meetings with, you know, 15-20 people coming along. Our December meeting looks like it's gonna be a heck of a lot busier. That starts to become unmanageable very quickly, so we'll need to start thinking about strategies to put in place. The magic of this thing. The thing that people have already sort of said that they just love is being able to be in a space with other people who know all about the challenges that they're facing and that you're kind of among peers who you can just be really candid with and go: is anyone else really struggling with that thing? An then a whole bunch of people – it’s kind of like therapy. It’s part of the value here, the people that come together and just share the same woes about what is really challenging, what’s really difficult, particularly as we’re all rapidly scaling organisations. So I hope that we can create a sort of a sort of unified feeling of common purpose, I think is the fundamental. The success of everything else will come with that if we feel we’ve got a united purpose, a united vision and that collaboration over competition concept really rings through for us where all acknowledge – like Planet Mark could not measure every company in the UK. If you asked us to couldn't do it, couldn't scale that fast, it would be ridiculous. But so that that means we need allies, right? We we're not specialists in everything. We need allies in the industry in order to achieve our goals, which is fundamentally impact fundamentally tackling climate change. So, I'm really keen for us to sort of success over the next 12 months will be, you know, working with policymakers to try and a make it really clear that you know what industry needs and building the business case behind it. So helping them understand what could be unlocked through doing certain things will be critical and the risks of not doing some of these things, so helping build that case for things that that we want to see. Then there's engaging with standards, so the ISO net-zero guidelines are likely to undergo a process in the next year where they're turned into an ISO net-zero standard. You know, we want to engage in that and make sure that all of the best practises and all of the knowledge and expertise that we have as a sector is feeding into that process to make sure that it's. If we can nudge best practise even slightly in a standard that gets set, the impact is huge because it ripples out globally, or certainly nationally and it would be global. So really driving for nudging best practise on both standards and policy, having that safe space for, you know, candid conversations about what we should and should not do as a sector and professionalising to a certain degree as well. To become a financial accountant, there’s a whole process - you have to become a Chartered financial accountant, at some at the moment any man, woman, child or dog can do a carbon footprint and there's no particular qualification that's required. Now I don't know what it's going to look like, but at some point, our sector is going to have to professionalise and there's going to be some form of qualification of knowledge and skills to say that it might be that you have a junior, same as financial accounts. They have people who are more junior doing a lot of legwork, but it still has to be stamped by a chartered accountant. And I think we're gonna have to get to that stage as an industry as well, over a transitional period where we get up to speed with that but professionalisation will be key and I think there's a whole array of things we can achieve, but really driving forward our sector and influencing policy and standards and advocating for green skills and the fact that carbon accounting isn’t a green skill. It's currently not on any UK government kind of docket for priorities. In saying this is a key sector that we can invest in and grow and we need to see that happen and we need to see universities and colleges actually training people to be carbon accountants because at the moment we don't often hire someone who we don't have to train how to do a carbon footprint. Whereas if you recruit a someone who's got their chartership of financial accounting, ou can be confident they know quite a lot of what to do. We need to get there as well so that we're not constantly having to have this huge on boarding sort of task and start being able to sort of have some form of qualification that tells us, yes, this is a qualified person who can do the job.
00:28:55 Charlie Luxton
It's really interesting because, again, in buildings, you know, carbon analysis and construction is very early, and there are some strange quirks in the way that life cycle analysis is done, that actually drive you to not necessarily make the best decisions if you’re trying to get the star, the A+ rating and the bells and whistles. But sometimes you actually go no I’m not gonna do that because I don’t think that’s the right thing, and the fact that you’re creating an organisation with enough people to have the heft to shift quickly the game rules is really critical. Because it does feel a bit like the wild west, but with a lot of people trying to do the very best they can but it is slightly unregulated. It’s amazing to hear that you are trying to work together to drive that more mature industry. So, you’re working with your competitors? It always strikes me in the green industries that there is much more collaboration – is that something that you recognise?
00:29:55 Andrew Griffiths
I think there's certainly a desire to collaborate. I think people you know, this won't necessarily be universally true, but I think most people who have gotten into particularly carbon accounting are in it because they are passionate about it, they know that we have a challenge that needs to be solved and that that challenge that need for impact kind of supersedes kind of competitive stuff. I think that there are other areas within the carbon markets that are potentially less collaborative and more competitive and you think you think carbon accounting is the wild west? Carbon offsetting is crazy. But yeah, I do think that there's a strong drive for collaboration in our sector and certainly It shines through. I'm reading the applications and just people voluntarily leave comments going. This is amazing. I've been wanting to find ways to talk to other people in my sector for ages and I think we should be doing more to do. One of the things that Amelie and I found as soon as we started going out to people. Was that like half the people we spoke to went - We've been thinking that something like this was needed as well. And I think that's why we're seeing this insane huge response is that clearly this is has been a gap. It's been a space that people have kind of wanted and that it's just that no one had kind of gotten around to doing it.
00:31:14 Will Richardson
I think you're absolutely spot on with regards to the nature of the person that gets involved with carbon accounting and in this space, but equally the market / industry is incredibly immature and because of that immaturity, most businesses are very small. Therefore, collaboration is a way of growing and you'll see a lot of people want organisations wanting to collaborate because of that. Do you see that as a barrier in the future with regards to organisations getting bigger and then not wanting to collaborate as much because there’s egos that start to come into the room, potentially from other industries running those?
00:32:03 Andrew Griffiths
I think it's something that we'll have to keep an eye on because I agree. I think at the moment the fact that you know when you think about, so you know we've got a lovely big number that is somewhere between 40,000 and 48,000 company carbon footprint cause we ask everyone to give a range we ask them for a specific number of clients. So that's a lovely big number, but it's actually an incredibly small number when you think about the total number of companies. If we are progressing towards a state in which all organisations at some point will have to measure their carbon emissions, probably within the next five years, then the scale that our that our industry is gonna have to get to is going to be quite remarkable in terms of going from 40,000 to millions. So, one of the things that will come up when people sort of think about is like, well, there's space for all of us. Right. Right now there's room to grow left, right and centre and. And so there's not as much competition, so could that change? Yes. Would that affect people's willingness to collaborate? I think it depends on how well we do at keeping the safe space. I think there'll be there may be certain things that that people get more reserved about, but as long as we can create this safe space that actually, you know, this whole B to B thing is kind of an illusion, right? It's people, people do business with people even when you're on a B2B transaction. And this is a B to B network but it’s people who are sitting within it and so what the corporate line will be will often be very different than what an individual will do or say, particularly if they're in a space where they know they're not going to be personally quoted. And so we have we use the Chatham House rule for all when we're in our meetings, so that people feel they can share more openly and they do. I think as long as we can create a space where enough of those people, particularly larger organisations like Planet Mark, Compare Your Footprint, Normative, Climate Partner, as long as we are leaning in and we are making ourselves a bit vulnerable and revealing oh yeah we are struggling with this or we’re not sure how to approach that, if we do that and lead by example, people tend to reciprocate. It's like kind of like a group therapy session, where as soon as one person goes to the next level and it gives permission for everyone else to make themselves that much more vulnerable. So I think a lot of it's going to be a cultural thing about how we really nurture a an open sharing, growth focused culture within the alliance, which is going to be hard to do at scale, but that I’m hopeful that we can do it, given where you know, given the enthusiasm and energy that we've already seen.
00:34:52 Will Richardson
I've got another question for you which I'm not convinced you're going to be able to answer, but I don't wanna preempt that. You've both touched upon life cycle analysis. It is a Wild West out there, but for the right reasons. How do you think we're going to tackle that? Because a lot of it is on assumptions and a lot of it is on well, we chose that because of.
00:35:20 Andrew Griffiths
So the first thing to say is that it's still more true in carbon accounting. But to be clear, even in financial accounting, interpretation is very important. You know, when it comes down to which taxes apply, how you calculate your profits, all of those sorts of things. There are decisions and interpretations that get made by accountants all the time, and so I think a certain amount of that is probably going to remain true for our sector as well.
00:35:57 Charlie Luxton
I think that's Donald Trump's argument, isn't it? At the moment in the New York courts, anyway?
00:36:06 Andrew Griffiths
Yeah, just. Yes, my apartment is twice the size in in square metres. I walked it myself and my feet are very large. I think that’s the first thing to set out is that we mustn’t treat ourselves as if we are somehow unique in that – financial accounting has the same thing. But that said, it's going to be important that we align on things and this is the technical alignment piece where there be a certain amount we can do where it's which, which proxies we use, what methods we use that will be standards driven, potentially regulatory driven, but the long game here, and where this kind of I think this is just personal opinion, where it will need to get to eventually for simplicity sake. Is that carbon data is going to have to be quite like financial data. In that, in principle, if every organisation in the work measured their scope 1 emissions, the fuel that they burn, everything else is data sharing and analytics. Because your scope 2 emissions, your energy is the scope one emissions that you're accountable for from the person you bought your energy from. Your scope 3 emissions are the nested scope one and two emissions of everything that led to that product or service being delivered to you. So if we can get to the point where everyone is calculating, you know, scopes one and two, which for most businesses is quite a straightforward ask, it's their utility bills and their vehicle fleet, which you've got that data for financial reasons anyway. Then in principle, what I you know, where I think we could end up going and this is why all the big account accountancy firms are rushing into this space, seeing that they can play a big role in, it is that under an invoice that comes to you to pay for a product or service, it will show you the aggregate scope one emissions of that product or service that have been nested all the way up because you don't need to know the cost and profit margins of every single movement of a product before it's arrived at you. That's baked into the price that you pay for it, so you can assume that all of the previous profit margins and costs are included. The same would be true here, where you know, I would buy a pencil and it would tell me this is nought .1 tonnes of CO2e, hopefully not. That would be a very heavy pencil. But you know, it would be .1 tonnes of CO2e for this pencil, and that would factor in all of the processing that gone into it from the raw materials that came into it from the transportation from all of these things, where if everyone just adds on their bit and then if I sell that pencil to someone else. I go right the scope one emissions that were reported to me on my invoice, plus my scope one emissions that have been added on to that. And so I think that will be where if we want to do this globally properly, that'll be where it goes. But getting to that stage is going to be really challenging because you need every country to agree to it.
00:39:09 Charlie Luxton
No, but can I just say that's a revelation to me, actually, because you know, when we try to understand- I think construction is quite unusual in that the amount of materials we're trying to get, our data, our APD's for is vast. You know we're putting you know 500,000 items together in a building, if you include every nail, it’s just vast numbers and that's been blowing my head like how are we gonna get these EPD's reliable? How do we understand this? How do they get this data? But actually, when you break it down and if everyone knows their scope one. That's it, really. I mean, there's a bit of sequestration stuff, you could argue tiny bit of complexity there, but fundamentally that that's it. And then out of that, you get this incredibly complex amount of data, but it's really very basic at the bottom line. How much did you burn? How much did you burn? I’m having a moment here, thanks for that.
00:40:06 Andrew Griffiths
You're welcome. I think it's, it's, it, it is that thing where we, I, to a certain extent where we are over complicating a solution to an issue because we, because policy isn't where it needs to be. And, and we're trying to fill the gaps because of that. And we're sort of making stuff up because we don't have data. We have to estimate because we don't have data and like just, but imagine if you were trying to set up the financial system from scratch, like that's, that's what we're doing. And I think about all of the complexity where now, and that wasn't always the case. This is one of my favourite sort of tidbits, which is that people sort of think of financial accounting is this thing that has just always been there. We've always known. And I, you know, I can read a financial report from a Chinese company and, and I know what their company Is, you know, doing the profit margin - that has never, that's not always been the case. Like, um, back in - when it's at the wall street crash, right? A major reason why the wall street crash happened was because at that time, there were different methodologies for calculating profits that were insane. One of those methodologies was you could take estimated sales from next year. things just make assumptions about what sales you're going to make next year.
And you could bring some of that profits and report it as this year's profits. That's like offsetting similar kind of principles, isn't it? And you could, you just, and you go, well, obviously that's going to create a balloon, obviously. And so people would start, people would be bringing forward profits, but then the next year, a big problem you've now got is you've set even higher targets to demonstrate growth, but you've given away a whole chunk of your profits to the last year. So now you've got to claim even more from the year after that. And so it became this vicious cycle that created this bubble. And that's, that's what led to Wall Street crash.
00:41:52 Will Richardson
That's a brilliant bit of information.
00:42:13 Andrew Griffiths
Before the wall street crash, international bodies were formed to say this can never happen again. We need to create a consistent method for accountancy internationally. And that was actually done by the same sort of, by the sort of the sister organization of IFRS, who are the ones who have just developed and launched the S1 S2 standards for carbon measurement within sort of a financial lens. They're the same people who developed the International Accountancy Standards, the IASB. It's the same organization that said, right, we sorted out the financial stuff. This carbon thing needs to be dealt with. We're going to create the IFRS S1 S2 using the International Sustainability Standards Board to do it. And, and they're sort of coming in on that. And so that's why that one has been taken up by government so quickly because it was created by a body that they already use to say, here's how we're doing financial accounting for our country now.
00:42:49 Will Richardson
Yeah okay I get it, that’s brilliant. That's really, really good.
00:42:58 Charlie Luxton
Will, you’re in this area. You're in this area and I'm going to throw a little question at you. I mean, what would you like to see the carbon accounting alliance do for, for your business and the sector?
00:43:09 Will Richardson
I think cohesion across the industry is imperative, with that cohesion will drive change. I remember when I first started green element back in 2003, four, I genuinely thought that by 2020, I wouldn't have a job because I assumed as it turns out wrongly, that every single organisation would innately reduce their emissions and their impact because everyone is trained up to -it's just part of society. And that's clearly not happened. But I think something like an organization like the Carbon Alliance will really drive systemic change in our society because, you know, legislators and politicians will have to sit up and listen to an industry that knows what they're talking about. And we absolutely need to have, be able to go into a company's house and see the footprint of every single organisation. I think we're in a fairly rich, affluent country. There are areas of the world that do not have the skills and expertise to measure carbon, but if we can solve the problem and make it incredibly easy in those affluent countries, then everywhere in the world will be able to measure their carbon incredibly easily. And I see that is where we should be going to.
00:44:34 Andrew Griffiths
Absolutely. And if we can get the data piece to largely sort itself out for people, so they understand where they are. There's going to be a lot, it means we can invest all of our time into helping them get to where they need to be and actually help them figure out, so yeah, where is it that you can, just because you've got a calm footprint doesn't mean you know what to do with it doesn't mean that, you know, Oh, I can probably reduce a thousand tons. If I change this material, I can probably change, I can probably, so I hope that it will, you know. The automation, which will come for our sector, as same as it does for all. It will free us up to focus more of our resources and more of our time as organisations on actually helping hold people's hands and walking through the journey of achieving the reductions that they need to achieve.
00:45:21 Charlie Luxton
But that's quite a sobering comment because effectively you're saying all of this incredible achievement is literally just going to get us to the start line. And then we've got to do all the real work of reduction. I mean, I understand that in the process of understanding your process of analysing and gaining your, your carbon footprint, you inevitably make reduction. I mean, I think it's just, that's just human. You do, but it's obvious you see waste and you see opportunity.
00:45:39 Will Richardson
So, but go back to one of the comments that Andrew made quite early on about double counting and triple counting with scope one, two, and three emissions. And if you have large organisations and many organizations reducing their impact on scope one, two and three emissions, then there's double triple counting going on, which means the reductions will be bigger and faster than anticipated because of that. So there is positive, but it doesn't mean that we should stop triple counting though, because actually that potentially could be one of our helpful saving graces.
00:46:00 Andrew Griffiths
I think it'll create this ripple effect and um, you know, leaning into your metaphor with the start line. You know, I love the metaphor of the UN's race to zero campaign because it is a race, let's be clear. and there are going to be winners and losers in this race in the same as there will be our blockbusters and there will be our Netflixes. Um, but the critical thing is that this is a race that we will all win. Or we'll all lose together. And it's not about who's first across the line, it's about who's last across the line and how long it takes us to get there. And so as a society, it's, that's why this collaborative mindset is so important. Because if we, I think, uh, Elon Musk used a really lovely thing when he re, he released all of the patents to all of the Tesla technology and said, make use of them. And I think the metaphor he used was, he said, if you're in a boat that's sinking and it's got loads of holes in it and you've invented the whole patch kit. Don't hoard it and keep it back and make lots of profits. You're still on a sinking boat. It is absolutely in your fundamental interest to get as many people making patch kits as you possibly can because you're in the boat. If the boat sinks, you might be the richest person on that boat, but you've sunk.
[00:47:38] Charlie Luxton
There is an enormous amount of rewiring that needs to go on within the human psyche and, and the kind of economy without a doubt. So let's say I'm a business who, who does carbon accounting. How do I join the Carbon Accounting Alliance? Do I have to be invited? Do I apply? What's the process?
[00:48:00] Andrew Griffiths
So you just go to the website, carbonaccountingalliance.com and there's a join us button and there's a little Microsoft form that you fill out and sort of just telling us who to contact and what sort of services you're providing, things like that. So we understand who, who we have in the Alliance. Um, and yeah, fill that in. And then when I get around to it, I get in there and I add you to the calendar invites. I add you to the mailing list. Uh, I get your logo and slap it on the website. So currently it's a very manual process that also needs some innovation to it from, from my side. But yeah, so it's very simple. There's, there's, there's currently no costs involved or anything like that. We want to make it open and accessible. Um, although given the size and scale we're reaching now, we're going to have to figure out some way, I think supporting some funding.
00:48:47
Yeah, you're going to have to, you have to, you're not going to be able to do it yourself otherwise.
[00:48:57] Charlie Luxton
I'm looking forward to the next CAA meeting and just imagining you there with about 20 screens just to see everyone's faces when you, when you have a suit. So that's it for this episode of Sustainability Solved, the sustainable business podcast. Thank you so much, Andrew Griffiths from Planet Mark and the Carbon Accounting Alliance. That was absolutely fascinating. Thank you so much. I'm Charlie Luxton.
00:49:40 Will Richardson
And I'm Will Richardson at Green Element. For more information on Green Element and everything we've discussed today, please check the show notes. And if you have any feedback or questions, you can definitely get in contact with us at Green Element on social media.
[00:49:31] Charlie Luxton
And don't forget to follow this podcast in your favourite app or write us a review because I thought this was a very good episode. So say that in a review. Thank you very much. See you next month.