The integration of ESG factors into corporate decisions and investments has become increasingly relevant in the context of a growing awareness of the environmental and social impact of business activities. Investing in accordance with ESG principles can be seen as a way to encourage sustainable and socially responsible practices, which are becoming more and more fundamental. Indeed, for decades, the scientific community, aided by increasingly accurate mathematical models, has described how the planet’s climate is changing alarmingly.
Today, we face increasingly extreme, frequent, and devastating climatic events. Many species are trying to adapt to these changes: migratory birds are altering their arrival and departure times year after year, blooms are advancing, and mountain species are moving as high as possible.
This transformation, undeniably triggered by human activities, mainly the excessive use of fossil fuels, manifests through increasingly extreme, frequent, and devastating climatic phenomena. Our planet is witnessing unprecedented changes, and the need to act urgently becomes increasingly evident.
The summer season of 2022, with its record temperatures, marked a new chapter in European climate history. In July, the temperature was 2.26 degrees Celsius higher than the Italian average since 1800, the year meteorological recordings began. These data, along with instrumental measurements and the increasing frequency of extreme weather events, unmistakably underline the reality of a climate crisis.
Human activities, such as the combustion of fossil fuels and large-scale deforestation, have raised the concentration of greenhouse gases in the atmosphere, acting as a thermal blanket that retains heat. The unprecedented increase in greenhouse gases in the atmosphere has been identified as a fundamental catalyst. The concentration of carbon dioxide has grown by 150%, methane by 262%, and nitrous oxide by 123% compared to pre-industrial levels, according to the World Meteorological Organization (WMO). CO2, measured by the Mauna Loa Observatory of the U.S. NOAA, reached unprecedented levels, averaging 420.99 parts per million in May 2022. A concentration not seen for at least 650,000 years, if not even longer.
This rising concentration is directly correlated with the global rise in temperatures, which, in turn, amplifies phenomena such as floods, droughts, hydrogeological instability, the spread of diseases, and crises in agricultural systems.
An Agreement for Change
As a challenge that encompasses the entire globe, climate change requires synergistic cooperation among the world’s countries. In 2015, global leaders agreed on ambitious commitments through the Paris Agreement, outlining an action plan to address global warming.
This agreement features key elements that emphasize the urgency and the need to act with determination:
- Long-Term Goal: A milestone of the Paris Agreement is the long-term goal of keeping the increase in the global average temperature well below 2°C above pre-industrial levels, with efforts to limit it to 1.5°C.
- National Contributions: Before and during the Paris conference, countries presented their national action plans (NDC – Nationally Determined Contributions) to reduce their respective emissions, highlighting a global commitment to addressing the climate challenge.
- Cyclical Ambition: States committed to communicating new action plans every five years, each of which should set more ambitious goals, promoting a constant increase in commitment to the fight against climate change.
- Transparency: Transparency is a key pillar, with countries committing to openly and accessibly communicate with each other and the public about the results achieved in implementing their respective goals, ensuring effective monitoring.
- Financial Solidarity: Another crucial element is financial solidarity, with EU member states and other developed nations committing to providing climate finance to developing countries. This support aims to help them both reduce emissions and increase their resilience against the impacts of climate change.
The Paris Agreement came into force on November 4, 2016, marking a significant step toward concrete action. Ratification by at least 55 countries, representing at least 55% of global greenhouse gas emissions, activated the agreement’s commitments. A sign of unity and determination, all EU countries successfully ratified the agreement, demonstrating the need for a collective approach to address the common challenge of climate change.
The EU as a Leader in Green Growth
The European Union has over 450 million inhabitants, but climate change affects each of the 7.5 billion people living on our planet without distinction based on borders. For this reason, the EU is determined to use its position to lead global climate action with the goal of being a model.
However, the EU’s actions go beyond setting an example. It collaborates with countries on a bilateral basis, including climate clauses in trade agreement negotiations, for example. It shares its experience and encourages its partners to take bold actions against global warming, funds the efforts of developing countries to address climate change, and respond to its impacts.
ESG: Sustainable Finance for a Better Future
Behind the acronym ESG, increasingly known outside the world of finance and sustainability, are three very clear terms: Environmental, Social, and Governance. These are three fundamental dimensions for verifying, measuring, controlling, and supporting (through product purchases or investment choices) the commitment to sustainability of a company or organization.
ESG principles are important because they allow for the precise measurement, based on standardized and shared parameters, of the environmental, social, and governance performance of a company. For a long time, the social and environmental commitment and good governance practices of an organization were entirely voluntary choices, independent of the organizations. The results achieved were represented based on choices and logics tied to each reality and could not be “measured” or “compared” to those of other companies and could not be the subject of “objective” evaluations. ESG principles are important because they allow the environmental, social, and governance activities to be traced back to objective and shared measurement criteria.
At this point, a natural question arises: what could companies practically do to make a difference? In practice, companies are encouraged to achieve so-called carbon neutrality.
The Intergovernmental Panel on Climate Change (IPCC) defines carbon neutrality as the balance between residual emissions and interventions to remove carbon dioxide from the atmosphere. The goal is to offset and neutralize CO2 emissions, achieving a CO2 emissions balance equal to or less than zero. The term “carbon neutral” literally means “zero emissions,” and the concept of carbon neutrality is commonly extended to other greenhouse gases (GHGs), measured in terms of carbon dioxide equivalence.
What is the threat? The excessive amount of carbon dioxide (CO2) produced implies well-known environmental damage. It jeopardizes the presence of ozone, the gaseous layer that envelops the planet in the atmosphere and preserves it from the damage of ultraviolet UV-C rays emitted by the sun. Another harmful effect of excess carbon dioxide in the air is climatic overheating. To counteract and contain these impacts, a plan to reduce CO2 emissions is essential. The virtuous philosophy of “carbon-free” is gaining ground in the industry and finance, thanks to the development and encouragement of the use of new technologies to generate clean energy.
Key Steps to Achieve Carbon Neutrality
Revelis is deeply committed to this cause and, by paying attention to ESG principles, has embarked on a path to achieve and maintain carbon neutrality, respecting the following key steps:
- Measurement and Reduction of Emissions: Calculating the ecological footprint, also known as the Carbon Footprint, is the first crucial step. It involves the accurate measurement of greenhouse gas emissions from production activities, transportation, and energy use. Once identified, a significant reduction of these emissions is necessary through the adoption of cleaner technologies, sustainable practices, and energy efficiency.
- Transition to Renewable Energy Sources: An essential aspect of achieving carbon neutrality is the gradual abandonment of fossil energy sources in favor of renewable sources such as solar, wind, and hydropower. This transition is essential to drastically reduce emissions related to energy production.
- Investments in Clean Technologies: Research and development of clean technologies are vital to accelerate the transition to a zero-emission society. This includes the development of carbon capture and storage technologies, solutions for sustainable agriculture, and innovations that reduce industrial emissions.
- Participation in Green Projects and Reforestation: Natural ecosystems, such as forests, play a critical role in absorbing atmospheric carbon. The conservation of existing natural areas and the reforestation of deforested areas are crucial strategies to balance emissions.
- Promotion of Sustainable Practices: At the individual and corporate levels, it is essential to promote sustainable practices. This includes waste reduction, the adoption of more sustainable eating habits, and the creation of low-carbon work environments.
Our First Step
As described earlier, the first fundamental step in the carbon neutralization process is measuring the ecological footprint. We took action in this regard primarily after becoming aware of the issue. Following comparisons with online tools and discussions with entities guiding companies in this process, we constructed a questionnaire and distributed it to employees.
The purpose of the questionnaire in this phase was to collect data regarding the total emissions generated by commuting between home and office for each of us. Secondly, based on our core business, we realized that our emissions would depend mostly on electricity consumption and office heating. Once this information was collected, it was normalized for 12 months and entered into the Carbon Footprint Calculator. This allowed us to visualize at least an estimate of our ecological footprint.
The result of the calculation shows that our company’s emissions amount to around 9 tons of CO2 emitted over twelve months. Considering the total number of employees, an interesting picture emerges regarding the modes of commuting to the office and the associated carbon emissions. 7.14% of them choose to use the bus to cover a distance of 9 km, generating a total of 0.2 tons of CO2 emissions. The remaining 92.86% of workers own a car, and within this group, 15.38% use gasoline vehicles. On average, these employees travel 55.5 km, contributing 0.95 tons of carbon emissions. The majority, accounting for 84.62%, have diesel cars and cover an average distance of 214 km.
This segment generates a total of 3.08 tons of CO2 emissions. In light of this data, it is evident that private transportation, particularly the use of diesel vehicles, significantly contributes to the overall carbon emissions of the staff. It might be strategic to promote more sustainable alternatives, such as public transportation or the adoption of low-emission vehicles, to reduce the overall ecological footprint resulting from daily commutes to the workplace.
More generally, it can be observed that emissions from individual commuting are more or less balanced with emissions from office electricity consumption. Considering electricity consumption, which represents 53% of the total emissions of 9 tons, another key element emerges to consider in the overall assessment of the ecological footprint associated with employees’ commutes to the office. In particular, the contribution of emissions related to electricity consumption amounts to approximately 4.7 tons.
This data underscores the importance of adopting sustainable strategies and practices in the electricity sector as well, promoting renewable energy sources and energy efficiency to reduce the overall environmental impact. Targeted interventions in this area could significantly contribute to the reduction of carbon emissions associated with consumption, representing a further step toward creating a more sustainable and environmentally responsible work environment.
Embracing Sustainability: Acquiring Carbon Credits as a Step Towards a Green Future
In line with ESG principles, joining green projects through the acquisition of carbon credits emerges as a key strategy for companies and individuals eager to contribute to the fight against climate change. This practice not only reflects a commitment to a more sustainable future but also offers tangible benefits for the environment and corporate reputation, building trust among consumers.
A carbon credit represents the amount of carbon dioxide (CO2) equivalent absorbed or reduced by low-impact environmental projects or initiatives. These projects can include reforestation, renewable energy production, or energy efficiency. Purchasing carbon credits means actively offsetting one’s carbon emissions by supporting actions that reduce the overall environmental impact.
Participation in national and international green projects is an ethic that not only looks exclusively at the sustainable development of the company but also improves the economy of the places where these initiatives are implemented. A glaring example could be the practice of reforestation in areas with greater needs. Planting new trees involves extracting resources from them to be introduced into the local economy.
Promotion of Sustainable Habits
In addition to achieving carbon neutrality, our goal focuses on raising awareness of the subject and the best practices that each of us should at least refer to, so that solving the problem becomes a cultural and individual mindset. In Revelis, shared knowledge spaces are often utilized to raise awareness on the topic.
We have committed to sharing a set of practices or principles as a reference point. It can be noted that these are not just a mere list of instructions to follow but also simple pieces of advice that, if considered, will help increase awareness on the subject, leading to a common understanding where the main purpose is a society in which every individual, in their own small way, can maintain environmentally friendly habits for themselves.
Another concrete example of our efforts in this direction has been the distribution of water bottles with the aim of discouraging the use of plastic bottles. In general, improvements are noticeable within our reality; in fact, the presence of people who (weather permitting) prefer to commute by bike or even on foot has increased. Similarly, the use of plastic, in general, has decreased in favor of eco-friendly materials.
Revelis is demonstrating a tangible commitment to promoting a sustainable corporate culture, highlighting how the adoption of eco-friendly practices can indeed have a positive impact on the environment and contribute to the creation of a more environmentally conscious corporate community.
In conclusion, addressing the climate crisis requires concrete actions at the global, national, and corporate levels, with a particular focus on transitioning to sustainable practices and reducing greenhouse gas emissions. Sustainability thus becomes not only an ethical obligation but also a key strategy for a better future. At Revelis, we are very convinced and motivated to complete the carbon neutrality process to promote sustainable and green growth.
Author: Franco Luigi Garofalo and Diamelys Dìaz Estrada