BEYOND CORPORATE

CARBON FOOTPRINTS
Expanding from only footprint emissions (Scope 1-3) to selling
solutions to deliver sustainable handprints (avoided emissions)

V. 0.9.1 March 2023

 Expanding from only footprint emissions (Scope 1-3) to selling
solutions to deliver sustainable handprints (avoided emissions)

Introduction
to climate action and the two roles of companies
02

Expanding
the current focus on carbon footprints to handprints – from the climate problem 06
innovation of the 1990’s to a 21st century climate solution innovation agenda

Differences
between scope 1-3 emissions, avoided emissions, 1.5 °C compatibility, and a future 30
where 11 billion people can live flourishing lives

Synergies
between carbon footprint reduction work and avoided emissions in society from sales
34

Ways forward
for current and future solution providers
36

Written by: Dennis Pamlin (lead author) and Jay Hennessy

 Dynamic Solution Approach
Opportunities
of tomorrow:
An expanded

Approach to companies/cities/countries
innovation
agenda
Provider of
Solutions

1. Introduction
Climate Action and the two roles of companies
Source of
Everything is bilateral in the domain of thought. Ideas are binary. Emissions

Janus is the myth of criticism and the symbol of genius Static Problem Approach

– Honore de Balzac, 1799-1850 1.5°C Strategy

Current Focus: Existing Human

Only a small part Sectors Needs
of the innovation
agenda

Sources of problems and sources of solutions

Introduction

So far, the climate challenge has primarily been approached as a problem, where the The fact that companies can provide innovative solutions and use the need in society
focus is on reduction of emissions from companies and their value chains. Most tools as drivers for innovation is a key reason why avoided emission are important to include
and initiatives have therefore focused on measuring and reporting emissions from value in corporate climate strategies, strategies that cover innovation, product development,
chain emissions. Incentive structures have been developed based on the assumption marketing, sales and overall business model innovation. The need for companies as
that the best a company can do is reduce emissions and reach “Net-Zero”. The common solution providers becomes even more important when we shift the focus to what is
denominator is that all of the above is based on a ”static reduction approach”, an approach ultimately needed, i.e solutions that allow everyone on the planet to live flourishing lives.
where the large companies, the infrastructure and consumption patterns, are assumed as Today 8 billion people have the right to live flourishing lives, by 2050 we will probably be
static and where improvements in existing systems is the focus. 10 billion and by the end of this century the most likely scenario is about 11 billion, before
the population is estimated to stabilize.1
This static problem perspective is supported by climate negotiations and media only
asking for reduction targets, investors wanting to know how companies address the risks Instead of the reduction of emissions from existing companies and structures that are
related to scope 1-3 emission, reporting frameworks, and tools that help companies keep inherently unsustainable, the main challenge from a long-term perspective is to avoid
track of and report their emission reductions, etc. emissions and deliver on human needs with the help of innovative companies that can
deliver what is needed in a sustainable way, i.e. we need incentive structures to ensure
The idea of “zero” as the goal for companies has become so dominant that for many that companies deliver solutions in support of a 1.5 °C compatible pathway where at least
companies this is the ultimate climate goal, and an industry has emerged to provide 11 billion can live flourishing lives. The UN assume that “with a probability of 95 per cent,
guidance for accounting and selling offsets so that companies can claim zero emissions the size of the global population will stand […] between 8.9 and 12.4 billion in 2100”2
from their own operations and value chain. The climate risk innovations that have While the current trajectory and actions by business and policy makers make a 1.5 °C
developed based on this situation have often not even focused on how current systems future increasingly unlikely the climate is not a negotiating partner and giving up on this
can reduce emissions, but how companies can report zero, or low, emissions. goal is to give up on future generations.

While companies must ensure that the emissions over the value chain are compatible with
a 1.5 °C development path, these emissions are only one side of the coin, and arguably the
less important from a long-term perspective.

The reason companies exist, why they have been given limited liability, and why many
new companies emerge, is to provide society with the solutions we need in the smartest
possible ways. As we now urgently need solutions that can provide us with what we need
in a sustainable way, companies as solution providers need to move into the center of the
climate discussion.

2 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 3

 $
new business models emerging, it is also becoming increasingly counterproductive to only
ask companies, countries and cities to reduce emissions from current systems. Such a
reactive approach will undermine many disruptive innovations and ignore most solution
providers. Instead of starting by asking stakeholders how they shall reduce their emissions,
it is time to identify low-carbon leaders by starting to ask what solutions they can provide.
Such an approach can accelerate the uptake of both individual solutions as well as
transformative system solutions that require new clusters for implementation.

Commitment from existing stakeholders to only reduce their emissions (scope 1-3), rather
than focus on how they can contribute to a 1.5 °C compatible development path through
the solutions they provide, can be a step in the right direction. However, such a limited
perspective has established a static problem approach with several challenges.

1. Strategies that only reduce greenhouse gases from existing systems are not enough
to achieve a sustainable 1.5 °C compatible pathway, as such a system will be too
resource intensive, too unequal and continue to undermine poverty reduction,
biodiversity, and other SDGs as the IPCC 1.5 Special report demonstrated.3

2. Many of the static problem commitments are based on business-as-usual strategies

with unproven technologies, such as carbon capture, utilization, and storage (CCUS),
$
and assumptions that these will reach a scale and price that might not actually
materialize. If they do, it would allow these stakeholders to continue without any
There are many reasons for the current one-sided static problem approach with a focus on significant changes. However, if these technologies do not become available we will
Introduction

reducing emission from current structures. Critically, most climate related initiatives and be stuck in a situation with outdated and unsustainable technologies that are so
organisations that dominate the current discussion were created: resource intensive that even if the carbon issue is addressed they can never be part
of a future where 11 billion can live flourishing lives. In order to support sustainable
• before the impacts of the fourth industrial revolution became obvious innovations that can deliver both reduced emissions and a flourishing life for
everyone, strategies that deliver net-zero without technical carbon capture should
• in a time when many large polluters openly questioned if climate change was real be the reference and the carbon capture strategies should only be considered as
a back-up.
• before many sustainable solutions we today take for granted became cost competitive
3. Strategies based on a static problem approach tend to deploy tools that support
• in a time where neo classical economics dominated and anything more transformative improved versions of existing products, such as most environmental labels,
was seen as impossible or unnecessary environmental taxes and investment decisions based on existing sectors. While
such strategies can deliver improvements in existing systems they tend to undermine
• before the scope and scale of the reductions needed in society were well accepted opportunities for a new generation of solutions.
and understood.
4. The main challenge with the static problem approach is, however, a combination of
Because the focus of most initiatives and tools were to deal with the laggards in the all the above and can be called “the fossil free typewriter dilemma”, where existing
corporate sector the result today is a situation where companies, but also cities and unsustainable production and business models are assumed as the default option that
countries, are viewed only as source of emissions and not providers of new smart just needs to be made more climate friendly, and smart new solutions that support
solutions. The best these “sources of emissions” can do is to reduce their emissions to global sustainability are ignored or marginalized. With a focus on what citizens need
zero, resulting in a “climate risk innovation approach”. With innovations focusing on rather than only improving existing products companies can use the need for resource
reporting zero rather than delivering what the world needs, creative reporting methods, efficient and fossil free solutions as a driver for business innovation.
reduction initiatives, and offsetting have come to dominate.
This paper discusses both how and why companies with climate risk experience (a risk/
To view companies, as well as cities and countries, only as sources of emissions ignore footprint/scope 1-3-approach) can expand the climate action agenda to also include a
many opportunities and limits the scope of innovation to a very narrow range of activities. climate opportunity strategy (opportunity/handprint/avoided emissions approach).

Expanding the climate and innovation agenda to also include a “climate solution
innovation approach” provides the opportunity to focus on the solutions the world needs
and how companies, as well as cities and countries, can provide these solutions. With the
fourth industrial revolution accelerating technological innovation, with new values and

4 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 5

 2. Expanding
the current focus on carbon footprints to handprints
From the climate problem innovation of the 1990’s to a
21st century climate solution innovation agenda

If you want the present to be different from the past, study the past.
– Baruch Spinoza, 1632-1677
Expanding

The three areas are developed in conjunction and stakeholders, theories and approaches
create interdependences. The result of these interdependences is that stakeholders,
How companies respond to the need for reduced emissions in society
theories and approaches in each area tend to resist change. Instead of a smart agile
depend on three interrelated areas: adaption to new situations, as the world changes, there is a tendency for a new paradigm
to grow in parallel until the pressure becomes so significant that a disruptive paradigm
Perspectives and drivers in society shift happens leaving behind companies that struggle to adapt.4

What are the goals that companies are supposed to deliver on and what role The current approach to climate change by most companies, policy makers, investors,
should companies have in a 1.5 °C compatible development path? NGOs and media makes it hard to deliver more than incremental improvement in existing
systems and is the reason why the focus on a company’s footprint is so dominant, even if
The stakeholders in focus that makes little sense in the current situation.

Depending on the goals for companies and what they are supposed to deliver By comparing the situation back in 1992, when climate change was established as an
on, different companies and stakeholders will be in focus. international priority, with the situation today 30 years later, we can better understand
the current bias and explore possibilities to expand the focus, from companies only as
The tools and initiatives a source of problems and a focus on carbon footprints (scope 1-3 work), to also include
a focus on companies as climate solution providers with a focus on climate handprints
The way the need for a 1.5 °C compatible development path is framed, and (avoided emissions).
the capacity among the stakeholders involved, will result in use of different
tools and initiatives. The different tools and initiatives will also be shaped It is important to note that companies will still be required to address their footprints as
based on what kind of innovation is seen as possible the handprint includes the footprint (but the footprint does not include the handprint),
but it will happen in a new context, with new stakeholders and new tools. The following
sections outline the three interrelated areas and the dramatic changes that have taken
place since the ‘90s, while the approach to companies has stayed the same.

6 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 7

 2.1 Perspective/Drivers 1992 – 2022 3. Responsibility:

During the ‘90s the focus was on big emitters in the OECD. Instead of a focus on human
• 5% reductions • 1.5 °C compatible solutions needs and those new clusters that have innovations that deliver on those needs, the
1990s • Reporting 2020s • Actual impact
• High emitters in the OECD • 11 billion flourishing lives sectors with high emissions were seen as those mainly responsible for addressing climate
change. The idea was established that companies could buy offsets, often from poor
countries, to show leadership. Decades have been lost with companies buying offsets
instead of moving away from unsustainable business models and exploring how they can
develop the solutions society needs. These offsetting companies and the consultants
Before the Climate meeting in Paris in 2016 most of the world lived in the and NGOs around them have created an ecosystem where they celebrate each other and
shadow of the Kyoto protocol, dating back to 1997. In Kyoto the world’s even hand out prizes for “climate leadership” for companies, PR agencies and offsetting
companies that manage to use creative reporting instead of delivering solutions that meet
countries agreed that the rich countries would begin to incrementally human needs in a sustainable way.
reduce the emissions within their national borders. The so-called “Kyoto
target” agreed that the rich countries should reduce their greenhouse gas Richest Richest 10% responsible for
49% almost half of total lifestyle 1990s
emissions by an average of 5% against 1990 levels, over the 2008-2012 10% consumption emissions

period.5 So in 20 years the rich countries agreed to make a symbolic first 19%

World population arranged by income (deciles)

step to break the trend with increasing emissions. Currently, UNFCCC 11%
estimates that almost 8 percent reductions are needed globally per year 7%
between 2020 and 2030. Rich countries, or more correctly rich people, 4%
obviously need to reduce emissions much faster than 8 percent per year. 2020s
Expanding

3%
Even the small change of 5% total reduction, under the Kyoto protocol, was seen as too
2.5%
radical for many governments and companies. In a comprise to bring onboard the US
Poorest 50% responsible for only
a loophole was also created that would influence the corporate climate approach for Poorest
50% 2% around 10% of total lifestyle
consumption emissions
decades, the idea of emissions trading. Described under Article 17 it allows countries to
1.5%
report reduced emissions by buying someone else’s emission reductions and thereby claim
that they have met their own emission targets.6 1%

Three perspectives and drivers were established during the ‘90s in conjunction with the
Kyoto protocol:

Today a new set of perspectives and drivers have emerged. After the climate meeting in
1. Incremental improvements:
Paris the world reached the Paris agreement in 2015, an agreement that sets out a global
framework to avoid extreme dangerous climate change by limiting global warming to well
the goal in focus was to reduce emissions in rich countries by a total of 5% over 20 years.
below 2 °C and pursuing efforts to limit it to 1.5 °C.7 Still, even 1.5 °C will still likely result
Instead of a focus on what was needed to avoid dangerous climate change and to help
in large-scale drought, famine, heat stress, species die-off, loss of entire ecosystems, and
people live better lives, cost-efficient incremental reductions of carbon emissions became
loss of habitable land, throwing more than 100 million into poverty.8
the goal.

Instead of reporting the focus has begun to move to actual impacts in society. Finally, the
2. Action as reporting:
global focus and the fact that most people on the planet still do not live flourishing lives
have begun to shift the focus from the current emissions from OECD countries (emissions
Instead of actual emissions reductions in society and a long-term sustainable pathway
reductions), to the question of what solutions are needed to allow 11 billion citizens to
the focus was on improving risk transparency among large polluters through reporting
live flourishing lives (avoided emissions). Instead of emission reductions from current
systems. The result was consultants and organizations rapidly emerging around reporting
structures the question becomes how to avoid emissions while meeting people’s needs.
with a focus on reporting own emissions rather than solutions needed in society, as well
as offsetting and other creative and cost-efficient ways to report scope 1-3 emissions that
were introduced.

8 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 9

 Three perspectives and drivers are emerging in the 2020s: 2.2 Stakeholders in focus 1992 – 2022
1. Transformative change will happen and is needed
• Fossil companies • Solution companies
1990s • Offsetting companies 2020s • Clusters based on human needs
With the goal to be 1.5 °C compatible transformative system changes and totally • Risk reporting experts • Business model innovation experts
new ways of meeting human needs becomes the focus. The 4th industrial revolution,
and digitalization in particular, will result in transformations, but these can be both
sustainable and unsustainable. How the disruptions that will happen, can be directed
in a direction where they are needed is therefore a key question for any climate and
innovation initiative.
It is easy to forget how different the world looked in the 1990s compared
2. Actions evaluated based on how they improve people’s lives with today. Back in the ‘90s much of the discussion about companies
focused on the fossil fuel companies who openly questioned climate
Instead of focus on cost savings and financial/governmental stakeholders demand for
change. Many of the largest companies on the planet were part of
reporting of scope 1-3 emissions, the focus is shifting towards those who can deliver on
human need in a sustainable way (globally sustainable 1.5 °C compatible solutions). organizations like the “Global Climate Coalition (GCC)”, an organization
whose main purpose was to object to any action that would result in
3. Solution providers/Start-ups
reducted use of fossil fuels. This is how Wikipedia describes GCC:
In the 2020’s the focus is shifting from large multinational emitters that are protecting old
“The Global Climate Coalition (GCC) (1989–2001) was an international lobbyist group
business models and their reduction commitments and offsetting communication, towards
of businesses that opposed action to reduce greenhouse gas emissions and publicly
solution providers. Especially new clusters and start-ups with the potential to deliver the
challenged the science behind global warming. The GCC was the largest industry group
next generation of solutions that can deliver a future where 11 billion can live flourishing
active in climate policy and the most prominent industry advocate in international climate
Expanding

lives are becoming the new climate leaders.

negotiations. The GCC was involved in opposition to the Kyoto Protocol, and played a role
in blocking ratification by the United States.”9

Why the world could only agree on incremental reductions in the rich countries, and still
include loopholes such as emissions trading that reduced the pressure in the rich countries
to begin a transition, is easier to understand if we look at the top 25 global companies
1992. But, there is also room for some optimism when it comes to the largest companies
and their approach to climate change if we look at the top 25 companies from 2022
and compare them to the 1992 list. Most of the new companies are still stuck in a static
problem approach and have business models linked to accelerated overconsumption,
but they are not linked to use of fossil fuel and don’t deny climate change the way the
companies in 1992 did.

10 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 11

 Global Fortune 500: 1992 Global Fortune 500: 2022

Not in 1992 top-25

Name Country Business area Name Country Business area
company list

General Motors US Fossil Walmart US Retail New

Exxon US Fossil Amazon US Retail New
Ford US Fossil State Grid China Fossil in transition New
Royal Dutch/ Shell US Fossil China National Petrolium China Fossil New
Toyota Japan Fossil Sinopec China Fossil New
IRI Italy Public holding (heavy in fossil) Saudi Aramco Saudi Arabia Fossil New
IBM US ICT Apple US ICT New
Daimler-Benz Germany Fossil Volkswagen Germany Fossil, but in transition 1992 Top company
General Electric US Fossil China State Construction Engineering China Construction New
Hitachi Japan Conglomerate CVS Health US Health New
BP UK Fossil United Health Group US Health New
Matsushita Electric Japan Conglomerate Exxon US Fossil 1992 Top company
Mobil US Cigarettes Toyota Japan Fossil, but in transition 1992 Top company
Volkswagen Germany Fossil Berkshire Hathaway US Finance New
Siemans Germany Industry Shell Britain Fossil 1992 top company
Nissan Japan Fossil McKesson US Medicine New
Phillip Morris US Cigarettes Alphabet US ICT New
Samsung South Korea Conglomerate Samsung South Korea ICT New
Fiat Italy Fossil Trafigura Taiwan Singapore New
Unilever Britain-Netherlands Consumer goods Hon Hai Precision Industry China/Taiwan ICT New
ENI Italy Fossil AmerisourceBergen US Health New
Elf Aquitaine France Fossil Industrial & Commercial Bank of China China Finance New
Nestle Sqitzerland Food and drink conglomerate Glencore Switzerland Fossil New
Chevron US Fossil China Construction Bank China Finance New
Toshiba Japan ICT Ping An Insurance China Insurance company New
Expanding

In 1992 a majority were fossil companies (energy and automotive companies dominated). The significant dominance of fossil companies, and in particular fossil companies that
This group constituted 15 of the top 25 companies (60%). Most of these companies were questioned climate change, made them a logical target for climate action. Trying to get
involved in lobby organizations questioning climate change. In 2022, only nine of the top large emitters to acknowledge climate as a risk and commit to cost efficient emission
25 companies were energy or automotive companies, and three of them can be defined reductions was an obvious focus for most policy makers and NGOs working with
as in “transition” away from fossil, making it only six of 25 companies, or 24% with a fossil climate change in the 1990s. In addition, the lack of companies that delivered solutions,
fuel based agenda. Numbers is not everything, a major difference compared with 1992 is renewables, electric cars, dematerialization, sharing, etc. made it hard to find any large
that none of the large fossil companies on the list is publicly questioning climate change corporate allies for a solution agenda.
and the need for emission reductions.10
A quick look at the most influential companies today with regards to business model
In addition, it can be noted that Tesla was one of the world’s fastest growing among the innovation and public support for climate action shows that many of them where start-
large companies, a company founded 2003, six years after the Kyoto protocol was signed. ups, or did not even exist back in the 1990s. Amazon was founded in 1994 (29 years ago),
Netflix was founded in 1997 (26 years ago), Google was founded in 1998 (25 years ago),
A comparison between 1992 and 2022 should also take into account that some of the Tesla was founded in 2003 (20 years ago), Facebook was founded 2004 (19 years ago),
fossil companies in 2022 should probably have been on the 1992 list if China and Saudi Spotify was founded in 2006 (17 years ago), and Uber was founded in 2009 (14 years
Arabia had listed their companies at that time. Hence, the move towards a solution agenda ago). As a reference the climate convention is from 1992 and the Kyoto protocol was
and away from a dominance of fossil fuel companies is even more significant than the negotiated in 1997.
difference between the 1992 and 2022 top lists indicates.
While many of these new companies have pushed new technologies and business models,
The geopolitical changes the last 30 years are also reflected in the changes in the lists. almost all of them are still helping to accelerate unsustainable trends. Some more obvious
In 1992 eleven of the top 25 companies where European (40%) and zero (0) where from than others, such as Amazon’s push for over consumption and Google/Facebook turning
China. In 2022 the number of European companies were two (8%) while there were eight users into products for advertisers that also want to see continued overconsumption.
(32%) Chinese companies.
In addition, many initiatives have emerged since Kyoto where companies as solution
providers have been the focus. Many have used new smart solutions, such as
digitalization, for sharing and dematerialization, but also traditional sectors have been
exploring avoided emissions.11

12 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 13

 2.3 Context for tools and initiatives 1992 – 2022 • Environmental product labels

Product labelling was also a default tool during the 1990s. Such labels allow consumers to
• Slow incremental change • Rapid transformative change support incremental changes in existing systems. They played an important role to show
1990s • Price on carbon 2020s • Purpose driven companies
• Risk/Supply chain management • Avoided emissions that optimization was possible. Today when new solutions are available and transformative
system change is needed most product-based labels are holding the innovation that is
needed back rather than supporting it. There are many environmental labels for meat,
but almost non for smart sustainable protein (making it hard for plant-based meals to
grow), for “green” paper, but almost no labels supporting accelerated digitalization, “green”
flights, but almost no labels that support a shift from travel agencies to meeting agencies
Back in the 1990s it was assumed that coal would be used for 200
promoting virtual meetings, for “green” cars, but few for smart city planning delivering a
years.12 Major car companies used decade-long planning and did not see a future for walking, biking, use of drones and 3D printers. The list goes on.
significant future for electric cars as a response to the climate challenge.13
• Risk reporting
Even most mainstream environmental NGOs did not look beyond natural
gas for energy and transportation, as solar PV and electric cars were seen In an attempt to show the big polluters that cost efficient measures could be taken to
as too radical for most mainstream experts. (marginally) reduce emissions NGOs came together to demand transparency relating
to the risks companies had in relation to carbon. These attempts made perfect sense
In the ‘90s the world’s think tanks, policy makers, business leaders, and also NGOs, were for optimization. However, by only approaching companies as sources of problems
shaped by the neoliberal economic dominance of the 1980s (often personified with the and climate action as a risk, policy makers and the financial system, together with
duo of Ronald Regan and Margret Thatcher14). Neoliberalism defines citizens as consumers leading NGOs, have created a culture in companies where sustainability tends to be the
only, whose choices are best exercised by buying and selling, a process that is seen as responsibility of compliance staff, PR people and supply chain experts.
rewarding merit and punishing inefficiency. It maintains that “the market” (companies and
Expanding

consumers) delivers benefits that could never be achieved by planning (policy makers Transformative systems change was never part of the neoliberal paradigm, and some even
and citizens).15 proclaimed the end of history and assumed that no other system could come after this.
Francis Fukuyama and his book The End of History and the Last Man is the archetype for
The experts emerging during the 1990s were neoclassical economists with the skill to this thinking, but it reflected much of the mainstream thinking in the early 1990s.
optimize products. Leading NGOs also recruited neoclassical economists to attempt to
convince a system that did not value nature as something with intrinsic value, and did not “Humanity has reached not just ... the passing of a particular period of post-war
see transformative system change as an option. history, but the end of history as such: That is, the end-point of mankind's ideological
evolution and the universalization of Western liberal democracy as the final form of
The acceptable trio of tools under the neoliberal paradigm were those that optimized the human government."16
existing system:
Hence, only a narrow set of tools were the seen as acceptable in large parts of the world
• A price on carbon during the ‘90s. Since the ‘90s this narrow approach has been challenged and the end of
history was “cancelled”. Two trends are particularly relevant for the climate discussion and
Still today many neo classical shaped thinkers think that a global price on carbon is the role of companies; digitalization and unsustainable social/environmental trends.
the only, or at least the most important, action that is needed. Even though no major
breakthroughs, from digitalization and electric cars to sharing and renewables have With digitalization, disruptions became the new normal, with new opportunities and
happened primarily due to a high price of carbon. Obviously, a price on carbon is not bad, challenges rapidly emerging. Sectors that had seen little change over decades, or even
but transformative system change is much more dependent on smart policy, regulation, a centuries, where suddenly challenged at the core. Many did not even know what they are
culture of risk taking and the opportunities for start-ups with new solutions to reach the competing against.17
market. Also, to ensure that the poor on the planet do not carry the main burden of the
transition, more sophisticated tools are needed.

14 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 15

 The growing understanding that the industrial development and the ideas it rested on IEAs curves for solar PV and McKinney’s cost curves are two well-known examples of how
was unsustainable became increasingly mainstream in the decades following the 1990s the 1990s mindset survived far into the 2000s. IEA has since revised its approach to solar,
and it was combined with a realization that the future would look very different due to but struggle to integrate system change in its models. McKinsey is still holding on to its
digitalization. Initially most companies only saw digitalization as a tool for optimization, cost curve, even if there are signs that they might soon shift focus as a new generation of
but as whole sectors became disrupted, starting with the media industry, books, music, analysts with knowledge beyond the static neoclassic economic models that shaped the
video, etc., it became obvious that the future was not a given. It is worth remembering original cost curve, move into more senior positions.19
that back in 1992, when the climate convention18 was established, the world wide web
was only three years old and most business leaders and policy makers had never heard of It is still common to hear experts use the 90s mindset and say that a global price on
it, let alone integrated it into their business strategies. carbon is the most important action that is needed, that product labelling will deliver
what is needed, and that ESG reporting will drive the necessary changes in companies.
As sectors and products back in 1992 had seen mainly incremental improvements over However, these voices are becoming less credible, as they are obviously disconnected
decades, the tools and initiatives created during this time reflected this slow incremental from reality.
development path.
The “90s toolbox” is usually promoted by groups, organizations, and individuals who also
As mentioned above the three obvious tools for optimization of existing systems are promote extreme growth of biofuel production, green versions of materials like steel and
price/taxation, product labels and reporting. Hence, “price on carbon”, “environmental aluminum in combination with electrification of current systems. These same groups often
product labels” and “climate risk reporting” emerged as the default climate toolbox. realize that their approach will not deliver what is needed, so carbon capture, or even
For the 5% reductions required during the 1990s this trio of climate tools worked geoengineering, also becomes a key part of the message.
reasonably well. Improvements in energy and transport systems including fuel shifts
and route optimizations together with general energy efficiency could deliver the 5% Cost Reductions Since 2008
reductions needed.
2008 2009 2010 2011 2012 2013 2014 2015
But a combination of accelerated technological development, digitalization, new values, 0%
Expanding

and new business models began to emerge in the 1990s and was in full swing by the early
2000s. Still, most stakeholders working with climate change did not pay much attention to -20%
these transformative changes and traditional expert bodies like the International Energy
-40%
Agency (IEA), and mainstream consultants like McKinsey kept producing models that Land Based Wind (-41%)
ignored the opportunities for transformative change. -60% Distributed PV (-54%)
Utility-Scale PV (-64%)
-80% Modeled Battery Costs (-73%)
LED Bulbs (-94%)
-100%

Breakthrough in
AI Resulting in
Self Driving Cars
Battery Technology During the 2000s it became harder to ignore the rapid changes and the new opportunities
Now these provide. Different traditional experts begun publishing reports that highlighted
the exponential change in many different areas, such as the report “Revolution Now:
Global
Collaboration
The Future Arrives for Five Clean Energy Technologies”20and the “Digital Transformation
Initiative” from WEF.21
impact

Then

Health Trends Result

Attractor in Walking/Biking

16% Business 8% Scenario 3

probability as usual probability

65% 8% Scenario 1 8% Scenario 4

probability probability probability

95% 8% Scenario 2 8% Scenario 5

probability probability probability

time sequence

16 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 17

 Annual PV additions: historic data vs IEA WEO predictions
In GW of added capacity per year –sources WEO and PVMA

70 2.4 Moving from the static problem triangle of 1992 to a

dynamic opportunity triangle for the 21st century
60
PV History
50 WEO 2016 New Policies
WEO 2016 Current Policies

40 WEO 2014 A significant challenge today is the fact that few stakeholders have the
WEO 2013
WEO 2012
capacity to shift focus at the same time for A. drivers, B. tools, and C.
30 stakeholders, something that is needed for transformative system change.
WEO 2011
WEO 2010
This results in many well intending ideas that are stuck in old structures
20 WEO 2009
WEO 2008 where only small changes happen. A few examples:
10 WEO 2006
WEO 2004 • Many governments, business organizations, NGOs, and financial institutions that
WEO 2002 are stuck in a climate risk innovation structure realize that the old goals with 5-10%
0
2000 2010 2020 2030 reductions are outdated. However, instead of a solution agenda where the focus is a
1.5 °C compatible pathway where 11 billion can live flourishing lives they just increase
the required reduction demands to 100%. But they still focus on companies only as
The exponential change and disruptive changes have so far seldom been guided, and sources of emissions and assume that current sectors and ways to provide needs will
definitely not in a sustainable direction. A reason for this is that the tools used by current stay the same. The result is that they ask for deep reductions, and want companies to
mainstream sustainability experts and consultants are based on risk management and report that, and push for an increased price on carbon as the key tool to get there, but
optimization of existing systems, shadow prices on carbon, environmental product labels also allow companies to buy offsets as they also keep the focus on reporting rather
Expanding

and risk reporting (scope 1-3). With such tools global sustainability becomes impossible than actual impact in society.
and the main path forward becomes an extreme increase in renewables, extreme
electrification and then adding CCS in order to make current systems “net-zero”.

With the opportunities provided by the fourth industrial revolution it is not enough
to focus on optimization and ask for fossil free versions of current solutions. Instead,
incentive structures that support a new generation of solutions that can deliver flourishing Slow/ 5-10% GHG
lives for 11 billion citizens with a 1.5 °C compatible just transition are needed, such as a Incremental Reductions
human need-based innovation agenda. change

Climate Risk
Innovation

Fossil
Companies

18 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 19

 • Others look at the work done to get fossil fuel companies to reduce emissions and 2.5 Living in the 1990s in the 2020s:
apply the same logic to cities and start-ups approaching them only as sources of Caught between two worlds
emissions and provide them with an opportunity to buy offsets to be able to report
reduced emissions. This undermines the innovation needed and keeps society in a
static problem state.

• New opportunities tend to emerge when avoided emissions in society from new
Below is a summary of the difference between the climate risk innovation
solutions are delivered and assessed by solution clusters with the aim to deliver a new
generation of solutions to human needs, and where the transformative opportunities agenda of the 1990s and the emerging expanded climate innovation
provided by digitalization and new business models are part of the strategy. Such agenda that also focuses on companies as solution providers.
approaches support a shift from a climate risk innovation approach to a climate
opportunity approach.
2020s emerging 1.5 °C and
1990s climate agenda
global sustainability agenda

Solution clusters, including enablers

(financial, PR, legal, cultural, etc.) based the
Companies in Focus Individual large emitters, and sectors
networks that have capacity to delivery on
11 Billion human needs.
Solution
Flourishing lives Reductions/avoided Avoided emissions in society that are 1.5 °C
Clusters 5-20% reduction from the company (later
compatible and support a sustainable future
below 1.5 °C emissions focus expanded to 100% with offsetting and CCS)
were 11 billion can live flourishing lives

Climate Reporting reduced emissions and

Development and deployment of solutions
Expected outcome that society needs and exponentially scale
Opportunity commitments to net-zero
this contribution
Expanding

Innovation
Drivers Cost reduction/Compliance Revenues/Purpose/Human needs

Ultimate climate Delivery of solutions that society needs to be

The capacity to report zero emissions
goal sustainable

Assumed speed of
Slow, incremental, and linear Fast, disruptive, and with transitions
change in society
Fast/ Business model innovation, clustering
Disruptive Internal price on carbon, environmental of solution stakeholders, 1.5 °C global
Main tools
change product labels and scope 1-3 reporting sustainability compatibility assessments,
accelerators/incubators

Reduce scope 1-3 emissions to zero as fast

as possible, or find ways to be able to report Provide as much solutions as possible that are
The best a company acceptable scope 1-3 emissions reductions in 1.5 °C compatible and support a future where
• If an avoided emissions assessment is done with climate risk innovation approach can do creative ways (such as reporting emissions in 11 billion can live flourishing lives and make
relative terms such as per revenue/sales, or by profits doing this.
it can easily be reduced to simple accounting tool that helps in the climate risk using offsetting).
reporting, where the only purpose is to contribute to net-zero reporting rather than
Revenues and customer satisfaction, based
the business model innovation required to focus on needs in society and how the Compliance and cost/risk reductions that are on providing what society needs for a
Key drivers
company can deliver 1.5 °C compatible solutions for human needs. cost efficient sustainable future in line with the purpose of
the company

Transformative approach based on human

Often an incremental decarbonization
Innovation needs and how 1.5 °C compatible solutions
approach that supports reduction of current
approach emissions from existing sectors.
can be provided by the company to meet the
needs of 11 billion

A potential provider of solutions (that have

View of companies A source of emissions (footprint only) both a footprint and a handprint) that are
needed for a sustainable society

CEO, CFO, rest of C-suite, Head of innovation,

Part of company Supply chain mangers, Risk managers,
Head of sales, Head of R&D and all others
staff involved on Cost saving measures, PR
mainly responsible department, classic CSR staff, sometimes
involved in identify tomorrow’s markets and
for climate action the development of new offerings, including a
C-suite but rarely
new generation of CSR staff

20 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 21

 3. Differences “Avoided emissions includes everything the most ambitious climate risk
agenda does (scope 1, 2 and 3) in addition to also assessing the actual
between scope 1-3 emissions, avoided emissions, 1.5 °C impact in society based on what the product provided is substituting. It
compatibility, and a future where 11 billion can live flourishing lives
also has the capacity to guide companies to become solution providers
for a future where everyone on the planet can live flourishing lives”
We don’t see things as they are, We see them as we are. – Anaïs Nin

As this paper has shown there are two fundamentally different ways for There also exists a funnel where different categories of avoided emissions can be found.
companies to approach the climate challenge. At the top are any avoided emissions. This includes any cases where emissions in society
are reduced, which includes many strategic actions that result in high-carbon lock-in. E.g.
an expensive investment to make a coal powerplant marginally more efficient, a slightly
A climate risk agenda
more fuel efficient SUV, or most investment in new natural gas infrastructure. Such actions
do result in reduced emissions compared with business as usual, but not enough.
The carbon footprint approach, with scope 1-3 emissions, is a reactive risk approach
where the focus is on the reduction from the company’s operation. This approach
In order to exclude actions that do not allow fast enough emissions reductions a 1.5 °C
was born out of a legal responsibility approach and then extended to also include the
compatibility criteria can be used. Such a criteria filters out actions that are not compatible
emissions up and down the value chain. The language around these (scope 1-3) emissions
with a 1.5 °C development path where emissions reductions of almost 10% per year
Differences

are filled with words like “compliance” and “reporting”, as the drivers are external. Hence
are needed.
the main question is “how to reduce emissions from current systems” (in the best case),
but more often “how can we use creative accounting and offsetting to be seen as reducing
Still, even if a solution is 1.5 °C compatible it does not necessarily mean it is compatible
the emissions we are responsible for”.
with a future where 11 billion can live flourishing lives. Currently many initiatives try to
switch from fossil fuel to biofuel or electrification, but as the current system is extremely
A climate opportunity agenda
resource inefficient such a switch is not globally sustainable. E.g. shifting to biofuel driven
airplanes and luxury yachts is clearly not compatible with a future where 11 billion live
The solution approach, with avoided emissions due to solutions from the company, is a
flourishing lives, but rather a world where a few use most of the planets resources and the
proactive climate opportunity approach that focuses on what is needed in society. It was
rest need to remain poor.
born out of the need to assess innovations that deliver positive impacts in society and
that purpose driven companies especially want to contribute to. There are four different
approaches to avoided emissions. The first is product substitution, the second is system
substitution, the third focuses on how different human needs can be met by supporting
different lifestyles, and the fourth and final is about contributions to low-carbon feedback.

22 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 23

 Carbon Handprint/ Avoided Emissions Impact Funnel/ Sustainability Scope
The GHG emissions avoided, or added, in society due Different impacts
to the products the company provides

Scope: Society today including the

poor of the world

Solution Level 1: Aim: Sell solutions that reduce

Avoided emissions emissions in society
from sales
Driver: Revenue opportunities for
solutions that are needed in society
often from product substitution

Scope: Society today and tomorrow

including the poor of the world

Solution Level 2:
Aim: Sell solutions that reduce emissions in
1.5 °C compatible
society that are compatible with a 1.5 °C pathway
solutions

Driver: Revenue opportunities for solutions

that are fast and cost efficient enough often
Avoided Emissions
Differences

from system transformation

io
nce scenar
Refere
Scope: Society and nature today and tomorrow
l
ica including the poor of the world
tor Avoided
His
Situ emissions
atio
n Solution Level 3:
with
the Provided Aim: Work in clusters to deliver solutions for
solu Delivering solutions
tion products, services, a just and creative world where everyone can live
for 11 billion people
marketing, advocacy flourishing lives
Lifetime of the solution living flourishing lives
and their positive or
Time negative impact in society Driver: Purpose driven companies with a goal to
make the world a better place in a profitable way due to
LCA of product/service/system Compared with the LCA of
blue ocean opportunities
the product/service/system it substitutes

Carbon Footprint/ Scope 1-3 Scope 3

The GHG emissions from the
company and the value chain needed Scope 2
to produce and use the product

Scope 1 LCA of the

company
ain
ch

Th
e l u
e

ne
gat e va
ive t h
impact over

24 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 25

 Carbon Footprint / Scope 1-3 Carbon Handprint/ Avoided Emissions

The GHG emissions from the company and the value The GHG emissions avoided, or added, in society
chain needed to produce and use the product due to the products the company provides

The footprint approach can be illustrated as three concentric circles that are assumed as a static part The handprint approach, with a focus on avoided emissions from products sold, shifts the focus from
of society. From the narrowest perspective only the emissions from the structures owned by the the company in isolation to its impact on society. It asks what impact the company has when the
company are included (scope 1). Expanding the perspective slightly and the emissions due to the energy products sold are used compared with alternatives. The handprint approach and avoided emissions can
purchased is also included (scope 2). The last stage expands the problem scope to the whole value chain be illustrated as four different assessment perspectives.
to include all indirect emissions (not included in scope 2) that occur in the value chain of the reporting
company, including both upstream and downstream emissions.22 Perspective 1: Product substitution

As the GHG Protocol, which is in charge of the scope 1-3 structure, describes it: This static problem The first is a product substitution perspective where the LCA (scope 1-3) from the company is
approach “provide a comprehensive approach to value chain GHG measurement and management.”23 compared with the LCA for the product it substitutes. Cases: a new tire compared with an existing tire,
Differences

Note, they do not claim that scope 1-3 work is about what solutions society needs, it is not about a new pair of trousers compared with an existing pair, a new airplane compared with an existing, etc.
new transformative innovations and solutions that deliver on human needs, it is an accounting tool to
measure and manage current value chains and has great value to improve existing structures. While Perspective 2: System substitution
the GHG Protocol is clear about the limits of scope 1-3, many consultants and policy makers think that
scope 1-3 emissions always deliver emission reductions in society, drive the innovation that is needed, The second is a system substitution perspective. Here the focus shifts to what is the unit that provide
and is the only thing companies should focus on. a service to people. The tire is not used in isolation, neither are the trousers, or the airplane. This
perspective requires the company to move the focus to the system it is a part of to deliver a service
Many countries only have initiatives that focus on how to make existing sectors fossil free, and no to people. The producer of tires needs to assess the impact from e.g. bicycles or SUVs depending on
initiatives that focus on solution providers and what society needs. The results from such initiatives where the tires are used. The provider of trousers needs to assess if they contribute to large wardrobes
are predictable and tend to result in the same list of recommendations: Rapid increase of renewables, of low quality that encourages people to only care about short-term external gratifications due to looks
electrification, and CCS with some energy efficiency in existing systems added to the mix. Hence, they and disregards empowerment of individuals as well as environmental challenges in society, or if they
support a future with almost no system innovation, an extremely resource intensive economy with no support small efficient wardrobes with garments that empower and encourage sustainable lifestyles.
changes in business structure, in short a “fossil free typewriter approach”. The provider of airplanes needs to ask how they influence the use of trains and virtual meetings.

Perspective 3: Delivery on human needs with different lifestyles

The third is a human need/lifestyle perspective. Here the focus is on how sustainable lifestyles that
deliver on human needs can be supported. Here a tire provider can collaborate with bicycle providers
to support sustainable access to nutrition and local vacations where personal growth is supported by
allowing people to reconnect to nature. A clothing company can support low consumption lifestyles
based on experience and creativity and healthy nutrition with an active lifestyle. These kinds of
business models and clusters are still very unusual and there are many companies, and sustainability
consultants, that prefer to talk about net-zero targets with offsetting as this only requires companies to
pay for their “sins” rather than rethinking their business model so they can become part of the solution.

Perspective 4: Feedback systems

In addition, a fourth perspective is included with a focus on feedback systems. In a rapidly changing
society in need of fast sustainability changes the feedback systems the company supports are important.
High- or low-carbon feedbacks can be supported though advocacy, marketing and different collaborations
that support, or undermine, institutional changes in support of a 1.5 °C compatible pathway.
26 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 27
 Richest 10% responsible for
Richest
10% 49% almost half of total lifestyle 1990s
consumption emissions

19%

World population arranged by income (deciles)

11%

7%

4%
2020s
3%

2.5%
Poorest 50% responsible for only
Poorest
50% 2% around 10% of total lifestyle
consumption emissions
Impact Funnel/ Sustainability Scope 1.5%

Different impacts 1%

For the carbon handprint / avoided emissions, a funnel can be used to illustrate what kind of avoided Note, that the “carbon footprint” was never meant to address global sustainability, and the science-
emissions are in focus. based targets are not really science based, more science inspired in relation to global sustainability.
The only thing most footprint initiatives require is that companies should reduce emissions, and if they
Solution level 1: Any Avoided Emissions. are more ambitious, they want to see faster reductions in current systems. But, the carbon footprint
Differences

approaches do not say if there are solutions that are scientifically much better if we want even faster
This is the most common approach. While making a simple comparison between the product the reductions, or if there are new science breakthroughs that open up new opportunities that also address
company provides and the product it substitutes can help companies begin to focus on actual emissions other sustainability challenges. So, a better name might be “static problem-based science-inspired
impacts in society, rather than a static problem approach with scope 1-3 emissions, it is not enough for targets with focus on existing sectors”.
global sustainability. Many avoided emissions suffer from the same problems as scope 1-3 emissions,
including science-based scope 1-3 reduction targets, i.e. they do not account for possible high carbon Compared with targets that have no relation to what is needed, science-inspired targets are a step
lock-in, ignore new system solutions and are not built for a time of disruptions. In addition, they do in the right direction, and there are some initiatives like the exponential roadmap that focus on
not consider if the corporate strategies they encourage are compatible with a future where the whole exponential emission reductions, and this can trigger a demand for new innovative and globally
population can live flourishing lives. sustainable solutions.24 The challenge is that many still do not understand the limits of a carbon
footprint approach. And for those that do not understand, more science-inspired targets are often the
Solution level 2: 1.5 °C compatible solutions. best they can use.

The next level includes only the solutions that are compatible with a 1.5 °C development path by
To sum up, three major benefits with a dynamic solution focus where avoided
providing solutions to human needs. To ensure synergies with other sustainability targets and to
support innovation the solutions should be 1.5 °C Low-Energy-Demand (LED) compatible as this is the emissions assessed are:
IPCC pathway with the strongest synergies with other SDGs and also the pathway that acknowledges
and focuses on innovation beyond CCS and more renewables. 1. It can assess what society ultimately needs, a 1.5 °C compatible pathway that delivers what is
needed for a sustainable future where 11 billion people can live flourishing lives.
Solution level 3: Delivering solutions for a sustainable future where 11 billion can live flourishing lives
in a half-earth world that address existential risks. 2. It acknowledges the need to provide solutions for the majority of the global population where
the focus needs to be on avoiding emissions as they move out of poverty and hardly emit
This is a level few companies address. It challenges any company that push unhealthy and unsustainable anything today.
over-consumption such as fast fashion, fast food, digital consumption platforms, and most providers of
natural resources as almost all of these have as a goal to sell as many goods as possible that accelerate 3. It embraces solution providers, and especially SMEs, as well as everyone in the innovation
current over consumptions as well as physical and mental unhealth. It also challenges almost all social ecosystem that supports solution providers delivering on human needs.
media companies that are advertiser driven, from Google and Facebook to TikTok and Twitter, but
also most mass media outlets that today have readers/listeners/watchers as products they sell to
advertisers. Finally, it challenges most consulting companies, cloud providers, legal firms, PR agencies
and architects that support current unsustainable trends by making the companies with unsustainable
solutions more efficient.

28 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 29

 3.2 Cases: Comparing Scope 1-3 and different solution approaches

Below are some short examples to illustrate the difference between a carbon The cases are meant as illustrative examples to show what different ways
footprint approach and a climate handprint approach. It also illustrates of approaching the climate challenge will highlight, but depending on
the difference between the three levels of avoided emissions: any avoided context, the actual results can differ significantly.
emissions, 1.5 °C compatible, and solutions for 11 billion living flourishing lives.
It also briefly discusses impact in society and innovation impact.

Variation in Any avoided emissions 1.5 °C Solution for 11 billion living Impact in Impact on
Example
scope 1-3 in society compatibility flourishing lives society Innovation

+ Short-term + Long-term - - -- - -
Reduction of scope 3 emissions, while Positive impact in the short term, but Negative impact due to high risk of Very negative impact. The current Initially incremental positive impact, Incremental product innovation.
scope 1 emissions might increase negative in the mid/long-term. In the lock-in into high resource demanding, transport system is extremely but not globally sustainable, as a Currently significant money is being
Car manufacturer shifting its due to the need for new production short term ICE is the reference, but as inefficient systems based on personal resource intensive and built around situation where each EV sold replace/ spent on old car companies with very
Differences

portfolio to EVs capacity smart city planning and other mobility car ownership unsustainable production and displace ICEs but also push the Global poor track record for any kind of
solutions become the new reference, consumption systems. Totally new South into inefficient systems is not significant business model innovation.
these will be better than electric cars systems to provide access are needed sustainable.
in most cases. for a world where 11 billion can live
flourishing lives.

+ 0 0/? + ? 0/+
Assuming the scope 1-3 reduction Unclear as it can result in increased The signal that less bikes are needed Basically, all companies moving away Unclear as there might be better No direct innovation impact unless
emissions if people use a car instead, can be negative as we currently live in from selling products to providing providers of biking and walking the competitors are affected, and that
Bike manufacturer selling no change if bikes are bought from such a car dominated society services, e.g. virtual access, is a good solutions that rent instead of selling can be walkability providers (good)
less bikes another company with similar impact, thing. But the challenge is obvious bikes making it easier to afford and or car manufacturers (bad). A positive
or reduced emissions if people are if the gap is filled by even worse also encourage better design for innovation that might be unintentional
walking instead. providers of transport solutions. longer lifetime. is that the company might reemerge
as a service company that rents
mobility solutions.

+ 0 - - 0/- 0
Reported Scope 2 reduction Unclear as the impact in society relate As the current society is too resource Purchasing green electricity without Often no impact, as guarantees of No significant innovation, beyond
(market based) to the total production. Hence if the intensive the first measure should any demand for new production and origin are often not additional, can innovation related to creative
Company purchasing green
purchase did not affect the production be energy conservation (not energy energy efficiency deals is better than have a positive impact if discussions accounting, as most GoOs do
electricity (GoO) it has no impact. efficiency in existing systems)25 and offsetting, but not much. about a sustainable energy system not trigger any additional low-
for 1.5 °C solutions new decentralized are encouraged. Can have a negative carbon capacities.
sustainable renewables with smart impact if the reporting discourages the
storage is needed. investments that are needed.

- + ?/- - +/- +/-

Scope 1-3 increase due to increased Positive impact, due to more efficient Unclear as the insulation can be both Probably negative impact. While these Potentially positive impact, as more New smart efficiency solutions
manufacturing buildings, but potential high-carbon part of a high-carbon lock-in and a kinds of companies deliver elements and more homes become energy- may be encouraged and if system
lock-in where fundamentally 1.5 °C compatible pathway depending that can be part of a sustainable efficient, but unless it is in a package solutions are developed with clusters
Home insulation company unsustainable buildings are just slightly on where the insulation takes place. solution, clusters are needed to that support buildings that are globally of stakeholders the innovations can
experiencing high growth more energy efficient. provide sustainable systems for sustainable there is a risk for resource be significant. However business
living. Isolated, these companies may intensive buildings that are too model innovation is needed that
only be able to deliver incremental expensive for most to own. The result focus on human needs and not just
improvements in existing sectors. would then be high-carbon lock-in improvement of existing systems
and a failure to meet the needs for 11
billion people.

30 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 31

 Variation in Any avoided emissions 1.5 °C Solution for 11 billion living Impact in Impact on
Example
scope 1-3 in society compatibility flourishing lives society Innovation

- + ? - +/- +/-
Scope 1-3 increase for the heat pump Positive impact, as the customers Unclear as heat pumps can be part Probably negative impact. While these Potential positive impact, as more New smart efficiency solutions are
Heat pump manufacturer and manufacturer and installer if they move away from a very unsustainable both of a high-carbon lock-in if they kinds of companies deliver elements and more carbon-intensive heating encouraged and if system solutions
installer targeting customers need to increase manufacturing and solution, but potential high-carbon are not if they are not combined with that can be part of a sustainable solutions get replaced. But energy are developed with clusters the
equipped with highly emissive transportation to customers. lock-in. energy efficiency measures/system solution, clusters are needed to conservation must be the first priority innovations can be significant. If only
heating solutions solutions and a 1.5 °C compatible path provide sustainable systems for with system solutions. single solutions are being promoted
if they are. living. Isolated these companies will the business model innovations
only be able to deliver incremental required will not happen.
improvements in existing sectors

+ - - - - -
ICE manufacturer reducing Scope 1-3 decrease Negative as emissions in society Negative as society needs to move We need to move to a human need Negative impact, if this manufacturer Negative as resources are invested
emissions from its suppliers of increase with SUVs compared with away from fossil SUVs approach and develop new smart use this as a marketing argument to in fossil technology that is extending
parts to its slightly more fuel electrification, public transport and resource efficient solutions to provide sell more SUVs, or of more customers the lifetime and attractiveness
efficient fossil SUVs tele-meeting trends access to human needs buy/use it instead of smarter access of inherently unsustainable
solutions due to lower use costs. products rather than smart
sustainable solutions.

0/- - - -- - -
Fast food and fast fashion No actual change in scope 1-3, Negative impact, as it increases Negative impact, as society needs Extremely negative impact. These Very negative impact if sales increase Very negative as resources are spent
companies buying carbon but with creative accounting they emissions in society from their to move away from unsustainable companies represent fundamentally due to marketing making consumers on marketing instead of developing
offsets and claim the products sometime make it sound as if they products, instead of avoided emissions nutrition and apparel unsustainable business models and more likely to buy more unsustainable sustainable solutions.
to be net-zero (or even have reduced their emissions. If this from sustainable nutrition and apparel need to rethink how they can deliver a products
is used to sell more unhealth and positive impact in society.
climate positive)
unsustainable food/apparel scope 1-3
will actually increase.

- + + + + +
Differences

Rapidly growing plant-based These companies would in most cases Positive impact and also synergies Very positive impact. This is the kind Very positive impact. Very few Very positive as it helps the Global Very positive as a cluster innovation
company collaborating with a report increased scope 1-3 emissions with other global sustainability goals. of clusters that are needed to ensure companies today focus on how they North transition to sustainable where the focus is on meals delivering
1.5 °C compatibility. can deliver globally sustainable production and consumption patterns, on human needs, instead of selling the
grocery chain to sell 11 billion solutions. while also allowing the Global South maximum amount of goods (in this
compatible healthy meals with to rapidly move out of poverty with case groceries)
a fair-trade business model. access to affordable sustainable
nutrition that is based on fair-trade
and deliver flourishing lives.

+ +/- - - - -
The scope 1-3 are usually decreasing Depending on scope. The simple In most cases negative as the focus Very negative as few cloud solutions Positive in the margin (energy use from Distracting innovation as the first
with simple procurement of green approach where cloud is compared is on the server hall instead of the are compatible with a future where the server halls), but negative where it focus should be what the cloud
energy with the old system to provide solutions the cloud provides. It is 11 billion can live flourishing lives matters (the use of cloud solutions). is enabling.
computer power tend to result in as if an airport authority thinks it is Because their offerings are based on
Cloud provider offering green significant relative savings. A more sustainable by providing sustainable maximizing utilization of services,
server halls relevant perspective is more difficult buildings rather than addressing rather than delivering on human needs.
as most cloud providers tend to deliver the airplanes (something that
solutions that lock-in companies in old also happens)
business models that only focus on
maximum sales of physical products
and use of AI based on non 1.5 °C
compatible data.

0/- + + + + +
A travel agency, and the
management consultants, This is either invisible or actually Very positive and the kind of For a sustainable 1.5 °C system Potentially positive, but without This shift towards new smart solutions Business model innovation of
legal company, and PR- negative if they are growing in this dematerializing that is needed in changes are required that deliver support for new structures and delivered by new clusters is exactly this kind is very important for a
area. It is a good example of one of many areas. totally new solutions. value changes the virtual meetings what is needed. sustainable transition.
company supporting them in
the key problems with the footprint/ risk becoming small additions to a
transforming into a meeting scope 1-3 approach, as enablers unsustainable system.
agency and helping people must play a significant role for global
move from flying to sustainability, but are often ignored or
virtual meetings told to focus on the wrong things by
scope 1-3 stakeholders.

32 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 33

 4. Synergies
between carbon footprint reduction work and
avoided emissions in society from sales

The following table summarizes strategic potential synergies

between a footprint (scope 1-3) approach and a handprint (avoided
emissions) perspective.
Footprint Handprint
Reporting and reducing Identify, support and accelerate solutions that
own emissions result in avoided emissions

Act to reduce emissions from the • Act to reduce emissions in society

Footprint Handprint company
• Reduce society’s dependency of fossil carbon
Reporting and reducing Identify, support and accelerate solutions that Reduce the company’s
• Be exemplary from a carbon opportunity perspective
dependency of fossil carbon
own emissions result in avoided emissions
• Innovate to reach emission reduction targets in society
Be exemplary from a carbon risk
Synergies

perspective • Strengthen financial and extra financial reporting from an

Measure, manage, and report the • Identify and accelerate the uptake of solutions that reduce
opportunity perspective (including intangible assets)
greenhouse gas (GHG) emissions emissions in society / that are compatible with and support Innovate to reach corporate
Focus a company is responsible for a 1.5°C compatible pathway where humans can live emission reduction targets • Anticipate regulatory opportunities for new
(scopes 1-3). flourishing lives. and growing markets
Strengthen extra-financial
reporting from a risk perspective • Increase revenues
A company’s emission • Focus the company’s time and energy on required emissions
Anticipate regulatory constraints • Motivate opportunity-oriented teams
reduction can result in global reductions and avoided emissions in society.
emission reductions and lower Reduce operating costs • Increase knowledge about new business opportunities and
• Enhance transformative change in society to align with a 1.5 °C
Benefits for dependency on fossil fuels, disruptive risks
pathway Motivate risk-oriented teams
the society but doesn’t always stimulate
demand for climate innovations • Communicate about reduced emissions in society
Increase knowledge about
to reduce emissions delivered by internal and supply chain • Move up the value chain to better understand and improve the
other companies challenges positive impact in society by the products and services provided
Benefits for
the company Communicate about reduced • Develop an understanding of the relevance of solutions in a
An innovative approach to scope • Companies with solutions that society needs also have to emissions from the company 1.5 °C scenario
Direct 1-3 creates markets for solution reduce their own emissions and can use parts of the existing
providers and helps companies framework for scope 1-3 emissions. • Mitigate transition risks integrating a clear vision
support for understand that scope 1-3 is of end-markets
each other just a small part of the climate • Identify opportunities in the transformative change needed in
equation if they have solutions. society to meet the 1.5 °C objective
• Develop understanding of the markets that need to be
decarbonized
• Enhance the work to use the need for reduced own emissions
to accelerate the development and implementation of solutions
that can be sold
• Improved collaboration with stakeholders with focus on
transformative system change
• Engage all staff related to innovation and sales with a focus on
the company as a solution provider
• Be identified as a purpose-driven company delivering what is
needed in society

34 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 35

 5. Ways forward Step 2: Benchmark your current business model and your vision
for the future

for current and future solution providers After a scanning of current solution-and-human-need leadership companies can explore
how they can change their climate strategy to not only help avoid emissions, but to do
that in a 1.5 °C compatible, and even globally sustainable way in support of a future where
Companies that want to accelerate their role as solution providers, 11 billion can live flourishing lives.
or explore opportunities as solution providers, are urgently needed
The benchmarking focuses on four areas.
to deliver on a sustainable 1.5 °C development path. Below are five
steps that can help companies move from only reporting scope 1-3 1. What human needs does the company deliver on
emissions and approaching climate change as a risk, to also assess
2. The value proposition captured by its role and goal
avoided emissions from sales and approach the need for reduced
emissions as a business opportunity. 3. The focus for sales

4. The expected impact

1. Product 2. System delivering

Step 1: Scan key documents to assess solution-and-human-need leadership 1
substitution 2 3
on human needs 4
System delivering 11 billion people Feedback systems:
on human needs living fourishing lives
Many companies today have solutions and focus on human needs, but not in their climate
Shaping the society of tomorrow
Ways forward

strategies, as these often have been developed from a risk perspective with a static
problem approach. delivering
Solutions
Solutions
delivering
Enabling
Enabling
solutions
solutions
Resource
Resource
solutions
solutions
delivering potentially
potentially potentially
potentially
directly on directly on
directly on delivering delivering
delivering delivering
Human Needs Human Needs
Human Needs onHuman
on Human onHuman
on Human
Needs
Needs Needs
Needs

Social development/ Social development/

Personal growth Personal growth

A result of the footprint approach is that many companies, investors, policy makers, and Spaces/Living Nutrition/Health
Nutrition/Health Spaces/Living
Spaces/Living

even some NGOs, only see the need for fossil free versions of existing materials (steel,
Energy Energy Information/
Information/ Energy
Energy
Knowledge Knowledge Knowledge
Knowledge
Mobility/Access Mobility/Access
Mobility/Access
Mobility/Access

Non-renewable Renewable Non-renew

wable
b Ren
e ewable
b Non-renewable
Non-renewable Renewable
Renewable
Non-renewable Renewable resources resources
resources resources resources resources resources resources resources resources

aluminum, and cement) and structures, electrification of cars, fossil free buildings, etc.
3. 11 billion people 4. Feedback systems:
When actions in these areas are not enough the response is to ask for large investments in
living flourishing lives Shaping the society of tomorrow
renewable energy and CCS. Such a carbon footprint approach also tends to miss many of
the transition risks

Companies can use the climate innovation scanner to identify their solution-leadership
and their human-need-leadership. Such scanning helps companies identify strategies and
parts of the company involved in the development and implementation of new smart
solutions. It also helps companies to move away from a focus on making “fossil free
typewriters”, or typewriters that use offsetting to claim being “climate positive”, that PR
driven scope 1-3 work tends to result in.
These areas are benchmarked against different climate opportunity innovation approaches
that companies can relate to. This transformation towards a human-need based innovation
Instead the company can explore how it can become a provider of the solutions the
approach is currently being led by new stakeholders, including many start-ups and
world needs.
incubators, but also larger companies such as Tesla that already use avoided emissions to
focus on its impact in society.

In addition to the four main areas, the

benchmarking also covers the underlying structure
needed to deliver the solutions (scope 1-3).

The climate innovation scanning tool can be found here:

The benchmarking tool can be found here:
https://climate-innovation-assessment-iclei.misolutionframework.net
business-model-development-and-benchmarking.misolutionframework.net

36 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 37

 Step 3: Conduct a “Full Climate Impact Assessment” Step 4: Support an expanded climate innovation agenda in society

After a scanning and benchmarking a full climate impact assessment can be conducted. Climate innovation is a huge opportunity to create value for all stakeholders involved.
Most companies today only use avoided emissions for product substitution, but this is not With an expanded climate agenda, where companies are approached as solution providers
enough. The really significant changes tend to happen on a system level and also require that deliver on societal needs, companies can create business advantage and value by
the company to contribute to changes in regulation and values. By using a full climate accelerating climate action to future-proof their business and help meet the 1.5 °C target.
impact assessment, the company can assess possible impacts for/on:

In addition to the impacts that are quantified the full climate impact assessment also Dynamic Solution Approach
Opportunities
assesses contributions to high- and low-feedback through marketing, advocacy and other of tomorrow:
actions that influence structures in society with a traffic light system. An expanded

Approach to companies/cities/countries
innovation
agenda
These assessments can be done to help companies develop impact strategies, build new Provider of
clusters, engage with investors, and identify new business model innovations. Solutions

The four steps are described in the report Full Climate Impact Assessment.

1. Product 2. System delivering

substitution on human needs

Source of
0
340 20

Emissions
0 40
32
Ways forward

60
30
Step Static Problem Approach
Step
280

80
1 260 2

100
0
1.5°C Strategy

12
24

0
0 14
22 0

200 180
160
Current Focus: Existing Human
Only a small part Sectors Needs
of the innovation
3. 11 billion people 4. Feedback systems: agenda
living flourishing lives Shaping the society of tomorrow

To support an expanded innovation agenda companies should insist that key processes,
Step Step initiatives, and events include a focus on avoided emissions in society and on how
3 4 companies can deliver on human needs in ways that are compatible with sustainable
1.5 °C development paths.

The report 21st Century Climate Innovation Assessment that discusses

the expanded climate and innovation agenda can be found here:
https://www.misolutionframework.net/pdf/8407_MISF_Climate_Alignment_Assessment_
Report_02.pdf

The UNFCCC Global Innovation Hub can be found here:

The full climate impact assessment can be found here: https://unfccc.int/topics/un-climate-change-global-innovation-hub
https://full-climate-impact-assessment.misolutionframework.net

38 Beyond Corporate Carbon Footprints Beyond Corporate Carbon Footprints 39

 Step 5: Avoid mixing avoided emission assessments with scope 1-3 reporting 6. Endnotes
Scope 1-3 emissions and avoided emissions are two very different approaches. To keep
1 https://www.un.org/en/desa/world-population- 14 https://en.wikipedia.org/wiki/Neoliberalism
them separated is usually very good, especially when it comes to reporting.
projected-reach-98-billion-2050-and-112-billion-2100 http://assets.press.princeton.edu/chapters/i9827.pdf

Scope 1-3 focuses on climate risk innovation and is about reducing emissions from the 2 https://www.un.org/development/desa/pd/sites/www. 15 https://www.theguardian.com/books/2016/apr/15/
company and its value chain. The reason to address these emissions are usually risk un.org.development.desa.pd/files/wpp2022_summary_ neoliberalism-ideology-problem-george-monbiot
and compliance, with potential for cost savings. This is often the traditional focus for of_results.pdf
16 https://en.wikipedia.org/wiki/The_End_of_History_and_
companies that are significant polluters.
3 https://www.ipcc.ch/sr15/ the_Last_Man

Avoided emissions focuses on climate opportunity innovation and is about guiding 4 https://en.wikipedia.org/wiki/The_Structure_of_ 17 https://www.wired.com/2015/11/bill-ford-interview-
strategies and action towards positive impact in society. The assessments are mainly used Scientific_Revolutions vision-for-world-without-cars/
to guide strategy development and in dialogue with strategic partners. It is not a PR or
5 https://unfccc.int/process-and-meetings/the-kyoto- 18 https://unfccc.int/resource/docs/convkp/conveng.pdf
compliance tool.
protocol/what-is-the-kyoto-protocol/kyoto-protocol-
19 https://www.iea.org/reports/solar-pv
targets-for-the-first-commitment-period
Due to the dominance of the footprint approach, and the idea that the best companies can https://www.mckinsey.com/about-us/new-at-mckinsey-
do is to reach zero, some companies and consultants have begun to use avoided emissions 6 https://unfccc.int/process/the-kyoto-protocol/ blog/a-revolutionary-tool-for-cutting-emissions-ten-
from sales to “compensate” the scope 1-3 emissions to be able to report net-zero results. mechanisms/emissions-trading years-on
Sometime these stakeholders also include offsetting, including forest plantations, and call https://www.mckinsey.com/capabilities/operations/our-
7 https://unfccc.int/ndc-information/the-paris-agreement
these avoided emissions also, as they try to communicate a low carbon footprint and do insights/net-zero-or-bust-beating-the-abatement-cost-
not focus on business model innovation. 8 https://www.ipcc.ch/sr15/ curve-for-growth

9 https://en.wikipedia.org/wiki/Global_Climate_Coalition 20 https://www.energy.gov/eere/downloads/revolution-
Ways forward

While a company should aim for a net-positive impact it is important to note that
now-future-arrives-five-clean-focus energy-
the ultimate goal is not to be able to report a nice number with the help of creative 10 The fact that the large fossil companies no longer
technologies-2016-update
accounting, but rather show that the company is contributing to a future where 11 billion offically supports organisations that questions climate
people can live flourishing lives. change does not mean that there are no controversies. 21 https://reports.weforum.org/digital-transformation/wp-
content/blogs.dir/94/mp/files/pages/files/dti-executive-
11 https://wwfeu.awsassets.panda.org/downloads/road_
If reporting is done for both avoided emissions and scope 1-3 it should be done separately summary-20180510.pdf
map_speed_of_light_wwf_etno.pdf
and with an explanation of how the assessments are done, including assumptions. But
https://gesi.org/research/smart-2020-enabling-the-low- 22 https://ghgprotocol.org/sites/default/files/standards_
reporting should not be the most important part for avoided emissions as it is a strategic
carbon-economy-in-the-information-age supporting/FAQ.pdf
tool to support sustainable business development, while scope 1-3 is about compliance
https://www.wbcsd.org/Projects/Chemicals/Resources/
and risk management. Transparency is always important and providing data for avoided 23 https://ghgprotocol.org/sites/default/files/standards_
Addressing-the-Avoided-Emissions-Challenge
emissions as a solution provider, in the way that for example Tesla has begun exploring, supporting/FAQ.pdf
https://www.keidanren.or.jp/policy/vape/gvc2018.pdf
provides an opportunity to build relations with other solution providers
24 https://exponentialroadmap.org
and show current as well as future employees that the company is part of 12 https://www.downtoearth.org.in/interviews/coal-will-
the future. dominate-at-least-for-the-coming-200-years-27633 25 https://www.eia.gov/energyexplained/use-of-energy/
https://www.dailycamera.com/2016/01/30/leslie- efficiency-and-conservation.php
glustrom-so-what-happened-to-our-200-years-of-coal/

For general guidance the report “A Three-Step Solution Framework for Net- 13 Even late in to the 2010’s major companies did not see
Zero Compatible Innovations” can be found here: an electric future.
https://www.misolutionframework.net/pdf/Net-Zero_Innovation_Module_1-A_Three-Step_ https://www.autoblog.com/2016/03/04/marchionne-all-
Solution_Framework_for_Net-Zero_Compatible_Innovations_(TSF)-v1.pdf electric-ferrari-an-obscene-concept/

A guidance from WBCSD that provide guidance for avoided emission

reporting for companies that are used to scope 1-3 work can be found here:
https://www.wbcsd.org/Imperatives/Climate-Action/Resources/Guidance-on-Avoided-Emissions

40 Beyond Corporate Carbon Footprints

 “From this distant vantage point, the Earth might not seem of any particular interest.
But for us, it's different. Consider again that dot. That's here. That's home. That's
us. On it everyone you love, everyone you know, everyone you ever heard of, every
human being who ever was, lived out their lives. The aggregate of our joy and
suffering, thousands of confident religions, ideologies, and economic doctrines, every
hunter and forager, every hero and coward, every creator and destroyer of civilization,
every king and peasant, every young couple in love, every mother and father, hopeful
child, inventor and explorer, every teacher of morals, every corrupt politician, every
"superstar," every "supreme leader," every saint and sinner in the history of our species
lived there – on a mote of dust suspended in a sunbeam.”
Carl Sagan Pale blue dot 1994

“Our planet, the “Pale Blue Dot”, as seen from Voyager 1 the 14th of February 1990
from its vantage point beyond Neptune. The first ever “portrait” of our planet and
the solar system from the outside, 150 million kilometres away.”
Credits: NASA/JPL-Caltech

mission-innovation.net misolutionframework.net

V. 0.9.1 March 2023