Demand Change 002 - Weekly Update from Variable
Mar 31, 2022
Welcome to 002 of our newsletter, Demand Change. We are sharing how we, our customers and the economy as a whole is working towards full decarbonization in a short and (hopefully) entertaining format. We'll be covering subjects within carbon accounting, climate policy, climate tech innovation and sustainable finance.
The Big Picture
The subsequent response from companies to Russia's invasion on Ukraine has demonstrated that business indeed has morals, but perhaps also that responsible companies simply can't ignore certain risks if they want to retain their customers, their employees and their brand. Doing the right thing is the right thing to do. Similarly, since the introduction of TCFD (Task Force on Climate-Related Financial Disclosures) in 2017 it's increasingly evident that climate risk is financial risk. And in its landmark ruling, the U.S. Securities and Exchange Commission (SEC) has stated just that: going forward, publicly listed companies will have to disclose their climate related risks and their GHG emissions in their periodic public reports. As Reuters wrote in these articles: "The U.S. Securities and Exchange Commission on Monday unveiled a landmark proposal requiring public companies to disclose their greenhouse gas emissions and other climate change-related risks in their periodic filings, such as annual reports."
"Companies will have to disclose the greenhouse gas emissions they generate both directly and indirectly from purchased electricity and other forms of energy, known as Scope 1 and Scope 2 emissions, respectively.
Companies will also have to disclose the indirect emissions from upstream and downstream activities in their value chains, known as Scope 3 emissions, "if material" or if they have a greenhouse gas emissions target that includes Scope 3 emissions. Smaller companies will be exempt from this requirement." This is great news for companies like us and will further accelerate the positive trend of markets and companies demanding more transparency and accuracy on climate data. Variable has an increasing number of publicly traded companies in its portfolio and we are looking forward to seeing the growth of this segment in the future.
And even though smaller companies will be exempt from Scope 3 disclosure, their emissions will still often constitute as the Scope 3 of a bigger company, therefore they will increasingly have to report to them.
Scope 3 is a network problem. And Variable is the carbon accounting solution to solve it.
News from Variable
Our CTO, Jimmy's story was covered by SHIFTER, the Norwegian startup publication (in Norwegian). Jimmy had a long career in Silicon Valley before moving to Norway with his family. We are super stoked to have him on-board.
Industrial Process of the Week
From Silicon Valley, we are driving further towards uncanny valley, straight into the eerie realm of rubber glove manufacturing. The sales of these disposable medical products skyrocketed during the covid-19 pandemic, presenting a serious environmental concern due to the hazardous waste they become at the end of their life. But that's not the only issue: a 1 kg batch of medical gloves produces ~40 kg CO2e emissions in its lifecycle, making it a rather carbon intensive product. Luckily there are ways to reduce it and some manufacturers are implementing actions to decarbonize the energy required to manufacture both the rubber and the end product itself.
Decarbonization Story of the Week
The old continent wasn't exactly lazy this week either and the European Council finally agreed on the long awaited Carbon Border Adjustment Mechanism (CBAM), an import tax scheme for carbon intensive products. The purpose of this mechanism is to prevent "carbon leakage", the outsourcing of carbon intensive industrial processes to regions with lower (or no) carbon pollution tax. Policymakers also hope that the system will protect European industry and also encourage partner countries to establish carbon pricing policies to fight climate change. It's great to see ambitious legislation capturing the reality that so many of us "idealists" have been shouting for so long. Values and principles are more important than ever. Closing with words from M.I.A.:
Egos (What's up with that?) Your values (What's up with that?) Your beliefs (What's up with that?) Your families (What's up with that?) Histories (What's up with that?) Your future (What's up with that?) My boys (What's up with that?) My girls (What's up with that?) Freedom (What's up with that?) Your power (What's up with that?)
Stay tuned, stay safe, demand change! - Adam & The Variable Team