Thirteen investors with over $1.2trn in assets under management have issued a statement urging the GHG Protocol, the greenhouse gas protocol corporate standard, to move forward with proposed changes to its Scope 2 emissions guidance.
The changes, say the investors, would ensure the GHG Protocol, the framework for measuring and managing greenhouse gas (GHG) emissions, better align carbon reporting with the realities of electricity systems.
In the statement, signatories warn that current standards for measuring and managing emissions prevent investors from accurately assessing companies’ energy transition risks.
For example, companies can claim solar power for energy used overnight, obscuring the true carbon impact of their electricity use.
Signatories include Helsinki-based Nordea Asset Management and German asset manager Union Investment.
“The standards that were originally designed to help foster an emerging voluntary renewable energy market are no longer fit for purpose,” said Jackie Garton, interim head of corporate climate campaigns at responsible investor campaign group ShareAction.
“Renewable energy is now the fastest growing source of energy, making this a critical moment to ensure the rules fully reflect how power is generated, transmitted and consumed today,” added Garton.
“These standards are used by investors, companies and policymakers to make rules and decisions that will affect people and planet for years to come,” noted Garton. “This is a pivotal opportunity to accelerate the global shift to a renewable energy system.”
The investors state that the proposed updates to the GHG Protocol Scope 2 emissions guidance would improve their ability to assess company resilience in the energy transition, while stimulating investment opportunities for much-needed transition technologies.
They urge the GHG Protocol to implement the following changes:
· Hourly matching of renewable energy consumption to production
· Deliverable market boundaries to ensure that clean electricity claims are based on local generation capacity
· Phased implementation to give companies and electricity markets time to adjust
· Recognition of legacy clean energy contracts to protect voluntary front-runners
Research suggests that these updates would create demand for battery and storage technologies, potentially accelerate grid decarbonisation and possibly strengthen voluntary clean energy markets – ultimately supporting a faster transition to a low-carbon economy.
“Serious investors need honest information about which companies are genuinely buying clean electricity when and where they need it. Right now, they’re largely flying blind,” said Killian Daly, executive director of not-for-profit EnergyTag.
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