Mirova and Robeco Collaborate on Global Standard for Emissions Avoidance Calculation

The founders of the initiative to standardize the calculation of avoided emissions, Mirova and Robeco, announced today that they have selected I Care by Bearing Point and Quantis to develop a global database of factors that avoid greenhouse gas emissions, offering a standardized and transparent calculation of emissions avoided by a wide list of low-carbon or ecological solutions. The initiative is supported by 10 founding partners representing more than 2 trillion USD in managed assets.

A global standard for assessing avoided emissions

The energy transition requires us to move away from carbon-based activities, so decarbonized alternatives are also needed. Although the data that companies currently share about their direct greenhouse gas emissions (GHG, for its acronym in English) and estimated indirect emissions (scope 2, scope 3) are based on solid methodological foundations, other metrics are needed to identify their respective contributions and to be able to compare solutions. For example: if it is relevant to take into account all the resources and recyclability of the components that come into play in the production of an electric vehicle, it is also important to understand and measure the carbon emissions that an electric vehicle can avoid in a transport sector still very dependent on thermal engines.

The creation of a standard for a global database of emission avoidance factors is therefore a big step forward for many economic agents. For the financial sector, this initiative will generate estimates of the emissions avoided by the financed activities, making them transparent and comparable. When these estimates are applied in a standardized way to a wide range of solutions, they will channel investment towards solutions with the greatest decarbonization potential, depending on their location. For companies, project sponsors or financiers, and consultants, this database will allow calculations to be made transparently, with reference to a recognized external standard. Finally, for data providers, the database will allow them to estimate the emissions avoided in a wide range of investments, thus complementing the existing metrics available on climate impacts that are currently too imprecise or binary.

A standardized and transparent database

The database created by I Care by Bearing Point and Quantis will initially cover 80 specifically defined low-carbon solutions (examples: biomass energy, recycled plastic, low-carbon concrete, etc.). The geographical differentiation of the reference scenarios taken into consideration for each solution and the various links in the value chains of these solutions will lead to the creation of about 9,600 different avoidance factors during this first phase, which will end in the fourth quarter of 2024.

The creation of a standardized and transparent database of avoidance factors should allow quantifying, comparing and auditing the emissions avoided by companies and projects, and thus promote the redirection of financial flows towards assets that favor decarbonization, addressing for example the production of renewable energies, the electrification of transport, low-carbon emission buildings, but also recycling or the rare metals necessary for the transition.

Each emission factor will contain details of the assumptions made, in particular:

• The functional unit used.
• The carbon footprint of the solution.
• The reference scenario used.
• The useful life of the solution.
• The temporal value of carbon.
• The rebound effect.

For all these parameters, precise default values will be provided, which will be updated annually. The database will also allow for more detailed calculations depending on the level of access to the data. For example, a company that has carried out a "life cycle" analysis of its solution will be able to modify the parameters to obtain a more precise avoidance factor. The scope of the database will also be progressively expanded to include many other ecological or low-carbon emission solutions.

The development of the database and the choice of methodologies will be supervised by a technical committee composed of the main organizations that are behind the current standards on avoided emissions. The development of the database will begin in January 2024 and a first version will be made available to all interested parties who have the obligation to calculate avoided emissions, among them: companies, consultants, impact measurement software developers, financial institutions and data providers. Data providers who calculate emissions at the company and asset level will participate in the construction of the factor database and will have to align with a protocol for its application.

"This initiative represents a major step forward in the history of Mirova, which, in collaboration with Robeco and numerous financial sector agents, contributes to inventing a new global market standard aimed at increasing the comparability and transparency of avoided emissions estimates. This innovation will allow investors to better identify and value companies that positively contribute to the decarbonization of the economy and that, therefore, are well positioned to create value in a transitioning world. It will also facilitate the aggregation of the carbon footprint of delegated assets for our institutional clients."

Guillaume Abel, Deputy CEO of Mirova

"This call for expressions of interest generated a significant number of high-quality applications. The approach proposed by I Care by Bearing Point and Quantis was selected because it allows for a comprehensive life cycle analysis, with the attribution of avoided emissions throughout the entire value chain. In addition to this experience, what has made the difference is the transparency and accessibility of the methodology used, two essential elements when calculating and communicating avoided emissions. We look forward to seeing this new database available to stakeholders and being able to integrate it into our evaluation and investment processes."

Manuel Coeslier, Lead Expert, Climate & Environment at Mirova