Steering Towards Net Zero Mobility | Zhang | SFI Seminar
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Published 2024-06-18
This case study underscores the critical need to address embodied emissions within the automotive sector, a major component of the industry's overall carbon footprint, particularly during the transition to electric vehicles (EVs). Regrettably, embodied emissions have historically received inadequate attention and have been shrouded in obscurity. While a valuable instrument, the Science-Based Targets initiative (SBTi) conflates the manageable embodied emissions with uncontrollable downstream Scope 3 emissions, relies on secondary data and estimations, lacks transparency in validating Scope 3 targets, and incentivizes companies to prioritize Scope 1 and 2 over supply chain emissions reductions. This methodology leads to skepticism regarding the adequacy of attention and rigor applied to Scope 3 emissions and raises questions about whether companies are authentically progressing toward their climate targets.
This case study on Pirelli exemplifies the drawbacks of the SBTi framework. The introduction of the Emission Liability Management (ELM) approach signals an evolutionary paradigm shift. The E-liability methodology champions using actual emission data rather than estimates and facilitates a quantifiable and auditable representation of a company's decarbonization efforts. Our analysis of the Pirelli Pro Forma (PPF) highlights the insights and transparency E-liability brings. Because it is built on the foundation of solid accounting, ELM allows practitioners to apply tested principles for the recognition of offsetting assets (E-asset) and guides auditable net zero claims.