Background
Avocado was in its second year of carbon-neutral certification when we started discussions with the company’s visionary leadership. The company has pushed the organic concept beyond food to mattresses and other daily furniture. They have invested heavily in certifications for every raw material that goes into their finished product. To further promote themselves as a responsible corporate entity making every attempt to drive sustainability in everything they do, they took on a carbon-neutral certification effort, despite limited bandwidth. Unfortunately, they went with preliminary data inputs in the first certification year without much fine tuning of emission factor mappings. The first attempt, therefore, resulted in an erroneously high carbon footprint and high carbon credit costs to offset the inflated carbon footprint number.
How did it start?
In the second certification year, with higher revenue, Avocado management was worried about increased offset costs, which could be double that of the previous year’s inflationary carbon offset expense. Further, the resources that worked on the same project had left the firm. With no access to last year’s data and approach, an impending certification deadline, and a worse resource crunch, Avocado was about to drop out of the certification cycle. Around this period, Latviv started showcasing its capabilities to Avocado. It quickly dawned on everyone that the combination of Latviv’s technical capabilities and the founding team’s past audit and governance experience could work well for the carbon net zero certification.
The Project Plan
Preparation
The Latviv team pulled expense data from Avocado’s operational system, and progressively mapped each expense item to accurate emission categories, to achieve the optimal carbon footprint count across Scope 1, Scope 2, and Scope 3 expense categories. In the first round of data pull and emission computation, the carbon footprint was about twice that of last year’s. However, after a series of adjustments, the final count was 33% less than last year’s, a whopping six-figure saving despite the company’s significant revenue growth.
Analysis
To avoid last year’s bloated carbon footprint count, the Latviv team first strived to use physical quantities of purchases instead of the purchases’ inflationary monetary value. Second, the team ranked emissions by scope – Scope 1 for direct emissions, Scope 2 for indirect emissions (from utility company purchases), and Scope 3 for upstream and downstream entities. Scope 3 emissions, as expected, accounted for more than 99% of the company’s emissions, given the nature of the company’s furniture business.
Fine Tuning Scope 3
Within Scope 3, purchased goods were the most significant contributor, followed by upstream shipping, capital goods purchases, and downstream shipping. The team further prioritized the material categories among the purchased goods sub-scope based on emission count. For each high emission category, such as wool, latex, wood, and springs, the team aggregated all classes for which physical quantities were available and removed duplicating monetary value entries. Next, mapping to the correct emission factor, such as recycled steel in place of hot/cold rolled steel when most of the springs procured were from recycled metal, made a massive difference in the carbon footprint. Similarly, the team progressively adjusted all remaining Scope 3 sub-scopes and categories. For instance, the team used computed physical quantities to replace upstream shipment entries’ monetary value to lower offset costs.
Certification Audit
Next, the team incorporated evidence for each data entry as part of Latviv’s audit module. Control Union, the designated auditor, found it convenient to trace each Scope 1, 2, and 3 items to relevant evidence and factor mappings. In addition to cost savings (i.e., optimization of costs and resources), the system enabled 1) data retention for next year; 2) trend analysis; 3) accountability via action items and ownership; 4) traceability; 5) verifiability; 6) data collection; 7) surveys; and 8) a meaningful carbon reduction roadmap with the incorporation of best practices for future years.
A Rock Solid Foundation for Future Climate Neutral Certifications
Witnessing this phenomenal success, Avocado has invited Latviv to be its technology platform for future Climate Neutral certifications. Avocado had long needed a platform to integrate with the company’s operating systems and expose relevant views mapped to the respective certification needs. Latviv’s reporting and analytical capabilities, complemented with its collaborative audit, project management, survey, and training modules, will enable Avocado’s sustainability and compliance officers to efficiently handle such certifications and related audits with fewer resource demands.
Please ask for a demo and explore what Latviv can do for you.