Our client is a global Fortune 500 leader in the manufacturing industry. The Group has been working towards carbon neutrality following an ambitious plan. Achieving Net Zero at the scale of the Group requires the use of carbon-neutral renewable energies in a context of increased political and societal pressure. However, transitioning to renewable energies is not enough to achieve the targets set at a global level. Indeed, all economic players have to accompany their energy transition with energy sobriety efforts to meet the objectives.
As such, all of the Group’s factories across the globe have embarked on a journey following the virtuous cycle defined by the company: “avoid, reduce, reuse, recycle, renew”. However, some industrial processes still require thermal energy and cannot be electrified with current technology. In that sense, the Group has been looking at wood biomass as a potential resource for thermal energy.
The Group thus approached Ksapa to conduct a sustainability diagnosis of transitioning from natural gas supply to wood biomass for one of its factories in Brazil. The scope was focused on eucalyptus wood and residues from wood, agricultural and construction debris.
The company adopted as a baseline the main sustainability principles requirements of the French Energy & Environment Agency (ADEME) with regards to biomass. The Group wanted to reinforce its sourcing requirements by:
- Setting up a profile of the environmental and social/human rights risks associated with the development of a biomass value chain. In addition to the technical value of decarbonization, the social dimension and consideration of the negative impacts on human rights that the development of this sector could entail must be taken into account.
- Implementing stringent biomass sourcing requirements by monitoring the crops and excluding timber that is only sourced for energy purposes, in accordance with ADEME and WWF recommendations
- Reducing their needs through the virtuous hierarchy of drivers (sobriety first) and electrification
- Reinforce verification and traceability
- Pay attention to the overall state of forests where they use biomass.
As such, the objective of the study was to assess the ESG and reputational risks of such a transition and to provide recommendations on the possible mitigation measures & action plan to tackle those risks.
Ksapa relied upon its internal expertise as well as network of partners in Brazil to conduct the engagement. This global and local collaboration model allowed to mix perspectives and provide recommendations relevant to Brazilian and European stakeholders’ priorities as well as local realities.
The engagement was conducted in several steps, with a first desktop review followed by a field mission allowing to engage with local stakeholders for data and feedback collection on The Group’s approach.
This work then fueled the analysis which was conducted on several streams:
- Review & recommendations on existing sustainability standards and best practices for energy wood biomass: Ksapa undertook a gap analysis comparing the Group’s sustainability criteria, based on ADEME’s, with leading standards such as the Sustainable Biomass Program or the Forest Stewardship Council to outline areas of risks not covered by existing criteria (especially on social issues).
- Lifecycle analysis (LCA) of eucalyptus woodchips for energy: Ksapa conducted an LCA using the openLCA software, Ecoinvent database, and following the Product Environmental Footprint (PEF) methodology defined by the EU to ensure comparability and robustness. LCA was based on thermal energy produced from eucalyptus woodchips in comparison with energy from natural gas, in an effort to estimate relative environmental performance of biomass compared to fossil fuels.
- Landscape study of plantations: Ksapa used satellite imagery to assess environmental risks related to biomass sourcing in focus areas. Such imagery provides contextual information to qualify importance and relevance of hotspots identified through the LCA.
- Stakeholder mapping and engagement: Ksapa identified the right stakeholders according to the issues at stake, in order to ensure the right level of granularity to then define an appropriate engagement strategy. Collecting feedback from concerned stakeholders then allows to provide substance for the reputational risk study
RESULTS & NEXT STEPS
Most LCA studies confine themselves to a purely technical and comparative approach to decarbonization. While this dimension is obviously essential, the specific feature of the work carried out by Ksapa is that it complements these analyses with in-depth reflection on the respect for human rights and the territorial inclusion of this type of program. After all, it’s possible to have an excellent carbon footprint and a deplorable social acceptance of such projects. Combining the two analyses is therefore critical to making the most relevant and concrete decisions in the delivery of ambitious low-carbon trajectories.
Concrete results from the LCA provide a clear direction for The Group’s energy transition strategy. The LCA, combined with the results of the landscape study, also allowed us to identify hotspots and the risks involved with current practices implemented in the field.
Those risks generated clear reputation risks for the group which were not covered by its existing sustainability criteria & policy.
In this respect, Ksapa outlined different scenarios activable by the Group to ensure supply of wood biomass with more control on the risks. Scenarios proposed in the mitigation strategy were hierarchized according to two parameters: complexity (in terms of expertise & resources), and control of ESG risks.
Following Ksapa’s study, the client is reviewing its sustainability criteria and assessing scenarios proposed by Ksapa in view of resources available & its desired level of commitment.