In addition to regulatory pressures, companies will seek suppliers’ greenhouse gas emission calculations

To clarify what the SBTi initiative entails, Karla Grgić, a manager in the business consulting department of Deloitte Croatia, delivered a presentation titled ‘Developing a Decarbonization Strategy through the Application of the Science Based Target Initiative (SBTi)’ at the Lider conference ‘ESG – Sustainable Future’, attended by curious entrepreneurs and experts.

– A huge transformation lies ahead for companies that requires adaptation to low-carbon energy – said Grgić.

At the outset, she emphasized that if we continue to operate as we do today, a temperature increase of more than four degrees is expected, and the Paris Agreement should help us prevent that. The European Green Deal was enacted to turn the requirements of the Paris Agreement into concrete regulations, not to make it harder for companies, but to achieve the goal of climate neutrality (Net Zero) by 2050 at the latest.

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ESG – Održiva budućnost: Karla Grgić

foto Ratko Mavar

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Calculating emissions

However, all of this sounds demanding for a reason, and it raises the question of how companies can achieve all this. Regionally, Grgić points out that some have already started calculating emissions, while others are just beginning, but it is important to consider that there are direct and indirect emissions.

In this context, she mentions the GHG protocol, which allows companies to calculate their direct emissions. This protocol provides a very simple methodology for private and public companies to calculate greenhouse gas emissions, which Grgić believes would be one of the first steps for companies.

However, the story is not that simple because there are also indirect emissions that span the entire value chain of the company. It is important to emphasize that calculating these requires more time and it is harder to obtain data. She emphasizes that, in addition to regulatory pressures, suppliers can expect that companies will start to inquire about these calculations on their own initiative.

The necessity of decarbonization strategies

Regarding the Science Based Targets (SBTi) initiative itself, she explains that it is an initiative that companies join if they want to contribute to the goals of the Paris Agreement. Currently, over 5000 companies from around the world have joined the initiative, including companies from all industries that account for nearly 20 percent of global emissions, among which is one domestic company.

– I must admit that I am extremely pleased that today we can say that one Croatian company, Hrvatska pošta, has joined the initiative – said Grgić.

She adds that it is essential for companies to implement decarbonization strategies into their operations from the perspective of future financing, where there is a significant emphasis on the environmental aspect and due to the increase in brand value. She also notes that it should be kept in mind that most future employees of all companies belong to Generation Z – members of this generation want to see actions from companies that demonstrate commitment to a more sustainable future.

She emphasized that the approach to strategy varies by sector, and it is important for companies to familiarize themselves with the methodology at the outset.

Grgić also highlights the features that good strategies should encompass, with the first being management commitment. Other important features include: setting reduction targets, defining absolute emission reduction targets, assigning responsibility for specific decarbonization initiatives, integrating the decarbonization strategy into the business strategy, and awareness of the challenges behind the set goals.

Desire for sustainable practices

To discuss that things cannot remain as they are today, that changes are necessary, but that some are already doing them, a panel discussion followed Grgić’s presentation, featuring Dino Novosel from E.ON Croatia, Stjepan Roglić from Orbico, Iva Rogović Lekić from Marsha, and Matija Žulj from Agrivia.

Presenting an example of E.ON Croatia’s actions, Novosel highlighted at the panel that the company presented its first sustainability report this year, confirming that they are on the right track, raising the level of transparency, and further transforming their goals.

– So far, we have invested 30 million euros in the energy transition over the last two years, and our goal is to raise that to 50 million euros in the next two years. We want to invest exclusively in green elements of the energy system and offer green energy to the market – emphasized Novosel.

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ESG – Održiva budućnost. Panel E: Dino Novosel, Stjepan Roglić, Iva Rogović Lekić, Matija Žulj i Gordana Gelenčer

foto Ratko Mavar

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Roglić emphasized that it is important to keep in mind that the logistical parameters of companies are also very important segments and that it is crucial for them to become sustainable as well.

– Orbico, as a logistics partner, is one of the elements of supply chains, and every element of that chain must be sustainable. We are in contact with all manufacturers we cooperate with and strive to fit into ESG standards – emphasized Roglić, adding that Orbico wants to create awareness by applying the latest technologies to be not only more efficient but also acceptable.

We are all part of a sustainable future

Roković Lekić emphasized that Marsha, as a company, has long ‘lived’ ESG. They introduced such policies back in 2008.

– This is not new to us. ESG only becomes new from the perspective of introducing regulation. And I must admit that I was surprised that this is such a novelty in Croatia because it has existed elsewhere for a long time – said Roković Lekić. She also added that she realized how far behind we are in Croatia in terms of ESG compared to, for example, America.

Žulj highlighted during the panel that 30 percent of all emissions come from the food and agriculture industry and emphasized how important it is to work on reducing the carbon footprint in this regard.

– Today, being a producer in agriculture is very challenging, and it is questionable who will find it profitable soon. However, the current conventional method of production is no longer sustainable, among other things, the productivity of the soil is no longer what it used to be because we have depleted it. However, the environmental impact is too great for us to only look at the quantity of food; we must consider the environmental impact. Changes in agricultural production concepts can help all of us and other industries to improve – said Žulj.

But how can this be achieved? Žulj notes that the role is on everyone – regulators, producers, and consumers.

Novosel concluded by emphasizing that the global need will certainly grow, but he stressed that societal transformation cannot happen overnight.

– It would be naive to expect that. It will be a transformation of the economy and a big shock for all of us, but the energy sector will bear most of that transition on its shoulders. However, we must understand that if we as a society want to become energy neutral, we must remove the notion that this is the task of some large companies; it is the task of all of us – to the extent that we all as individuals choose how we will adapt our mobility or which packaging we choose when we enter a store – said Novosel. He added that a lot of investment is needed and that it is shocking how many problems those who want to be part of the energy transition face, concluding that we all need to actively strive for this.