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Open-Source Sustainability: Autodesk Frees Its Climate Stabilization Method
September 13, 2012
In taking steps to shrink its carbon footprint, Autodesk realized it could liberate its own process from proprietary practice to make it freely available for all companies to follow. Autodesk’s C-FACT, or a Corporate Finance Approach to Climate-Stabilizing Targets, represents a step-change in environmental metrics by integrating sustainability context into its approach. In other words, the company measures its ecological impacts just like other companies do, but then it takes the necessary next step of gauging its impact against real-world limits — in this case, atmospheric carbon concentrations at (or below) the targets set by climate science. And while C-FACT constrains emissions, it doesn’t constrain the ability of companies to thrive economically.
To find out more, “New Metrics of Sustainable Business” Issue in Focus guest editor Bill Baue recently interviewed Ben Thompson, Sustainable Business Program Manager for Autodesk’s Sustainability Initiative. This interview continues the ongoing series on implementing sustainability context, with past pieces profiling BT and future pieces looking at EMC, the Carbon Disclosure Project and Cabot Creamery Cooperative, among others.
Bill Baue: In the past couple of years, Autodesk developed C-FACT, and has made the methodology freely available for others to use. What inspired you to create C-FACT?
Ben Thompson: In 2010, we were looking at our environmental impact. We had performed two carbon footprints to date and needed to set a greenhouse-gas reduction target for our company. But when we looked around at the corporate community, it wasn’t doing a good job of setting responsible targets to encourage emissions reductions. So we developed a model inspired by the work of Chris Tuppen of BT and Jørgen Randers of the Norwegian School of Management that’s honest, scientifically rigorous, business-friendly, and verifiable, so we could say with confidence, “If you implement C-FACT, you’ll be doing your share.”
Baue: How is it that the corporate community is falling short on emissions target-setting?
Thompson: It seemed to us like many across industry were just holding their finger to the wind — targets weren’t being set with scientific rigor, and sometimes even masked increases in emissions. Management typically sets goals that can be attained, but frankly, we’ve got a big problem with climate change — we can’t do “goal sandbagging.” So we wanted to start a dialogue in the private sector about adopting rigorous, science-based emissions reductions targets that still allow businesses to create economic value.
Baue: What’s a rigorous target look like — how do you determine it?
Thompson: The climate science community tells us we need to reach 85 percent emissions reduction by 2050 to keep our world from hitting the tipping point on climate change. Autodesk wants to do our part to help avert this crisis, but do so in a way that is fair to our growing business. So, for our own operations, we built a methodology to set a new kind of annual target that is both scientifically rigorous and economically intelligent, that can be expressed both in absolute and intensity metrics. Autodesk’s CEO signed off on following the C-FACT methodology following through 2020.
Baue: So how do you get from here to there?
Thompson: There is a whitepaper, FAQ and video on the website that describes the process, but to start, the target is set based on your footprint and relative value-add to the world economy. To reduce short-term variability, we smooth the targets over 10 years. This is built into the methodology, but companies could also “bank” or diffuse emissions reductions when they beat or miss their annual targets. The way we implemented C-FACT at Autodesk, emissions reductions are front-loaded, which is important when considering the atmospheric lifetime of GHGs and makes it easier to not fall behind later on.
Baue: You mentioned intensity targets, but your method is much different from most, which normalize emissions reductions to non-environmental proxies like per unit of production or revenue. Your method normalizes emissions reductions according to your share of economic productivity, then you allocate reductions from that relative metric based on scientific targets — similar to how BT does it.
Thompson: Exactly. Just as BT does, C-FACT looks at companies’ relative value-add to determine their relative emissions contribution — we call it your carbon intensity ratio — to set a fair share reduction target. This creates flexibility to reflect economic conditions and changing company size — if you take up a larger chunk of the economy, you get larger emissions allocations, while still keeping you on track to do your share for climate stabilization.
Baue: So how does C-FACT differ from the BT method?
Thompson: The BT model depends on value-add information that’s public in Europe but is typically confidential elsewhere. We use publicly available information to determine relative economic contribution to world GDP — specifically, gross profit for publicly traded companies, divided by world GDP. For private companies, EBITDA plus operational costs is an appropriate proxy for value-add. By integrating the relative economic value-add, we overcome problems of traditional intensity targets.
Baue: Precisely. In particular, you use a non-environmental indicator for allocating fair share proportionality, to liberate the method from constraining economic productivity, then you peg your metric to an environmental threshold for apples-to-apples target-setting of environmental performance.
Thompson: Exactly right.
Baue: So this proportionality mechanism — the “what if everyone did the same thing” dynamic — points toward why you decided to go open source with C-FACT.
Thompson: We thought a lot about how to maximize our impact; we are a small company. We have a 61,000-ton carbon footprint — we can get much more impact by helping our peers and customers with their footprints. We do this through our products and the C-FACT methodology, which is a simple spreadsheet and Excel-based tool. So we chose to make it open source and available to all for free to create “true impact.” We strive for leadership in sustainability, so we figure it’s too important to hold onto the methodology for ourselves. Since the release of C-FACT in 2010, we’ve gotten expressions of interest from over 100 companies, and it has been implemented by large companies such as EMC. Another benefit of open source is that companies can adapt the method and improve upon it, further continuing this important dialogue.
Baue: And what are the sustainability leadership implications if C-FACT were to get this kind of uptake?
Thompson: In the white paper on the website, we take our private-sector peers to run an analysis: If all of Silicon Valley implemented C-FACT, 151 million tons of carbon would be reduced per year, or 3 trillion tons through 2050.
Baue: Given these sustainability implications, why is this approach so rare?
Thompson: Because it’s complicated! Look, it’s easy to set easy targets. Our hope is that by making this method business-friendly, companies won’t be scared by big numbers and climate science. So we did the complicated stuff on the back end, and make the target-setting process easier. There’s a lot behind the methodology, but for users, all they have to do is plug six data points into the spreadsheet.
Baue: Are there other ways to help spread this practice?
Thompson: Absolutely. We worked with SAP to get them to embed C-FACT into their carbon accounting software, a module for goal-setting and tracking against progress. So there’s now a link within that tool that takes users right to C-FACT. I would encourage other software providers to follow suit.
Baue: So is SAP using C-FACT to set their own context-based emissions targets?
Thompson: Not to my knowledge, but this points to an unfortunate dynamic: They’d already set their targets. So in general, there are more companies setting context-based targets now, but many companies have already set context-free targets, and they don’t need to recommit until they reach those target dates. As companies’ target dates are reached, I’m beginning to talk with more managers about the approach. Hopefully, they will recommit using something like C-FACT.
Baue: We may not have time to wait. What about institutional-level leverage points, to create top-down change?
Thompson: Reporting groups like the Carbon Disclosure Project are taking steps. To qualify for CDP’s Carbon Performance Leadership Index, companies don’t get points unless they surpass a certain threshold that establishes them as a leader, which at this point still isn’t necessarily linked tightly to science-based climate stabilization targets. We work very closely with CDP, and we’d love to see them make their scoring methodology push users further. This makes people in my field sweat, but if we’re gonna stabilize climate, we all need to sweat a little more. I would really welcome that change by CDP.