Difference between revisions of "Definitions"

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=== CO2 offsetting ===
=== CO2 offsetting ===
CO2 offsetting or compensation happens when a company removes the CO2 it emits from the air.<ref name=":1">Milieudefensie. (n.d.) Wat is CO2-compensatie en waarom schiet het klimaat er niets mee op? Retrieved on August 2, 2022 from https://milieudefensie.nl/actueel/co2-compensatie-wat-is-het-en-waarom-schiet-het-klimaat-er-niets-mee-op</ref> Also compensation in the future is considered CO2 offsetting. Companies often pay another company or initiative to compensate for them, by, for example, planting trees or protecting forests<ref name=":2">Dupont-Nivet, D. (December 11, 2019). Het klimaatbos gaat in rook op. De Groene Amsterdammer. Retrieved from https://www.groene.nl/artikel/het-klimaatbos-gaat-in-rook-op</ref> somewhere in the world. Taking CO2 out of the air is an important act in order to contribute to minimizing global warming.<ref name=":1" /> However, according to many, (Greenpeace, WWF, Milieudefensie, Center for International Forestry Research, researchers of universities<ref name=":2" />) there are problems with companies offsetting their CO2.   
CO2 offsetting or compensation happens when a company removes the CO2 it emits from the air.<ref name=":1">Milieudefensie. (n.d.) Wat is CO2-compensatie en waarom schiet het klimaat er niets mee op? Retrieved on August 2, 2022 from https://milieudefensie.nl/actueel/co2-compensatie-wat-is-het-en-waarom-schiet-het-klimaat-er-niets-mee-op</ref> Also compensation in the future is considered CO2 offsetting. Companies often buy credits from another company or initiative to compensate for them, by, for example, planting trees or protecting forests<ref name=":2">Dupont-Nivet, D. (December 11, 2019). Het klimaatbos gaat in rook op. De Groene Amsterdammer. Retrieved from https://www.groene.nl/artikel/het-klimaatbos-gaat-in-rook-op</ref> somewhere in the world. Taking CO2 out of the air is important in order to contribute to minimizing global warming.<ref name=":1" /> However, according to many, (Greenpeace, WWF, Milieudefensie, Center for International Forestry Research, researchers of universities<ref name=":2" />) there are problems with companies offsetting their CO2.   


Regarding the planting of trees, it takes a lot of time for a new tree to remove the CO2 that is now emitted, from the air.<ref name=":1" /> Therefore, it does not reduce CO2 emissions now, while that is necessary to minimize the risks of climate change. Regarding the protection of forests, it is not always clear whether the forest would have been destroyed in the first place. Furthermore, companies benefit from sketching a scenerio with the most deforestation, because this means that by protecting the forest, they prevent the most CO2 from going in the air.<ref name=":2" /> Therefore, there are examples of organisation overestimating the amount of CO2 prevented from going in the air. The CO2 offsetting projects often take place in countries around the equator or in the Global South. The projects can result into many tensions, since the lands are sometimes needed for agriculture. Moreover, companies can present themselves as sustainable because of their offsetting activities. They can continue polluting and consumers continue doing polluting activities, thinking that climate change is being dealt with.<ref name=":1" /><ref name=":2" />  
Regarding the planting of trees, it takes a lot of time for a new tree to remove the CO2 that is now emitted, from the air.<ref name=":1" /> Therefore, it does not reduce CO2 emissions now, while that is necessary to minimize the risks of climate change. Regarding the protection of forests, it is not always clear whether the forest would have been destroyed in the first place. Furthermore, companies benefit from sketching a scenerio with the most deforestation, because this means that by protecting the forest, they prevent the most CO2 from going in the air.<ref name=":2" /> Therefore, there are examples of organisation overestimating the amount of CO2 prevented from going in the air. The CO2 offsetting projects often take place in countries around the equator or in the Global South. The projects can result into many tensions, since the lands are sometimes needed for agriculture. Moreover, companies can present themselves as sustainable because of their offsetting activities. They can continue polluting and consumers continue doing polluting activities, thinking that climate change is being dealt with.<ref name=":1" /><ref name=":2" />
 
There are certifications that claim to guarantee that the projects really achieve the promised CO2 compensation, like Verified Carbon Standard (VCS).   


== Climate Agreements ==
== Climate Agreements ==

Revision as of 13:10, 2 August 2022

This wiki page is used to provide a definition of some of the terms and concepts you might come across on the company pages.

Emissions

GHG emissions

Greenhouse gas (GHG) emissions are all the different gasses that absorb heat (infrared radiation) emitted from Earth, and consequently reflect it back onto Earth’s surface hence contributing to the greenhouse effect, more commonly known as global warming.[1] This includes carbon dioxide (CO2), methane (CH4), and water vapor, as well as nitrous oxides and surface-level ozone. As a result of certain human activities such as the emission of fossil fuels, the greenhouse effect has become stronger over time. This is because there is now more carbon dioxide in the Earth’s atmosphere. For more in-depth reading, refer to the following source.

Increased CO2 is most frequently attributed as being the main cause of worsened human-induced global warming. However, it is vital to be aware that there are other, non-CO2, substances that are equally as polluting. In the aviation industry for instance, persistent contrails, aviation induced cirrus, and nitrogen oxides (NOx) contribute more significantly to global heating than ‘just’ CO2 emissions. NOx for example contributes to ozone formation, causing smog in and near cities and other areas of the country.[2]

Scope 1

According to the GHG emissions protocol, scope 1 emissions entail all the GHG emissions that occur from sources that are:

owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment.[3]

However, direct CO2 emissions that occur from the combustion of biomass are not included in scope 1, but have to be reported separately. Additional GHG emissions that are not covered are Chlorofluorocarbon (CFCs) and NOx, despite these gasses having large ozone-depleting effects.[4]

For financial institutions, scope 1 includes the emissions on loans and investments.[5]

Scope 2

The GHG emission protocol states that scope 2 accounts for the:

generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.[6]

According to the World Resources Institute, approximately 40% of the world’s GHG emissions come from energy generation, and about half of that is consumed by industrial or commercial users.[7]

Some ways to cut scope 2 emissions include switching to a low-carbon energy supplier - one that invests in building new renewable power infrastructure.[8]

Scope 3

The GHG emissions protocol classifies scope 3 emissions is an optional reporting category. They define scope 3 accordingly:

Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. some examples of scope 3 activities are extraction and production of purchased materials; transportations of purchased fuels; ad use of sold products and services.[3]

For scope 3 emissions, a distinction can be made between upstream activities, and downstream activities. The first referring to "indirect GHG emissions related to purchased or acquired goods and services" and the latter to "indirect GHG emissions related to sold goods and services".[9] Additionally, due to its broadly encapsulating nature, scope 3 is categorized into 15 distinct categories.[10]

In 2011, the GHG protocol released a Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard to aid companies in preparing and reporting their GHG emissions inventory including scope 3 emissions.[11]

Megatons

When referring to a company's or country's total emission, we often talk about megatons (Mton). One megaton is contained of a million tonnes.

One tonne of GHG is equal to:[12]

  • Heating a home for 4 months or;
  • Driving 4500 KM or;
  • Raising a cow for 6 months or;
  • Extracting 15 barrels of oil.

In 2020, the Netherlands emitted a total of 164.5Mton.[13]

CO2 offsetting

CO2 offsetting or compensation happens when a company removes the CO2 it emits from the air.[14] Also compensation in the future is considered CO2 offsetting. Companies often buy credits from another company or initiative to compensate for them, by, for example, planting trees or protecting forests[15] somewhere in the world. Taking CO2 out of the air is important in order to contribute to minimizing global warming.[14] However, according to many, (Greenpeace, WWF, Milieudefensie, Center for International Forestry Research, researchers of universities[15]) there are problems with companies offsetting their CO2.

Regarding the planting of trees, it takes a lot of time for a new tree to remove the CO2 that is now emitted, from the air.[14] Therefore, it does not reduce CO2 emissions now, while that is necessary to minimize the risks of climate change. Regarding the protection of forests, it is not always clear whether the forest would have been destroyed in the first place. Furthermore, companies benefit from sketching a scenerio with the most deforestation, because this means that by protecting the forest, they prevent the most CO2 from going in the air.[15] Therefore, there are examples of organisation overestimating the amount of CO2 prevented from going in the air. The CO2 offsetting projects often take place in countries around the equator or in the Global South. The projects can result into many tensions, since the lands are sometimes needed for agriculture. Moreover, companies can present themselves as sustainable because of their offsetting activities. They can continue polluting and consumers continue doing polluting activities, thinking that climate change is being dealt with.[14][15]

There are certifications that claim to guarantee that the projects really achieve the promised CO2 compensation, like Verified Carbon Standard (VCS).

Climate Agreements

Paris Climate Agreement

The Paris Agreement is the first-ever universal, legally binding global climate change commitment. It was obviously adopted on 12 December 2015, and officially entered into force on 4 November 2016. With it, the undersigned Parties strive to keep the increase in the global average temperatures well-below 2°C, preferably to 1.5°C, compared to pre-industrial levels. In order to achieve this, countries aim to "reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate neutral world by mid-century".[16]

Despite the fact the Paris Agreement mainly targets States as entities for change, civil society, the private sector, financial institutions, cities and other subnational authorities are invited and welcome to contribute. The United Nations hopes that by 2030, zero-carbon solutions could be competitive in sectors compounding 70% of global emissions.

Dutch Climate Agreement

The Dutch Climate Agreement is a Nationally determined contribution, also known as a NDC. In this document, countries state how they intend to reduce their GHG emissions in order to match the goals set by the Paris Agreement. The Climate Act was released on May 28th 2019.

The Dutch government strives to reduce the Netherlands' GHG emissions by 49%, compared to 1990 levels, and a 95% reduction by 2050. Accordingly, the "agreement is based on the principle that reducing carbon emissions must be feasible and affordable for everyone".[17] Hence the government seeks out a cost-efficient transition and provides large subsidies to companies to facilitate said transition.

In 2015, the Hague District Court ruled that GHG emissions in the Netherlands must be reduced by 25% (compared to 1990 levels) by the end of 2020.[18] They achieved this goal.[19]

Katowice Agreement

In 2018, the signed Parties came together to discuss the further details of the Paris Agreement. Ultimately, the Katowice climate agreement is a package that

sets out the essential procedures and mechanisms that will make the Paris Agreement operation.[20]

Katowice Commitment

This commitment is set up by multiple global banks. In an open letter to heads of government and the international community at COP24, leadings banks argued they had teamed up in a "pledge to align lending portfolios with global climate goals".[21] They pledged to commit themselves to re-finance their total worth of 2.4 trillion euros toward the fastening the transition toward a climate-resilient world.

Company structure

Subsidiaries

A subsidiary is most commonly known as a 'daughter company'. This entails that these type of companies are frequently owned by another company, the 'parent company'. Most companies these days own multiple subsidiaries. Despite technically being part of the same company, and in in most cases bearing the same logo, subsidiaries are separate, distinct legal entities with regard to taxes, regulations, and liabilities.

For a subsidiary to belong to a specific parent company, the latter needs to hold at least a majority of the its shares.

Dividends

A dividend is essentially money paid out on the ownership of stocks. In other words, it is the "distribution of corporate profits to eligible shareholders".[22] Generally, the higher a company's profit, the higher the payed out dividend. Usually, dividend payments and its amount are determined by a company's board of directors. They are both a reward and an incentive for investors to put money into a venture.

Royal Status

The Royal Status or 'Predicaat Koninklijk' in Dutch is a distinction that can be awarded to associations, foundations, institutions or large companies.[23] This distinction is awarded by the king or queen and symbolizes the respect, appreciation and trust towards the recipient. The purpose of assigning predicates is, among other things, to contribute to the positioning of Dutch companies and organizations in the Netherlands and abroad. The history of the Royal Status goes back to 1806, when Lodewijk Napoleon introduced it. In 1815, the first royal distinctions were awarded. The most important obligation following the designation is that the recipient will refrain from anything that will damage their reputation.[24]

References

  1. Britannica. Greenhouse gas: atmospheric science (accessed on May 31st 2022), https://www.britannica.com/science/greenhouse-gas
  2. EPA. Aircraft Contrails Fact Sheet, p. 5, published in September 2000, (accessed on May 31st 2022), https://www.faa.gov/regulations_policies/policy_guidance/envir_policy/media/contrails.pdf
  3. 3.0 3.1 World Business Council for Sustainable Development ad the World Resources Institute. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition, p. 25, n.d., (accessed on May 31st 2022). https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
  4. MIT News. Emissions of several ozone-depleting chemicals are larger than expected, published on March 17th 2020, (accessed on May 31st 2022), https://news.mit.edu/2020/emissions-ozone-cfc-chemicals-0317
  5. Partnership for Carbon Accounting Financials. The Global GHG Accounting & Reporting Standard for the financial industry, p. 31, published on November 18th 2020, (retrieved on May 31st 2022), https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf
  6. World Business Council for Sustainable Development ad the World Resources Institute. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition, p. 31, n.d., (accessed on May 31st 2022). https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
  7. World Resources Institute. Scope 2: Changing the way companies think about electricity emissions, published on January 20th 2015, (accessed on May 31st 2022), https://www.wri.org/insights/scope-2-changing-way-companies-think-about-electricity-emissions
  8. Jennifer Cooper. Reducing Scope 2 Emissions. Native: a Public Benefit Cooperation, published on March 15th 2018, (accessed on June 1st 2022), https://native.eco/2018/03/how-to-reduce-scope-2-emissions/
  9. Greenhouse Gas Protocol. Corporate Value Chain (Scope 3) Accounting and Reporting Standard: Supplement to the GHG Protocol Corporate Accounting and Reporting Standard, p. 29, published in 2011, (retrieved on June 1st 2022), https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf
  10. Greenhouse Gas Protocol. Corporate Value Chain (Scope 3) Accounting and Reporting Standard: Supplement to the GHG Protocol Corporate Accounting and Reporting Standard, p. 32, published in 2011, (retrieved on June 1st 2022), https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf
  11. Greenhouse Gas Protocol. Corporate Value Chain (Scope 3) Accounting and Reporting Standard: Supplement to the GHG Protocol Corporate Accounting and Reporting Standard, p. 4, published in 2011, (retrieved on June 1st 2022), https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf
  12. Citizens for Public Justice. Infographic: What is a tonne of greenhouse gas emissions?, published on November 24th 2016, (accessed on June 1st 2022), https://cpj.ca/infographic-what-is-a-tonne-of-greenhouse-gas-emissions/
  13. RIVM. Daling uitstoot CO2 en luchtverontreiniging zet door in 2020, uitstoot ammoniak stijgt licht, published on September 2rd 2021, (accessed on June 1st 2022), https://www.rivm.nl/nieuws/daling-uitstoot-co2-en-luchtverontreiniging-zet-door-in-2020-uitstoot-ammoniak-stijgt-licht#:~:text=De%20uitstoot%20van%20broeikasgassen%20wordt,duidelijk%20groter%20dan%20vorige%20jaren.
  14. 14.0 14.1 14.2 14.3 Milieudefensie. (n.d.) Wat is CO2-compensatie en waarom schiet het klimaat er niets mee op? Retrieved on August 2, 2022 from https://milieudefensie.nl/actueel/co2-compensatie-wat-is-het-en-waarom-schiet-het-klimaat-er-niets-mee-op
  15. 15.0 15.1 15.2 15.3 Dupont-Nivet, D. (December 11, 2019). Het klimaatbos gaat in rook op. De Groene Amsterdammer. Retrieved from https://www.groene.nl/artikel/het-klimaatbos-gaat-in-rook-op
  16. United Nations Framework Convention on Climate Change. What is the Paris Agreement? (accessed on June 1st 2022), https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
  17. Government of the Netherlands. Climate policy, n.d., (accessed on June 1st 2022), https://www.government.nl/topics/climate-change/climate-policy#:~:text=To%20combat%20climate%20change%2C%20the,Act%20on%20May%2028%2C%202019.
  18. Urgenda. Klimaatzaak tegen de staat, n.d. (accessed on June 1st 2022, https://www.urgenda.nl/themas/klimaat-en-energie/klimaatzaak/
  19. CBS. Urgenda-doel uitstoot broeikasgassen in 2020 gehaald, February 9th 2022, (accessed on June 1st 2022), https://www.cbs.nl/nl-nl/nieuws/2022/06/urgenda-doel-uitstoot-broeikasgassen-in-2020-gehaald#:~:text=Aanzienlijk%20minder%20broeikasgasuitstoot%20in%202020,2%2Dequivalent%20in%202020%20gerealiseerd.
  20. United Nations Framework Convention on Climate Change. The Katowice Agreement, n.d. (accessed on June 1st 2022), https://unfccc.int/process-and-meetings/the-paris-agreement/katowice-climate-package
  21. BBVA, BNP Paribas, Societe Generale, Standard Chartered and ING. The Katowice Commitment, n.d., (retrieved on June 1st 2022), https://group.bnpparibas/uploads/file/katowice_commitment_letter.pdf
  22. Investopedia. Guide to Dividends, updated on February 26th 2022, (accessed on June 1st 2022), https://www.investopedia.com/terms/d/dividend.asp
  23. Het Koninklijk Huis. (n.d.) Predicaat Koninklijk. Retrieved on April 19, 2022 from https://www.koninklijkhuis.nl/onderwerpen/onderscheidingen/predicaat-koninklijk
  24. Het Koninklijk Huis. (n.d.) Predicaat Koninklijk aanvragen. Retrieved on April 19, 2022 from https://www.koninklijkhuis.nl/onderwerpen/onderscheidingen/predicaat-koninklijk/aanvragen