Autodesk’s innovative C-FACT (Corporate Finance Approach to Climate-Stabilizing Targets) methodology is a business- and environmentally-friendly model to help companies set targets for greenhouse gas (GHG) emissions reductions.
We encourage companies to adopt and build upon this open source approach to reducing their corporate carbon footprint in line with global scientific and economic-based goals. Autodesk recently extended the C-FACT methodology to help cities create climate-stabilizing targets.
The Intergovernmental Panel on Climate Change (IPCC) has called for industrialized countries to reduce GHG emissions by 85% by the year 2050 to help stabilize the climate. C-FACT enables companies to set customized GHG emissions reduction targets, allowing them to:
Discover how the four-step C-FACT process makes it easier for companies to set targets to reduce corporate GHG emissions.
If all companies were to adopt the free C-FACT approach and meet the targets defined by the methodology, private-sector emissions would be on track to help stabilize the climate by 2050.
Autodesk has committed to following the C-FACT approach through the year 2020. We publish our progress in reducing our corporate carbon footprint against our annual target at the close of each fiscal year (FY). In FY 2014, Autodesk achieved a 38.1% reduction in absolute emissions compared with our FY 2009 baseline, exceeding our C-FACT target of a 23.4% reduction.
The Intergovernmental Panel on Climate Change (IPCC) reports that for climate stabilization to occur, industrialized countries need to reduce their GHG emissions by roughly 85% by 2050. C-FACT calls for companies to reduce GHG emissions in line with these scientific climate stabilization targets, and in proportion to companies’ relative contribution to the economy. The three underlying principles that make C-FACT unique are:
Autodesk recently extended the C-FACT methodology to help cities create climate-stabilizing targets in a similar way, allowing them to create plans for reducing a city’s GHG emissions in line with global scientific and economic-based goals.
The C-FACT methodology simplifies the process of setting a corporate GHG target that is fair to both business and the environment through the following four steps:
The C-FACT white paper walks through this methodology using real numbers. Email us at firstname.lastname@example.org if you would like to receive a free Microsoft Excel template to help you follow the C-FACT methodology.
By modeling sustainable business practices, including best practices on carbon accounting and target setting, Autodesk inspires peers and business partners to adopt leadership positions as sustainable companies. Learn about Autodesk’s sustainability practices, including corporate carbon footprint, corporate environmental management system and governance, emissions reduction projects, work with vendors, and use of Autodesk software to measure and reduce emissions.
Autodesk consulted with the U.S. Environmental Protection Agency (EPA), the Climate Group, World Resources Institute, and Clear Carbon Consulting to develop C-FACT. Inspired by UK Telecom company BT’s Climate Stabilization Intensity model, the C-FACT methodology simplifies and adds flexibility to the concept that corporate carbon emissions should be set relative to a company’s economic value add.
Over 100 companies, large and small, have downloaded the C-FACT methodology spreadsheet and are testing it right now. Major companies like EMC and SAP have customized C-FACT to fit their needs.
The C-FACT methodology allows a company to project its absolute reductions over a selected time horizon, and therefore complies with the requirements of the EPA Climate Leaders program.
The IPCC has called for industrialized countries to reduce GHG emissions by 85% by the year 2050 to help stabilize the climate. To address this issue Autodesk derived a corporate target using the C-FACT methodology, which first sets the initial trajectory based on the prevailing climate science and then back-calculates the intensity reduction rate needed to meet the scientific community’s stated 2050 climate stabilization goal. The company’s environmental performance is measured annually against this target to identify and address any deviation from this path.
The C-FACT methodology calculates carbon intensity by taking financial projections and environmental performance into account. Just as companies may over- or underestimate their financial targets, so they may surpass or miss their GHG reduction targets. In these situations, The C-FACT model allows companies to allocate deviations of actual performance from the emissions target over a sliding window of time, in a process called “error diffusion.” This approach has two primary benefits:
Climate scientists and policy experts recommend that industrialized countries take the lead in reducing emissions, recommending an approximate 85% absolute GHG reduction by industrialized countries by 2050.
However, despite good intentions and the best measurement and projections, it’s likely that attempts by individual companies to set targets 40 years out in order to achieve absolute 2050 goals would be arbitrary and inaccurate. As a result, many corporations set simple intensity targets, using revenue or the number of employees as the denominator.
In contrast, C-FACT’s intensity metric allows a company’s corporate carbon footprint to grow as their profits grow, but in relative proportion to world GDP. The underlying logic is that, as one company grows at a faster pace than the economy as a whole, other companies are shrinking in proportion.
While all companies must be accountable for their share of total absolute emissions reductions by 2050, the burden can shift between several companies over a 40-year span of time based on their fair share of the economy (and their fair share of emissions). This more nuanced approach to intensity metrics also better accounts for business changes through acquisitions and divestitures than simple intensity metrics based on revenue.
To achieve climate stabilization, climate scientists indicate the atmosphere must reach 350–450 ppm carbon dioxide concentrations by 2050. In order to reach this target, scientists have set absolute emissions reduction targets for the world economy as a whole that are unrelated to GDP growth, recommending that industrialized countries reduce their GHG emissions by 85% by 2050, and developing countries reduce their emissions by at least 50%.
However, if we look inside the greater world economy, which is growing at a steady state, we can see that individual companies grow (or shrink) at wildly varying rates. A rapidly-growing company is therefore counterbalanced by one or more companies that are declining. There is no way to predict how much each company within the world economy will grow or shrink in a given decade, therefore setting an absolute target for each individual corporation does not make sense.
As an extreme example, imagine a company grows at an excessive rate and takes over the entire global economy by 2050. Its 2050 footprint (which would equal the world’s entire corporate carbon footprint), could be 85% lower in total (that is, climate stabilizing), but would be many times its baseline footprint, and therefore look like an increase. Therefore, the C-FACT methodology accounts for a company’s relative contribution to global GDP in setting emissions reduction goals.
C-FACT is a methodology for GHG target-setting and does not take specific GHGs into consideration. It is applicable to Scope 1, 2, and 3 emissions, as defined by the GHG Protocol established by the World Resources Institute and the World Business Council for Sustainable Development.
As part of Autodesk’s commitment to model sustainability best practices, we include a large range of business activities in our corporate carbon footprint, including Scope 3 emissions (such as leased facilities, business travel via air or car rental, employee commute, events and data center vendors), to better understand how our business activities influence our vendors’ carbon footprints and extend our influence to improve our vendors’ impact on the environment.
Because most financial projections are in “nominal” values, C-FACT uses nominal values for financial projections and current values for GDP per the IMF World Economic Outlook Database. Converting them to “real” dollars would have introduced an additional layer of financial modeling complexity, and would make comparisons across industries or companies difficult, as companies could be using different base years. There is no standard base year for GHG footprinting across companies.