EY remains carbon negative and advances toward net zero in 2025

9 minute read 20 Sep. 2022
Authors
Carmine Di Sibio

EY Global Chairman and CEO

Passionate about our clients and the power of our global organization. Driver of growth and innovation. Relationship builder. Sports fan.

Steve Varley

EY Global Vice Chair - Sustainability

Passionate about sustainability, diversity and entrepreneurship. Husband and father of two. Triathlete.

9 minute read 20 Sep. 2022

EY made strong progress on its carbon ambition in FY22 against its seven-point action plan, and remains on track to reach net zero in 2025.

In brief
  • EY continues to reduce its greenhouse gas (GHG) emissions, and is carbon negative for the second year, meaning we offset and remove more carbon than we emit.
  • Our challenge going forward is to decouple business growth from emissions growth, while supporting clients and maintaining our distinctive global culture.
  • We are investing in services, technology and products to help clients decarbonize their businesses and accelerate the transition to a low-carbon economy.

Decarbonization has ascended to the top of the global business agenda, ushering in a period of exponential growth in companies committing to net zero following the 26th UN Climate Change Conference of the Parties (COP26). More than 3,000 businesses and financial institutions have declared their intentions and are working with the Science Based Targets initiative (SBTi) to reduce their emissions in line with climate science.

Momentum continues to build as businesses transform their operations to support decarbonization. But for growing organizations everywhere, the benefits of positive growth come with an urgent need to manage the risk of increased emissions as a result.

“The challenge we face in FY23 and beyond is to continue to grow our business and maintain our distinctive global culture, while reducing our absolute emissions,” says Steve Varley, EY Global Vice Chair – Sustainability. This challenge is illustrated by the fact that the EY people base (measured in Full Time Equivalents, or FTE) has grown 29% since our baseline year of FY19.

In addition, with the return of business travel, FY23 is the first year we expect our air travel emission limits to be really tested. “We are ready to meet this challenge and are confident that the actions laid out in our carbon action plan will help us remain on track to reach net zero,” says Varley.

The challenge we face in FY23 and beyond is to continue to grow our business and maintain our distinctive global culture, while reducing our absolute emissions.
Steve Varley
EY Global Vice Chair - Sustainability

EY launched its carbon ambition in January 2021: to reach net zero in 2025 with a 40% reduction in our absolute GHG emissions across Scopes 1, 2 and 3 emissions (against an FY19 baseline). This is consistent with a 1.5°C reduction pathway approved by SBTi1. This target aligns with what climate science deems necessary to meet the goals of the Paris Agreement to limit global warming to 1.5°C degrees.

We reached the major milestone of becoming carbon negative globally in FY21. Being carbon negative means we offset or remove more carbon from the atmosphere than we emit. We are proud to remain carbon negative in FY22, keeping us on track to reach net zero in 2025.

How EY is reducing GHG emissions and remaining carbon negative

In FY22, our GHG emissions totalled 597k tonnes of carbon dioxide equivalent (tCO2e). While this represents a 56% reduction on our baseline of FY19 (1,354k tCO2e), it also reflects a 53% increase from FY21 — a year which saw a dramatic drop in our Scope 3 travel emissions and Scope 2 office electricity usage. This was not unexpected, as many EY businesses in FY22 resumed more normal business operations, and our 1.5°C pathway factors in an expected increase in GHG emissions in the post-COVID-19 environment.

To offset the emissions that we have not yet eliminated, EY continues to invest in a carbon offset portfolio with leading project developers and global climate solutions providers Combined, these projects offset 723k tCO2e, representing 121% of EY’s FY22 emissions — confirming our carbon negative position for FY22. All projects meet our criteria for quality offsets and have demonstrated that they are independently verified, additional, permanent, not used for other purposes, will not result in leakage, and have a positive impact on the community.

We have implemented new technology, just as many of our clients are doing, to help track our emissions with greater precision. Through the implementation of Enablon, we can now more precisely track our emissions across Scopes 1 and 2. This includes data points like energy usage, water consumption, fuel data and more from around 650 offices across the EY network.

We also continue to closely track our Scope 3 emissions through analysis of our travel bookings and spend across air, rail and car. Travel plays a critical role in helping enable us to deliver exceptional client service, win in the market, collaborate across EY teams and strengthen our EY culture. But we recognize we must travel in a way that is thoughtful and considered, and ensures we remain on track to reach our net-zero target in 2025. Our air travel emissions limit for FY23 is a 6% decrease on our FY22 limit. To ensure we meet this reduced limit, our challenge for FY23 and beyond will be to balance the reduction of emissions with meeting travel requirements for EY clients and other activities.

Progress on our seven-point plan to reach net zero in 2025

To reach net zero in 2025, we will continue to deliver on our seven-point plan to reduce our GHG emissions and become an even more sustainable organization. Over FY22 we’ve made substantial progress on each of our key actions:

As we act on this seven-point plan, we continue to follow SBTi developments, including their recent update to formalize the definition of net zero. We, along with many EY clients, are working to better understand the implication of this definition change and assessing what it means for EY.

Collaborating with others for a low-carbon future

“EY, like other professional services organizations, has a simpler business model than many, such as manufacturing, retail, and hard-to-abate industries,” says Varley. “While we recognize our emissions are small on their own, we use our experience, convening power, skills, services and people to help others transition to low-carbon futures.”

In addition to supporting EY clients and suppliers on their decarbonization journeys, the EY organization continues to use its convening power to bring like-minded organizations together to protect and create value from sustainability for business, society, and the planet.

Through collaborating with others, we’ll find the collective solutions that’ll help us all reduce emissions. After all, sustainability is everybody’s business.
Carmine Di Sibio
EY Global Chairman and CEO

In November 2021, EY leaders took part in COP26 – the first COP summit to bring business and finance leaders together with government to determine the need for collective action. Looking ahead to COP27, held in Egypt in November 2022, we will continue to support the fight to accelerate progress toward a net-zero emissions future. We will work with clients to translate the promises made into business actions that create real impact.

We continue to engage with standard setters on the measurement and reporting of sustainability, and drive progress through our work with external organizations, such as the Sustainable Markets Initiative (SMI) which has been championed by His Majesty King Charles III, and the S30 forum of Chief Sustainability Officers (part of the SMI).

As the climate science clearly shows, it is critical that organizations large and small rapidly accelerate all efforts to reduce the amount of carbon in the atmosphere. But everyone must play a role, and those of us who can go even further, should do so. Together, we can rise to the challenge of net zero and build a better, and more sustainable working world.

“The challenges of climate change and decarbonization need answers that can only be found together. Through collaborating with others, we’ll find the collective solutions that’ll help us all reduce emissions,” says Carmine Di Sibio, EY Global Chairman and CEO. “After all, sustainability is everybody’s business.”

  • Appendix: EY GHG emissions FY20-FY22

    The chart below shows the progress EY is making on its Scope 1, 2 and 3 GHG emissions.

    Greenhouse gas emissions*      
      FY20 FY21 FY22
    Total emissions (tCO2e)

    976,000

    394,000 597,000
    Emissions per employee (tCO2e/FTE) 3.3 1.3  1.7
    Scope 1 GHG protocol (tCO2e) 9,000 10,000 18,000
    Scope 2 GHG protocol (tCO2e) 132,000 106,000 148,000
    Scope 3 GHG protocol (tCO2e) 835,000 278,000 431,000
    Emissions per dollar of revenue (tCO2e/US$000) 0.0263 0.0099 0.0131

    *Greenhouse gas emissions are calculated in line with the global EY carbon footprint methodology. This is based on the Greenhouse Gas (GHG) Protocol developed by the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), using its ‘location-based’ approach to reporting scope 2 emissions. Emissions calculations use 2022 conversion factors published by the UK Department for Business, Energy & Industrial Strategy or locally published factors where appropriate. Conversion factors used to calculate emissions from air travel include the impact of ‘radiative forcing’. Emissions from office energy consumption are estimated using activity data representing 83% of the global office portfolio. In 2022 additional categories of scope 3 emissions have been included to align our reporting with our Science Based Target. Figures for each of the three reported years (above) include emissions relating to the following scope 3 categories: business travel; employee commuting; remote working; waste generated in operations; and fuel and energy related activities.

  • Glossary of key decarbonization terms

    Science-based target (SBT): A greenhouse gas reduction target to reduce an organization’s emissions in line with climate science and the Paris Agreement goal to limit global warming to 1.5˚C above pre-industrial levels.

    Carbon neutral: The result of an organization removing and offsetting emissions equivalent to its carbon footprint each year.

    Carbon negative: The result of an organization both reducing its emissions in line with its 1.5˚C SBT and investing in nature-based solutions and carbon technologies to remove and offset more carbon than it emits each year.

    Net zero: The point at which an organization has achieved its 1.5˚C SBT and removed its residual emissions from the atmosphere.

    Emission scopes: Emissions are split into three categories by the Greenhouse Gas Protocol:

    Scope 1: All direct emissions from the activities of an organization or those under its control
    Scope 2: Indirect emissions from electricity purchased and used by an organization
    Scope 3: All other indirect emissions from activities of an organization, excluding electricity

    For EY, scope 1 and 2 is largely related to office energy, while scope 3 is from business travel.

In FY21, EY emitted 394k tons of carbon dioxide equivalents (CO2e) compared to 976k tons of CO2e in FY20 – a decrease of 60%. This represents a 71% decrease from the 1,354k tons of CO2e emitted in the FY19 baseline year. However, the EY carbon ambition will help keep emissions below its 1.5°C pathway in FY22 and beyond, and EY will remain carbon negative as more usual business practices return.

To become a carbon negative organization, EY teams have invested in a carbon offset portfolio with South Pole that includes carbon removal projects. South Pole is a leading project developer and global climate solutions provider. The portfolio includes multiple projects around the world that offset or remove carbon through reforestation, regenerative agriculture, biochar, and forest conservation. The projects contribute to removing or offsetting a total of 528k tons of CO2e, representing 34% of the EY FY21 footprint, making EY carbon negative.

“Carbon negative is when an organization removes even more carbon than it emits. It requires both the setting of a science-based target to reduce emissions to get to net zero and offsetting or removing even more of its unavoidable emissions,” says Steve Varley, EY Global Vice Chair – Sustainability. “Even before an organization reaches net zero, it can proactively manage emissions beyond balancing them out at neutral.”

EY believes that a comprehensive decarbonization strategy must include a rapid reduction in organic emissions and investments in both nature-based solutions and innovative technologies that support the removal of carbon from the atmosphere. In addition to the nature-based offsets and removals projects above, EY has also signed a Memorandum of Understanding for future offtake using DAC (direct air capture) from a pioneering new project that pulls in atmospheric air, then, through a series of chemical reactions, extracts the carbon dioxide. From this, it creates a pure and compressed form of carbon dioxide that is stored permanently underground while returning the rest of the clean air to the environment. This mimics what trees do naturally, faster, and on a smaller footprint that is scalable.

EY teams will continue to invest in a diverse carbon reduction portfolio and to support emission reductions and innovative removal projects to help support the development of critical climate technologies needed to meet global climate goals. This will help drive down the price per ton of CO2e removed over time and bring down the cost of net zero compliance globally – for organizations, countries, and the planet.

How we’re helping others decarbonize

EY, like many professional services organizations, has a less complex supply chain than some other industries like manufacturing and retail. The EY journey to carbon negative has not come with the challenges and complexities that many others face, especially in hard-to-abate industries. However, when coupled with investments in sustainability-focused people, solutions and services, EY is helping others, both large and small, to decarbonize.

In addition to working directly with clients, EY member firms are also collaborating with other leaders and driving progress through its work with the Sustainable Markets Initiative, the S30 forum of Chief Sustainability Officers led on behalf of His Royal Highness The Prince of Wales, the WEF Alliance of CEO Climate Leaders, the Taskforce on Nature-related Financial Disclosures (TNFD), The Taskforce on Climate-related Financial Disclosures (TCFD), the World Business Council for Sustainable Development (WBCSD), and other multilateral organizations. These efforts will only increase as we approach, and go beyond, COP26 in November 2021.

Summary

EY is proud to be carbon negative for the second year running, as we work to reduce absolute GHG emissions on the journey to net zero in 2025. We are using our experience, services, solutions and people to collaborate with others and help them transition to a low-carbon future.

About this article

Authors
Carmine Di Sibio

EY Global Chairman and CEO

Passionate about our clients and the power of our global organization. Driver of growth and innovation. Relationship builder. Sports fan.

Steve Varley

EY Global Vice Chair - Sustainability

Passionate about sustainability, diversity and entrepreneurship. Husband and father of two. Triathlete.