How Salesforce became a net-zero business and what happens next
EXCLUSIVE: Last month, Salesforce announced it had become a net-zero business across its value chain. Here, edie explores how offsetting and location-based decarbonisation plans have created a unique road to combatting the climate crisis.
“For many years, Salesforce has worked to mitigate emissions from its operations by following a three-step, iterative process: avoid, reduce, offset”. That is one of the opening lines of the company’s in-depth sustainability pages that are currently hosted on its website.
This three-step approach has evidently started to bear fruit. At the end of September 2021, the global technology company announced that was a net-zero company “across its full value chain” and had reached 100% renewable energy for its operations.
With many companies working towards net-zero targets ranging from 2030 to 2050, the fact that Salesforce has reached this milestone is a testament to its strategic approach to sustainability, but the methods to reach this landmark moment may not please everyone.
Prior to the announcement, Salesforce had already delivered a carbon-neutral cloud and operations. In a bid to drive further emissions reductions in-house and to reduce the use of carbon offsetting, the company has developed 1.5C-aligned targets, approved by the Science Based Targets initiative (SBTi). These entail halving Scope 1 (direct) and 2 (power-related) emissions by 2030, against a 2018 baseline; halving Scope 3 (indirect) emissions from fuel and energy activities within the same timescale and supporting suppliers representing 60% of Scope 3 emissions to set their own targets in line with climate science by 2024.
The company’s latest sustainability update reveals that it has reduced Scope 1 and 2 emissions by 48% against a 2018 baseline, putting it within touching distance of its science-based targets. Interestingly, Salesforce recorded a 35% reduction in absolute emissions across these scopes over a 12-month period.
While this undoubtedly points to impressive levels of carbon reduction (coupled with the impacts of the coronavirus pandemic) it does point to the fact that Salesforce, like many other businesses, is leaning into the “net” aspect of net-zero emissions.
The report notes that Salesforce has offset 85,000 MTCO2e of its remaining Scope 1 and 2 emissions, as well as all of its 185,000 MTCO2e Scope 3 Carbon Neutral Cloud-Related emissions.
For Salesforce’s head of clean energy and carbon, Max Scher, offsetting is a “critical way” for companies to deploy much-needed climate finance, but that carbon markets needed to be improved, as did corporate efforts to actually reduce emissions.
“The carbon markets are a critical way in which companies can deploy finance on the baseline of emissions reductions that every company needs to be pursuing,” Scher told edie. “But it’s just one way. They, like all the efforts everyone is doing on climate change, need to be improved.
We have set a commitment to reduce our emissions, but we are also netting those emissions because the world, in general, is off track, we need to go further faster. The risk is that others don’t set emissions reduction targets and so science-based targets need to be the minimum threshold for businesses around net-zero.”
Carbon credits are typically used to fund projects that either sequester carbon, like reforestation and peatland restoration, or prevent emissions in the first place, like schemes incentivising clean cooking fuels. The idea is that, if an organisation can reduce emissions elsewhere to compensate for those it is unable to reduce in its operations or value chain, it can still claim to be aligning with climate targets.
While many offsetting projects are credible and businesses often see no other path to net-zero, offsetting has proven to be one of the most controversial topics in the climate debate. Corporates have been accused of greenwashing after investing in non-verified credits or of failing to prioritise in-house emissions reductions. Double-counting is a recurring concern. And some carbon credit issuers claim that avoiding practices which humanity has known are climate-wrecking for decades, including flaring at fossil fuel sites, should be counted.
Scher understands the concern around offsetting, and claims that businesses cannot solely rely on carbon markets that are largely becoming oversubscribed and still lack consistent data in some cases.
Salesforce’s approach to carbon credits is to “carefully select projects with the highest environmental and social benefits” the company notes. Projects also go through “through independent third-party verification to ensure adherence to strict internationally recognised methodologies for quantifying emissions reductions, such as the Gold Standard”.
In addition, Salesforce is committed to delivering the conservation, restoration, and growth of 100 million trees by the end of 2030. Salesforce announced that it had funded more than ten million trees over the past 12 months.
Scher also points to the near 50% reduction in Scope 1 and 2 emissions achieved by Salesforce to date. While part of that reduction is attributable to Covid-19 and reduced business travel as a result, the company’s push to 100% renewables has seen its carbon footprint across those Scopes tumble down from 163,000 MTCO2e. Indeed, electricity use accounts for around 90% of the company’s direct emissions.
In 2021, Salesforce achieved 100% renewable energy, purchasing enough renewable energy to match all electricity it uses globally – equivalent to around 746 GWh.
However, Scher explains that while the milestone to reach 100% renewables globally has been achieved, it doesn’t mean the company is powered completely by renewable energy.,
“We’re not powered by 100% renewable energy,” Scher said. “It is often how these commitments are positioned, but really what we’re talking about is an annual matching of our electricity use. We’re purchasing an equivalent amount of renewables on an annual basis.
“A lot of the time people think of renewable energy purchasing as an emissions reduction and this will count towards science-based targets, but purchasing renewables doesn’t necessarily mean a complete emissions reduction for electricity use. What we’ve done is count that as an equivalent to a carbon credit, how you would net your emissions.”
Scher added that this does “send demand signals to markets” but that the company is now working towards a goal of generating 24/7 clean energy that was introduced back in 2018.
Indeed, the renewables procurement has pushed Salesforce towards a science-based target of reducing our Scope 1 and Scope 2 market-based emissions by 50% by 2030. However, Salesforce notes that its “location-based emissions” have increased over the same period. This, the company states, is “reflective of our business growth and the comparatively slow clean energy transition taking place on the grids where we operate”.
Scher notes that the main difference between location-based and market-based accounting is that businesses can count renewable energy purchasing as part of emission reduction efforts. For location-based accounting, however, you can only count the physical grid emissions that occur from electricity use across facilities.
“There is a scenario where everyone reaches 100% renewables and your market-based emissions drop dramatically, but the physical emissions from the grids are still very high,” Scher added. “Location-based is the most accurate reflection of our physical impacts on climate change and helps us consider business growth as to where we put our new facilities.”
Scope 3 emissions
Currently, 66% of Salesforce’s value chain (Scope 1, 2, and 3) emissions come from its suppliers and with emissions from this area actually up by 1.5% compared to the 2018 baseline, the company is rolling out new measures to accelerate decarbonisation across the value chain.
Salesforce has recently launched “Sustainability Exhibit”, a document that places binding commitments upon suppliers to combat the climate emergency through carbon reduction. This will build on a steady baseline of progress that has seen more than 20% of supply chain emissions covered by science-based targets from suppliers.
Salesforce is working with 250 of its top suppliers, representing 60% of the company’s Scope 3 emissions, to encourage them to set science-based targets by 2024.
Earlier this year, Salesforce unveiled a new cloud-based hub that enables companies of all sizes to track and measure value chain emissions.
The Salesforce Sustainability Cloud Scope 3 Hub was launched in April and enables businesses to input data on supply chain emissions to gain a better understanding of how decarbonisation can be achieved.
In addition to capturing emissions across all three scopes, the cloud platform can track historical and real-time environmental, social and governance (ESG) data and visualise it for businesses.
Scher believes that these innovative platforms and approaches will improve data collection for Scope 3 emissions and enable the company to progress in decarbonisation across the value chain.
This approach includes lobbying and working with other corporates to scale climate solutions that will deliver a wide range of impacts across the globe.
In terms of promoting climate action more broadly, Salesforce is a member of the Business Ambition for 1.5C initiative, the Business Alliance to Scale Climate Solutions and the European Corporate Leaders Group (CLG Europe).
It has also added climate-related principles to its policy platform, which acts as a framework for policy engagement. One of the firm’s recent policy actions has been calling for mandatory climate risk disclosures from businesses in the US, where it is headquartered. At the recent G7 summit, nations including the US agreed to follow the UK’s lead in implementing mandatory reporting in line with the recommendations of the global Taskforce on Climate-related Financial Disclosures (TCFD).
The company has also joined the likes of Sky, Microsoft, SSE, ScottishPower, NatWest Group, National Grid, Sainsbury’s, Hitachi and Reckitt as Principal Partners for COP26.
Scher believes that businesses can come together to change markets in a way that makes carbon credits much more reliable.
As a net-zero business Salesforce isn’t willing to call time on its sustainability journey. One part of the science-based commitments are within reach, but the company is already looking to new solutions, such as carbon-removal technologies, to help drive progress.
“We are hyper-focused on emissions reductions,” Scher added. “We have to continue being net-zero and compensating for our emissions by scaling some solutions, like technology-based removals, that we know we’ll need as we reach 2030.
“We need new things that don’t exist today and better things of those that do exist today, and so we have a role to play in enabling the next wave of ecopreneurs to invest in themselves and their businesses. A question we’re asking ourselves now is ‘how can we spur this action everywhere across the world?’”