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This article is the last in a series on ESG compliance and Xebia’s SustainX solution. Previously, we shared insights about profitable sustainability investment and ESG reporting regulations.
The Rising Risk of Emissions
Over the past seven decades, carbon emissions have grown from 6bn tons in the 1950s to 37bn tons today. While the world is lagging severely on its path to going net zero and upholding the Paris Climate Agreement (PCA) commitments, businesses and governments alike are now taking real steps toward limiting GHG emissions.
One of the most perplexing issues in reducing and mitigating carbon emissions is that the most carbon-intensive sectors also drive key processes in the economic machinery. That said, regulators are now taking stricter steps to bolster the adoption of sustainable practices across these sectors.
Take a look at the most carbon-intensive industries, and the processes that add to the highest volume of carbon emissions from these sectors.
Top 8 Carbon-Intensive Sectors
1. Oil and gas
O&G operations are linked to nearly 9% of human-made GHG emissions. Of these, upstream operations contribute to 62% of the overall volume, where extraction, drilling, and flaring cause the most carbon emissions. In upstream operations, fuel combustion for driving, drilling, production, and liquefaction accounts for the highest emissions. Other sources of high emissions that aren’t linked to combustion include methane losses, leakages, flaring, and CO2 venting.
Beyond these, the industry also produces fuels that cause another 33% of all GHG emissions.
2. Logistics and transport
The logistics and transport industry accounts for 24% of all GHG emissions, and this number may grow to 40% in the absence of definitive steps towards sustainable practices. Meanwhile, the logistics sector adds to over a third of total carbon emissions, thereby being the largest-emission sector in some countries.
The key source of emissions in this industry is the combustion of fuel for powering vehicles. In logistics, air freight is the most emission-intensive mode, resulting in ~10x of road freight and 30x of ship freight.
3. Real estate and construction
This sector hit a new peak of energy consumption and carbon emissions after the pandemic when pent-up demand was released. Transportation of raw and processed materials accounts for the highest emissions during the construction of buildings, followed by transportation of workers, and construction processes.
Despite the reduction in energy and emissions intensity, the sector contributed to 37% of process and energy-related carbon emissions in 2021.
4. Retail
In the retail industry, Scope 3 emissions account for nearly 80% of the overall footprint for most companies. Within Scope 3 emissions, raw material extraction and production are the most carbon-intensive, whereas the contribution of manufacturing and last-mile logistics varies by the sub-sectors.
However, top retailers like IKEA are now making commitments to Scope 3 emissions with upstream and downstream interventions in their supply chains. Moreover, ecommerce is 17% cleaner than brick-and-mortar retail, and its rising share may lower the footprint of the sector in coming years.
5. Manufacturing
The manufacturing industry consumes nearly 54% of all energy and adds to a fifth of total carbon emissions. Within this industry, food, paper, basic chemicals, and metals and minerals represent the most energy-intensive sectors.
In manufacturing, the production and rolling of steel is the most carbon-intensive step – and depending on the end product, it contributes to Scope 1/2/3 emissions. Understanding product carbon footprints and adopting carbon accounting practices are key steps to mitigating emissions in this industry.
6. Animal agriculture
Animal agriculture adds to over 8.1 GT CO2-eqs annually, of which methane accounts for 50%, and nitrous oxide and CO2 constitute the other half. The total volume of GHG emissions from animal agriculture forms 15.4% of total human-made emissions.
In livestock farming, most non-CO2 emissions result from animal digestion, whereas in agriculture, fertilizer production and fuel combustion for powering machinery contribute to a significant volume of CO2 emissions.
7. Financial services
In the financial services industry, financed emissions – i.e., emissions linked to lending and investments they have done, account for 75% of the industry’s total GHG emissions.
Analysts are therefore introducing newer approaches for holding the industry accountable, with measures like funded emissions. In 2021, portfolio emissions of the sector stood at 700x of its direct emissions, attracting calls for aligning portfolios to PCA commitments.
8. Healthcare
In 2022, healthcare systems accounted for 4% of global GHG emissions, with the figure rising to 10% for industrialized countries.
Hospital energy consumption intensity is a significant contributor to GHG emissions from the sector, making energy efficiency a key practice for a more sustainable healthcare industry.
Next Steps
Carbon accounting and sustainability reporting is the first step towards decarbonizing for every industry. Understanding your organization’s carbon footprint and climatic impact will help you attain net zero goals.
Our sustainability solution, SustainX, enables automatic computation of Scope 1, 2, and 3 emissions and provisions for use-case-based emission visibility. It allows an organization to achieve high-fidelity emissions forecasts that can help achieve the desired emission reduction targets. Businesses can easily monitor the emissions from each process and business unit.
To effectively track emissions from various processes and take corrective measures, reach out to us at connect@xebia.com.