Steering Towards Net Zero Mobility

In this case study, we emphasize the necessity of addressing embodied emissions within the automotive sector as it traverses the transformative pathway to electrification. It is essential to recognize that embodied emissions constitute a substantial fraction of the industry’s overall carbon footprint, especially in the context of electric vehicles. Regrettably, embodied emissions have historically received inadequate attention and have been shrouded in obscurity.

While a valuable instrument, the Science-Based Targets initiative (SBTi) conflates the measurable embodied emissions with uncontrollable downstream Scope 3 emissions, relies on secondary data and estimations, lacks transparency on the target validation process, and incentivizes companies to prioritize Scope 1 and 2 over supply chain emissions reductions. This methodology engenders skepticism regarding the adequacy of attention and rigor applied to Scope 3 emissions and raises questions about whether companies are authentically progressing toward their climate targets. This case study on Pirelli exemplifies the drawbacks of the SBTi framework.

The introduction of the Emission Liability Management (ELM) approach signals an evolutionary paradigm shift. The E-liability methodology champions using actual emission data rather than estimates and facilitates a quantifiable and auditable representation of a company’s decarbonization efforts. Our analysis of the Pirelli Pro Forma (PPF)  highlights the insights and transparency that E-liability brings. Because it is built on the foundation of solid accounting, ELM allows practitioners to apply tested principles for the recognition of offsetting assets (E-asset) and guides auditable net zero claims.