Please indicate the energy consumption in gWh per million EUR of revenue of your company, per high impact climate sector.

  • Radia Guira

EU Regulation 2019/2089, also known as the EU Low Carbon Benchmarks Regulation (EU BMR), defines high climate impact sectors as those that are key to the low-carbon transition.

This question asks you to indicate your company’s energy consumption, measured in gigawatt-hours (gWh), relative to its revenue, expressed in millions of euros, specifically within any high-impact climate sectors in which your company operates.

This means that the company should calculate how much energy it consumes in the course of generating each million euro of revenue in these sectors. It is to help measure the environmental footprint of the company’s economic activity, which is a significant aspect of its overall Environmental, Social, and Governance (ESG) score.

For instance, if your company operates in a high-impact climate sector like manufacturing and it consumes 1000 gWh of energy to generate 500 million euros of revenue. The answer will be 2 gWh per million euros of revenue. Therefore, the example should look like this: (Example: « Our company consumes 2 gWh of energy for every million euros of revenue generated in the manufacturing sector. »)

Understanding Energy Consumption Metrics in ESG Reporting

For companies within high impact climate sectors, energy consumption is a crucial indicator of sustainability performance. The metric of gigawatt-hours (gWh) per million EUR of revenue provides a clear picture of a company’s energy efficiency and enables stakeholders to assess the environmental footprint relative to the economic value generated. This ratio is particularly relevant for comparing energy practices among peers and setting industry benchmarks.

Before diving into how to calculate this metric, it is important to understand what constitutes a high impact climate sector. These typically include industries such as energy production, transportation, manufacturing, and others that have significant greenhouse gas emissions or environmental footprints. Recognizing whether your company belongs to one of these sectors is the first step in accurately reporting your energy consumption metrics.

The methodology for calculating your company’s energy consumption in relation to revenue can be complex. Fortunately, detailed guidelines and examples are available in the resources provided by industry experts and regulatory bodies. One such resource is the MSCI ESG Metrics Calculation Methodology, which offers in-depth information on how to approach these calculations.

Calculating Your Company’s Energy Consumption Ratio

To calculate your company’s energy consumption in gWh per million EUR of revenue, follow these steps:

  • Gather your company’s total energy consumption data for the reporting period, converting all energy use into gigawatt-hours (gWh).
  • Obtain the total revenue generated by your company during the same period, expressed in EUR.
  • Divide the total energy consumption in gWh by the total revenue in millions of EUR.
  • The result is your energy consumption ratio, which can be benchmarked against industry standards and regulations such as those outlined in the European Securities and Markets Authority’s (ESMA) guidelines, available here: ESG Disclosures.

It’s vital to ensure that all data collected and calculations performed are in accordance with recognized standards and methodologies. This not only ensures regulatory compliance but also maintains the integrity and comparability of your ESG data.

For an example of a comprehensive ESG reporting framework, you can refer to the documentation provided by Amundi, which can be accessed here: Amundi ESG Reporting Framework. This document offers a practical reference for developing robust ESG disclosures, including energy consumption metrics.

Improving Energy Efficiency for a Better ESG Score

Once your company’s energy consumption ratio is determined, it may be necessary to develop strategies to improve this metric. Energy efficiency improvements not only contribute to a better ESG score but can also result in significant cost savings and competitive advantages. Consider the following steps to enhance your company’s energy profile:

  • Invest in energy-efficient technologies and practices within your operations.
  • Transition to renewable energy sources where possible.
  • Engage in energy auditing and monitoring to identify areas for improvement.
  • Implement employee training programs focused on energy conservation.

Remember, the journey towards sustainability is continuous, and incremental improvements in energy efficiency can lead to significant impacts over time. By accurately calculating your energy consumption ratio and working to improve it, your company can demonstrate its commitment to sustainability and potentially improve its ESG score—a critical aspect for investors, regulators, and the public at large.

In conclusion, the gWh per million EUR of revenue metric is a pivotal ESG indicator for high impact climate sectors. By following the calculation guidelines and using the resources provided, companies can ensure that their reporting is transparent, comparable, and actionable. Moreover, by striving to enhance energy efficiency, businesses can not only improve their ESG scores but also contribute to the larger goal of sustainable development and climate change mitigation. In an increasingly ESG-focused world, accurate reporting and proactive improvements in this area are essential for long-term success and resilience.