Investment solutions dedicated to achieving the Net Zero objective
Rothschild & Co Asset Management has launched a range of responsible investment funds .
Implementation of an Internal Carbon Price to finance sustainable project
This mechanism, implemented by Rothschild & Co, places a monetary value on greenhouse gases and is a way to responsibly influence emissions from business operations, including travel, aimed at ensuring the Group pursues emission reduction opportunities. The Internal Carbon Price (ICP) generates a financial support stream for the Group’s environmental management budget, which in turn is used to develop further small and medium-scale carbon-reduction opportunities and sustainability projects in line with the supported SDGs.
Main project's drivers for reducing the greenhouse gas (GHG) emissions
Energy and resource efficiency
Energy Decarbonisation
Energy efficiency improvements
Improving efficiency in non-energy resources
Emission removal
Financing low-carbon issuers or disinvestment from carbon assets
Reduction of other greenhouse gases emission
Project objectives
The project aims to implement a group-wide Internal Carbon Pricing (ICP). The cost is applied per tonne of carbon dioxide equivalent (CO2e) and charged to offices and divisions. The financial support stream generated is used as part of the Group’s environmental management budget, which in turn is used to develop further small and medium-scale carbon-reduction opportunities and sustainability projects in line with the supported SDGs and to reduce the group’s carbon footprint.
Detailed project description
Rothschild & Co recognises that climate change is a serious risk for environment, society and economy. By proactively managing its GHG emissions and environmental impact, the Group is making its own contribution to the fight against climate change.
In 2019, the Group Executive Committee (GEC) has approved the implementation of an Internal Carbon Pricing (ICP) at group level. This innovative pricing mechanism makes it possible to identify, assess and reduce the group’s carbon dependency by placing a monetary value on GHG emissions produced by the various entities. The cost per ton of carbon is charged to offices and divisions.
The ICP is multiplied by the total operational emissions from scopes 1 & 2 and 3 , which includes emissions related to flights, train, use of cabs, daily commute, overnight stays in hotels, mail services, use of materials – mainly paper -, recycling and disposal of waste, remote working, water, vehicles leased and owned by the company, IT equipment, servers, electricity transmission and distribution losses.
The ICP is used to finance sustainable solutions to reduce GHG emissions and green projects in line with four selected Sustainable Development Goals (SDGs): SDGs 7, 12, 13 and 15.
The ICP places a monetary value on greenhouse gases and is a way to responsibly influence emissions from business operations, including travel, aimed at ensuring the Group pursues emission reduction opportunities. One of the key priorities is to use these new cashflows to reduce energy consumption of Rothschild & Co buildings.
The ICP has already helped finance energy efficiency projects, such as the energy-efficient lighting project in the London office. This project is underway with an expected completion date in 2021. When fully operational it will enable the company to reduce energy consumption from lighting by approximately 60%, in addition to significant cost savings estimated at between £75k and £80k. Similar actions will be implemented over the next four years to ensure that the group meets its GHG reduction target of 10% per Full Time Equivalent (FTE) by 2025.
Such initiatives undertaken to reduce overall operational GHG emissions are essential. Rothschild & Co is convinced that this internal carbon pricing mechanism will help to sustainably address GHG emissions of its entities’ operational activities, including emissions linked to business travel.
Emission scope(s)
on which the project has a significant impact
Scope 1
Direct emissions generated by the company's activity.
Scope 2
Indirect emissions associated with the company's electricity and heat consumption.
Scope 3
Emissions induced (upstream or downstream) by the company's activities, products and/or services in its value chain.
Emission Removal
Carbon sinks creation, (BECCS, CCU/S, …)
Avoided Emissions
Emissions avoided by the activities, products and/or services in charge of the project, or by the financing of emission reduction projects.
Scope 1 – Purchase of biogas
- Quantification: l-Replacement of natural gas by biogas has reduced emissions by 500 tCO2e – between 2018 and 2019 – from approximatively 628 tCO2e to 128 tCO2e
Scope 2 – Purchase of renewable electricity
- Quantification : Purchasing electricity from renewable energy sources reduced GHG emissions by approximately 1,400 tCO2e in 2019 compared to 2018
Scope 2 – Replacement of conventional lighting with LEDs
- Quantification:Replacement of usual lighting with LEDin London offices should reduce the energy consumption by approximately
580 MWh/year
Replacement of conventional lighting with LEDs (London Project): Electricity consumption related to lighting was around 900 MWh/year before the project was launched. The installation of LEDs will reduce this average consumption by 60% to 320 MWh/year.
Key points
Invested amount
Not disclosed
Starting date of the project
2019
Project localisation
Worldwide
Project maturity level
Prototype laboratory test (TRL 7)
Real life testing (TRL 7-8)
Pre-commercial prototype (TRL 9)
Small-scale implementation
Medium to large scale implementation
Economic profitability of the project (ROI)
Short term (0-3 years)
Middle term (4-10 years)
Long term (> 10 years)
Illustrations of the project
Rothschild & Co is convinced that operational improvements will positively contribute to the fight against climate change, but that other actions are needed.
To this end, in 2020, the Group strengthened its environmental partnership with Cool Earth to support the regions inhabited by the Asháninka and the Awajún in the Peruvian Amazon, fighting against the harmful climate impact of tropical deforestation.
Supporting these communities is a way to preserve and protect the delicate balance of the rainforest ecosystems and biodiversity in this area. These communities suffer from a lack of access to food and basic healthcare, which forces them to sacrifice the forest. The projects supported by Rothschild & Co aim to offer an alternative to these communities to sustain and improve their livelihoods, so that they are no longer dependent on logging for their survival and thus fight against the deterioration of the ecosystem.
To date, the project has provided 318 families from Awajún and 231 families from Asháninka with short-cycle seed varieties, training, equipment and tools, such as picks, rakes and 5-liter backpacks for watering. Furthermore, providing support to mitigate the impact of COVID-19 is a key area of intervention. Basic health care was distributed to help 610 families cope with hygiene requirements during the pandemic.
Carbon pricing is not new and some sectors, such as the energy sector, have been using various forms of carbon pricing since the 1990s. The potential impact that carbon pricing can have on GHG emissions is significant. Internal carbon pricing can enable all organizations to make investment and development choices that foster the global transition to a low-carbon economy. Internal carbon pricing is a tool for companies to meet their carbon reduction goals. By putting a value on their emissions companies are more likely to take action to reduce them.
The success of an internal carbon pricing project depends on two main elements:
- Ensuring that the price moves at the right pace to stimulates action to reduce emissions
- Ensuring that divisions remain accountable to the Group for their emissions
A partnership with the NGO Cool Earth was initiated to financially support sustainable projects.
Contact the company carrying the project :
Groupmediaenquiries@rothschildandco.com press@coolearth.org
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