EY is now carbon negative, a major milestone in its carbon ambition

EY made strong progress on its carbon ambition in FY22 against its seven-point action plan, and remains on track to reach net zero in 2025.

In brief

• EY continues to reduce its greenhouse gas (GHG) emissions, and is carbon negative for the second year, meaning we offset and remove more carbon than we emit.
• Our challenge going forward is to decouple business growth from emissions growth, while supporting clients and maintaining our distinctive global culture.
• We are investing in services, technology and products to help clients decarbonize their businesses and accelerate the transition to a low-carbon economy.

Decarbonization has ascended to the top of the global business agenda, ushering in a period of exponential growth in companies committing to net zero following the 26th UN Climate Change Conference of the Parties (COP26). More than 3,000 businesses and financial institutions have declared their intentions and are working with the Science Based Targets initiative (SBTi) to reduce their emissions in line with climate science.

Momentum continues to build as businesses transform their operations to support decarbonization. But for growing organizations everywhere, the benefits of positive growth come with an urgent need to manage the risk of increased emissions as a result.

“The challenge we face in FY23 and beyond is to continue to grow our business and maintain our distinctive global culture, while reducing our absolute emissions,” says Steve Varley, EY Global Vice Chair – Sustainability. This challenge is illustrated by the fact that the EY people base (measured in Full Time Equivalents, or FTE) has grown 29% since our baseline year of FY19.

In addition, with the return of business travel, FY23 is the first year we expect our air travel emission limits to be really tested. “We are ready to meet this challenge and are confident that the actions laid out in our carbon action plan will help us remain on track to reach net zero,” says Varley.

EY launched its carbon ambition in January 2021: to reach net zero in 2025 with a 40% reduction in our absolute GHG emissions across Scopes 1, 2 and 3 emissions (against an FY19 baseline). This is consistent with a 1.5°C reduction pathway approved by SBTi1. This target aligns with what climate science deems necessary to meet the goals of the Paris Agreement to limit global warming to 1.5°C degrees.

We reached the major milestone of becoming carbon negative globally in FY21. Being carbon negative means we offset or remove more carbon from the atmosphere than we emit. We are proud to remain carbon negative in FY22, keeping us on track to reach net zero in 2025.
 

How EY is reducing GHG emissions and remaining carbon negative

In FY22, our GHG emissions totalled 597k tonnes of carbon dioxide equivalent (tCO2e). While this represents a 56% reduction on our baseline of FY19 (1,354k tCO2e), it also reflects a 52% increase from FY21 — a year which saw a dramatic drop in our Scope 3 travel emissions and Scope 2 office electricity usage. This was not unexpected, as many EY businesses in FY22 resumed more normal business operations, and our 1.5°C pathway factors in an expected increase in GHG emissions in the post-COVID-19 environment.

To offset the emissions that we have not yet eliminated, EY continues to invest in a carbon offset portfolio with leading project developers and global climate solutions providers Combined, these projects offset 723k tCO2e, representing 121% of EY’s FY22 emissions — confirming our carbon negative position for FY22. All projects meet our criteria for quality offsets and have demonstrated that they are independently verified, additional, permanent, not used for other purposes, will not result in leakage, and have a positive impact on the community.

We have implemented new technology, just as many of our clients are doing, to help track our emissions with greater precision. Through the implementation of Enablon, we can now more precisely track our emissions across Scopes 1 and 2. This includes data points like energy usage, water consumption, fuel data and more from around 650 offices across the EY network.

We also continue to closely track our Scope 3 emissions through analysis of our travel bookings and spend across air, rail and car. Travel plays a critical role in helping enable us to deliver exceptional client service, win in the market, collaborate across EY teams and strengthen our EY culture. But we recognize we must travel in a way that is thoughtful and considered, and ensures we remain on track to reach our net-zero target in 2025. Our air travel emissions limit for FY23 is a 6% decrease on our FY22 limit. To ensure we meet this reduced limit, our challenge for FY23 and beyond will be to balance the reduction of emissions with meeting travel requirements for EY clients and other activities.
 

Progress on our seven-point plan to reach net zero in 2025

To reach net zero in 2025, we will continue to deliver on our seven-point plan to reduce our GHG emissions and become an even more sustainable organization. Over FY22 we’ve made substantial progress on each of our key actions:

1. Business travel emissions: achieve a 35% reduction by FY25 (against our FY19 baseline)

• In FY22 our business travel emissions represented a 74% decrease compared to our FY19 baseline. More people chose to travel by rail in FY22 (20% versus 4% in FY19) and fewer took same-day trips (3% versus 18% in FY19).
• Our air travel emissions limit for FY23 is a 6% decrease on our FY22 limit. We will continue to reduce this limit by 6% each year to meet our target of a 35% reduction by FY25.

2. Energy: reduce overall office electricity use and procure 100% renewable energy for our remaining needs

• 47% of our electricity consumed globally is currently supplied from renewable energy sources. This includes 100% renewable energy supply in the US, UK and Germany, and a significant proportion of renewable energy in India, Japan and several countries across South America. We continue to engage with existing and potential landlords to switch to renewable energy.
• In FY23, EY will join RE100, a global initiative bringing together the world’s most influential businesses committed to 100% renewable electricity, as a Gold Member.

3. Contracts: structure electricity supply contracts through virtual power purchase agreements (vPPAs), to add more electricity than EY consumes to national grids

• We currently have three vPPAs in place across two EY Member Firms. We will continue to work with EY Member Firms where vPPAs are feasible to establish new renewable energy projects. We aim to complete a new vPPA transaction in FY23 in Australia.

4. Measurement: enable EY teams to calculate and reduce the amount of carbon emitted during client work

• A new emissions dashboard tracks progress against EY’s travel emissions targets and is open to everyone across EY member firms. A traveler dashboard gives EY travelers full visibility of their individual travel-related emissions.
• In FY23 we will introduce a new travel decision tool in collaboration with IBM, that displays the carbon emissions for each travel mode – ensuring EY people have the right information to make a considered decision.

5. Nature- and science-based projects that remove or offset more carbon than we emit, every year

• We continue to invest in nature and technology-based projects to offset the emissions we have not yet eliminated. In FY22, these 10 projects helped us to offset 723k tCO2e, representing 121% of our FY22 emissions and confirming our carbon negative position.
• Our portfolio includes forest protection, wind and solar renewable energy, clean cookstoves, peatland protection, regenerative agriculture, blue carbon, and biochar.
• Early-adopter support of innovative removal projects is essential to support the development and scale of critical climate technologies needed to meet global climate goals. In 2021, EY signed a letter of intent to join the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition, a ground-breaking public-private coalition to provide finance for tropical and subtropical forest conservation, offering invaluable support for countries and benefitting hundreds of millions of people. EY has also signed a Memorandum of Understanding for the future offtake of Direct Air Capture (DAC) from a pioneering project in the UK.

6. Suppliers: require 75% of EY suppliers, by spend, to set science-based targets no later than FY25

• We encourage our suppliers to drive change by supporting them to set science-based targets for their organizations. We provide helpful training to encourage their own decarbonization journeys. To date, 52% have set a target. Our aim is that 75% will have a target in place by FY25.
  
  

7. Clients: invest in services and solutions that help clients create value from decarbonizing their businesses and provide solutions to other sustainability challenges and opportunities

• We help clients with their journey to sustainability ambitions and commitments. Our innovative solutions and technologies address the top sustainability issues for organizations and their sectors. This includes collaboration with our alliance partners Microsoft, IBM, SAP, Enablon and ServiceNow, who we work with to develop technology, products and services that will help our clients further embed sustainability into their strategy.

As we act on this seven-point plan, we continue to follow SBTi developments, including their recent update to formalize the definition of net zero. We, along with many EY clients, are working to better understand the implication of this definition change and assessing what it means for EY.
 

Collaborating with others for a low-carbon future

“EY, like other professional services organizations, has a simpler business model than many, such as manufacturing, retail, and hard-to-abate industries,” says Varley. “While we recognize our emissions are small on their own, we use our experience, convening power, skills, services and people to help others transition to low-carbon futures."

In addition to supporting EY clients and suppliers on their decarbonization journeys, the EY organization continues to use its convening power to bring like-minded organizations together to protect and create value from sustainability for business, society, and the planet.

In November 2021, EY leaders took part in COP26 – the first COP summit to bring business and finance leaders together with government to determine the need for collective action. Looking ahead to COP27, held in Egypt in November 2022, we will continue to support the fight to accelerate progress toward a net-zero emissions future. We will work with clients to translate the promises made into business actions that create real impact.

We continue to engage with standard setters on the measurement and reporting of sustainability, and drive progress through our work with external organizations, such as the Sustainable Markets Initiative (SMI) which has been championed by His Majesty King Charles III, and the S30 forum of Chief Sustainability Officers (part of the SMI).

As the climate science clearly shows, it is critical that organizations large and small rapidly accelerate all efforts to reduce the amount of carbon in the atmosphere. But everyone must play a role, and those of us who can go even further, should do so. Together, we can rise to the challenge of net zero and build a better, and more sustainable working world.

“The challenges of climate change and decarbonization need answers that can only be found together. Through collaborating with others, we’ll find the collective solutions that’ll help us all reduce emissions,” says Carmine Di Sibio, EY Global Chairman and CEO. “After all, sustainability is everybody’s business.”