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ESMA publishes its first Climate Transition Plan

ESMA publishes its first Climate Transition Plan

The introduction of an annual greenhouse gas emissions report, the optimization of office space usage during certain periods of the year to reduce energy consumption , and the introduction of measures (such as incentives, rewards, or benefits) to encourage suppliers to choose more environmentally sustainable solutions. These are the objectives that the European Securities and Markets Authority ( ESMA ) has set itself in its first Climate Transition Plan (TP), a necessary milestone to align ESMA's internal operations with the European Union's climate objectives.

Through the implementation of the plan, ESMA aims to reduce the carbon footprint of its activities, specifically reducing its gross greenhouse gas emissions by 15.4% by 2027 and 31.4% by 2030, compared to 2023. The plan, according to a press release from the European authority, was developed based on currently available data and will be subject to regular review, adaptation, and improvement.

In developing its climate transition plan, ESMA drew inspiration from the principles, objectives, and key elements of the current EU regulatory reporting framework . In line with EU objectives, ESMA's climate transition plan aims to achieve climate neutrality by 2050 and align with the goals of the Paris Agreement.

In the short and medium term, ESMA has set itself the objective of reducing gross greenhouse gas (GHG) emissions by 15.4% (-70.3 tCO₂e) by 2027 and by 31.4% (-143.6 tCO₂e) by 2030, compared to 2023, in line with the Paris Agreement objective of limiting global warming to 1.5°C.

ESMA short and medium term objectives

Source: ESMA Climate Transition Plan

For emissions related to staff business travel and food consumption (Scope 3), targets were set using the Science-Based Targets Initiative (SBTi) target-setting tools. The SBTi's required 2030 efforts are aligned, according to the plan, with the emissions reductions required globally.

For energy-related emissions, the targets were set based on the 1.5°C-aligned greenhouse gas intensity pathway developed by the Carbon Risk Real Estate Monitor (CRREM) initiative. Using CRREM pathways as benchmarks allows the ESMA building's current performance in terms of GHG emissions per square meter to be taken into account.

For emissions from IT equipment and other sources, currently available base-year data are insufficient to set targets, primarily due to incomplete emission factors (EFs). These emissions represent 19% of Scope 3 emissions in 2023. Further work will be done to define ambitious and realistic targets during ESMA's next review of the TP.

Reference paths and definition of sub-objectives

Emission source Reference path used
Staff business trips Cross-sector SBTi
Energy consumption CRREM Initiative
Food consumption Cross-sector SBTi
IT equipment and other sources To be developed in the next TP revision
Source: ESMA Climate Transition Plan

The year 2023 was adopted as the base year for setting greenhouse gas emission reduction targets. Among recent years, 2023 has been considered the most representative of ESMA's typical operations, while 2022 was significantly impacted by COVID-19-related disruptions.

In 2023, actual greenhouse gas (GHG) emissions amounted to 430.1 tCO₂e , reflecting ESMA's environmental footprint from various sources. Emissions for 2023 have been recalculated to account for the additional staff hired by ESMA under various new EU mandates. In 2023, ESMA projected 399 full-time equivalents (FTEs, a standardized measure of work performed that allows comparisons between different types of full-time contracts or working hours), resulting in an emission intensity of 1.08 tCO₂e per FTE, i.e., per employee working full-time for a full year. The same ratio was applied to the projected number of FTEs in the short term. Based on this emission intensity, the recalculated emissions for 2023 amount to 457.1 tCO₂e .

Actual and recalculated GHG emissions for 2023

Emission source Actual emissions 2023 (tCO₂e) 2023 Emissions per FTE (tCO₂e) Recalculated emissions 2023 (tCO₂e)
Staff business trips 153.5 0.38 163.1
Energy 99.5 0.25 105.7
Diet 112.5 0.28 119.5
IT equipment 51.8 0.13 55.1
Other 12.9 0.03 13.7
Total 430.1 1.08 457.1
Source: ESMA Climate Transition Plan. Energy-related emissions are Scope 2. All other emissions are classified as Scope 3. The "Other" category includes emissions from direct waste, purchases of water, paper, and toner, and printer rentals.
Source: ESMA Climate Transition Plan

The impact of mitigation actions associated with decarbonization strategies was assessed for various emission sources. The identified decarbonization levers do not all have the same level of impact in terms of mitigation results and are not all feasible in the short term, as they vary by case.

Achieving the 2027 emissions reduction target ( -70.3 tonnes of CO2 equivalent, tCO₂e ) appears achievable based on a set of short-term strategies under the control of ESMA. Approximately 72% of this reduction (-50.3 tCO₂e) could be achieved by switching from Business Class (BC) to Premium Economy (PE) on long-haul flights, implementing short-term energy-saving measures, and decarbonizing catering orders.

Decarbonisation strategies for the 2027 objective

Source: ESMA Climate Transition Plan

To reduce the remaining 20 metric tons of CO₂ equivalent (tCO₂e), additional travel-related strategies could be used. These would not reduce the number of trips, but would likely make them less impactful (for example, preferring trains to planes, choosing direct flights, offsetting emissions). These levers could not only close the gap but also lead to an additional reduction of 12.7 tCO₂e, the document states.

By 2030, achieving ESMA's emissions reduction target of 143.6 tCO₂e will increasingly depend on strategies outside its direct control. However, a reduction of -96.2 tCO₂e , equivalent to 67% of the 2030 target, could be achieved through the implementation of measures that ESMA can control. Furthermore, considering the possibility of reducing the carbon intensity of staff canteen purchases (a lever under ESMA's direct control), up to 94% of the 2030 target (-134.7 tCO₂e) could be achieved.

Decarbonisation strategies for the 2030 objective

Source: ESMA Climate Transition Plan

At this stage, two types of initiatives appear relevant to ESMA for long-term decarbonization: the purchase of carbon credits and the purchase of sustainable aviation fuel (SAF) certificates. Carbon credits could be considered a complementary measure, aiming to neutralize residual emissions and contribute to the development of carbon removal technologies. The purchase of SAF certificates, already offered by some airlines, could represent a way to partially or completely neutralize emissions associated with business travel.

However, the use of carbon credits or SAF certificates is not envisaged as part of ESMA's first Climate Transition Plan, and given concerns about the environmental integrity of carbon credits, a prudent approach is essential, the plan states.

To achieve energy savings targets in the short term, ESMA plans to implement measures to optimize workspace occupancy . ESMA will consider adopting the practices shared by the European Commission for more dynamic collaborative work environments, which offer additional opportunities to optimize space utilization and achieve energy savings.

Furthermore, given the importance of Scope 3 emissions to ESMA's overall footprint, proactive engagement with suppliers is crucial. Key priorities include:

  • Engagement with the catering and canteen service provider , with the aim of encouraging the offering of meals with a lower carbon impact mix;
  • Engagement with the energy maintenance operator and the ESMA building owner to ensure proper management of the energy system and effective implementation of energy saving measures.

The report on progress towards the transition plan objectives will be published annually, as part of ESMA's annual report, focusing on key performance indicators (KPIs) that measure greenhouse gas emissions from ESMA's own operations. The KPIs are accompanied by a qualitative assessment of the main factors influencing their performance.

Furthermore, a more detailed assessment will be provided annually in ESMA's environmental statement, which will describe the progress achieved in reducing greenhouse gas emissions and implementing the decarbonisation levers and mitigation actions outlined in the transition plan.

Key metrics to monitor

Emission source Sub-category Metrics, aggregation level Unit
ESMA staff business trips Number of trips Number of short (SH), long (LH) and train business trips planned and completed Number of trips
GHG emissions GHG budget forecast and consumed to date, for SH and LH trips, disaggregated by class tCO2e
Total GHG emissions to date, disaggregated by means of transport tCO2e
Total GHG emissions to date, disaggregated by mode of transport %
Energy Energy consumption Energy consumption, broken down into electricity, heating, and cooling MWh
Change in energy consumption compared to the previous base year %
GHG emissions Associated GHG emissions, with similar subdivision tCO2e
Change in GHG emissions compared to the previous base year %
Food consumption Staff canteen purchases Meals purchased by staff in the canteen Number of meals
Percentage of various meal types in line with emission factors (EF) % of number of meals
GHG footprint associated with staff canteen purchases tCO2e
GHG emissions from catering Meals ordered as part of catering services Number of meals
Percentage of various types of meals in line with EF % of number of meals
GHG footprint associated with catering services tCO2e
GHG emissions GHG emissions associated with food and coffee consumption tCO2e
Change in GHG emissions compared to the previous base year %
IT equipment and other sources GHG emissions Total GHG emissions associated with IT equipment and other sources tCO2e
Change in GHG emissions compared to the previous base year %
Transversal GHG emissions Total GHG emissions associated with sources within the Transition Plan (TP) perimeter tCO2e
Change in GHG emissions compared to the previous base year %
Source: ESMA Climate Transition Plan
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