Building on our new net zero commitment announced in September 2021, we plan to review and update our TCFD disclosure mapping in fiscal 2022. The results will be disclosed as part of Cisco’s fiscal 2022 ESG reporting.
TCFD was established to assess potential business impacts of climate change, including efforts to reduce GHG emissions and to mitigate the impact of climate change. These impacts can potentially emerge over a time period measured in decades and for which typical business forecasting is not well suited. Suggested TCFD methodology focuses on evaluating scenarios. Per section B.2 of TCFD Technical Supplement, The Use of Scenario Analysis in Disclosure of Climate Related Risks and Opportunities:
It is important to remember that scenarios are hypothetical constructs; they are not forecasts or predictions nor are they sensitivity analyses… Scenario analysis is a tool to enhance critical strategic thinking. A key feature of scenarios is that they should challenge conventional wisdom about the future.
Section B.2 of the Technical Supplement further explains that scenarios should be plausible, distinctive, consistent, relevant and challenging.
The science and scenarios
The impact of increasing greenhouse gas concentrations in the Earth’s atmosphere is projected to have increasing impacts on climate as the global average temperature increases due to the retention of energy previously radiated into space. The Data shown in the chart Atmospheric CO2 at Mauna Loa Observatory gives a clear view of the potential for climate change given the unabated increases in CO2 concentrations that interfere with black body re-radiation. The Mauna Loa data only reports on CO2. Other GHG emissions, such as methane and chlorofluorocarbons, are also increasing, contributing to the absorption of infrared radiation emitted by the Earth.
Atmospheric CO2 concentrations continue to increase and are increasing at a faster rate (see figure Atmospheric CO2 concentrations at Mauna Loa Observatory.)
Before 1960, the rate of increase was less than 1 ppm CO2 /yr. Today the increase is more than 2.5 ppm/yr, with the absolute CO2 concentration increasing from around 315 ppm CO2 to about 415 ppm CO2. Extrapolating to the year 2050, CO2 concentrations will likely approach or even exceed 500 ppm CO2. This path to 500 ppm by 2050 has been chosen as our base-case scenario. This base case includes GHG reduction efforts implemented worldwide to date and that may continue, but which have not had an appreciable impact on GHG concentrations in the Earth’s atmosphere.
From the IPCC report, Climate Change 2014 – Synthesis Report (see figure Atmospheric CO2 concentrations for the past 800,000 years), the increase in CO2 concentration above the historic maximum of 280 ppm has gone from 35 ppm CO2 in 1960 to 135 ppm CO2 in 2020 (280+35=315 ppm, the approximate CO2 concentration in 1960; 280+135=415 ppm, the approximate CO2 concentration in 2020).
Per the IPCC report, Climate Change 2014 – Synthesis Report (Table 3.1, p. 22), 500 ppm in 2050 is indicative of a 3° C temperature rise “more likely than not.” Continued increases in GHG concentration through 2100 would further push temperature upward. Cisco is using the “2050 base case” for its scenario construction and risk assessment.
A second scenario is constructed projecting that, as of some future date, there will be no net impact on GHG concentrations from Cisco operations or from its products. Although terminology such as “carbon neutral” and “net zero” has not been standardized, “no net impact” is used to mean that, starting at a to-be-determined future date, there would be no net increase in GHG emissions from Cisco operations or from product manufacture, use, or end-of-life. Accomplishing such a future state would be the result of energy efficiency initiatives, low-carbon sources of energy, and validated carbon offset mechanisms, the latter needed to remove residual GHG emissions from any remaining use of fossil fuels.
Assuming a “no net impact” date of 2050, this second Cisco scenario is aligned with a 1.5°C 21st-century temperature rise, relative to pre-industrial levels, described in Global total net CO2 emissions in pathways limiting global warming to 1.5° C (Figure SPM.3a of IPCC special report) from the 2019 IPCC special report, Global Warming of 1.5° C.
This Scenario 2 has two distinct paths:
- Cisco successfully implements “no net impact”, as does the world.
- Cisco successfully implements “no net impact”, but global action is similar in effect as the Scenario 1 base case.
TCFD documentation specifies two kinds of reporting. The first is four widely adoptable recommendations for disclosure on governance, strategy, risk management, and metrics and targets,