Equipment companies target 50% emissions reduction by 2030

Equipment lenders are working to reduce emissions within the next decade, prompting companies to adapt their strategies and commit capital to sustainable construction, but many smaller equipment organizations struggle to determine the first steps.

Commercial lenders such as Mitsubishi HC Capital America and PNC expanded their environmental finance commitments while equipment OEM Caterpillar set emissions reductions targets for the company and its equipment, according to the company’s respective websites. 

Meanwhile, the United States aims to achieve a 50% to 52% greenhouse gas reduction from 2005 levels by 2030, President Joe Biden announced in April 2021, and the United Nations also aims to cut emissions in half by 2030 and limit global warming, according to the United Nations website. 

While the government and larger organizations continue to work toward net-zero emissions, many smaller equipment organizations are unclear on how to best approach reducing their emissions, Ivan Bagaliyski, Europe, Middle East and Africa go-to-market strategy and value proposition director at Solifi, said Thursday during the leasing software provider’s webinar on ESG goals in the leasing industry. 

“We have this fantastic commitment and long-term goal to get to net zero by 2050 by most global and large organizations, and we have this interim milestone not too far away in 2030, which we need to get 50% there,” he said. “The problem is, when we roll the clock to today, a lot of clients and a lot of companies are still unsure how to get started practically on the ESG journey.”

ESG best practices

Equipment companies can meet their sustainability goals by following some best practices, according to Solifi:  

• Form an ESG data baseline to compare against; 
• Set an ESG goal and a high-level strategy to get there;  
• Develop the ability to classify every new deal according to ESG factors, i.e., whether it’s green or not; 
• Incorporate ESG risk parameters into the decisioning process and origination system to approve or reject deals;  
• Develop the ability to monitor the portfolio and see whether the company is making progress toward the goal; 
• Input all the data and feedback into the ESG regulatory reporting tool, or ESG sustainability report, usually on an annual basis. 

While the framework can provide help for equipment companies, the ability to accurately track the ESG goal data can be difficult given the lack of regulations, standards and consistency in the methodology used to calculate emissions for the industry,  Bagaliyski said.  

“We are looking at companies that have deep domain expertise around the subject [of equipment] to figure out how do we extend some of these concepts and quantify emissions for equipment as well,” he said.