A good understanding of Greenhouse Gas (GHG) impacts is crucial to our collective climate journey. And that’s because it enables companies to thoroughly understand their climate hotspots as well as to spark the proper responsive actions.
Therefore, it’s no surprise that measuring, reporting, and managing Greenhouse Gas (GHG) emissions (scope 1, 2, and 3) is increasingly becoming mission-critical to many companies. A good understanding of GHG impacts:
1) Enables companies to thoroughly understand their climate impacts;
2) Sparks the proper responsive actions and allows for a robust strategy;
3) Allows them to make environmental claims to stakeholders.
Recap: What is the GHG Protocol?
The Greenhouse Gas (GHG) Protocol was developed in the late ’90s and is the global standard framework for measuring and managing our greenhouse gas emissions (GHG). Most of its listed corporations have reported according to the GHG protocol for years already. The framework is now also increasingly adopted by many small and mid-size enterprises.
The GHG protocol applies to measuring greenhouse gasses in both the public and private sectors. It provides standards that create a common ground for many sustainability certifications and reporting systems. As a result, other standards such as the Global Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC) are built on the GHG protocol.
Because of its relevance, GHG Protocol reporting receives a lot of attention from multiple stakeholders (customers, investors, etc.). The Protocol is now increasingly adopted worldwide as the standard framework for measuring climate risks and climate performance.
Meaning: it should not be underestimated. It’s the base for every sustainability year report- and it’s tricky to measure.
Watch our full webinar on measuring GHG emissions (no sign-up required)- or read the summary by clicking on the button below.
Sustainability Reporting: What are the GHG Standards?
GHG reporting has become a requirement in sustainability/CSR year reports and now plays a crucial role in company’s strategic climate decisions.
And as the GHG protocol report is a framework, it entails a couple of standards for different organizational levels that can help you measure and achieve your sustainability mission and targets.
The most important standards for sustainability reporting are:
- The Product standard: The Product Standard can be used to understand the full life cycle emissions of a product and focus efforts on the greatest GHG reduction opportunities. This is the first step towards more sustainable products.
- The Corporate standard: The GHG Protocol Corporate Accounting and Reporting Standard provides requirements and guidance for companies and other organizations, such as NGOs, government agencies, and universities, that are preparing a corporate-level GHG emissions inventory.
- The Corporate Value Chain (Scope 3) Standard: The Corporate Value Chain (Scope 3) Standard allows companies to assess their entire value chain emissions impact and identify where to focus reduction activities.
- The Project Protocol: The GHG Protocol for Project Accounting is the most comprehensive, policy-neutral accounting tool for quantifying the greenhouse gas benefits of climate change mitigation projects.
The protocol and the standards mentioned above look at both indirect– as well as direct emissions that occur in companies’ value chains (also called scope 1, 2, and 3 emissions- we’ll discuss that soon).
Science-based targets & KPI’s
When it comes to the GHG standards, organizations often set science based targets and KPI’s. This helps them to make the claim that they operate ‘within the boundaries of the planet’, i.e. the Paris Agreement, whether that is ‘within the boundaries of 1.5. or 2 degrees scenario’.
Companies can formally submit their target to SBTI, which also verifies that such targets have been set in line with the SBTI methodology. The methodology allows for various types of target setting, which should be decided upon depending on the nature of the business
So- lots to do.
What are Scope 1,2 and 3 Emissions and why do I need to measure them?
The GHG emissions are generated from all kinds of organizational activities throughout your supply chain. According to the GHG Protocol, these emissions can be categorized into three scopes: Scope 1,2, and 3. They are defined as follows:
Scope 1: Emissions from scope 1 are direct emissions. This means that they directly come from your company’s owned- or controlled source, such as company vehicle emissions.
Scope 2: Emissions in scope 2 cover the indirect emissions from purchased sources, such as your company’s consumed electricity or cooling. For example; this would entail the emissions from the burning of fossil fuels at a power station that generates your electricity.
Scope 3: Emissions from scope 3 are the trickiest. They include all the other indirect emissions within your entire value chain, this includes the upstream supply chain (suppliers), as well as downstream GHG emissions e.g. occurring with customers. Think of emissions of your business travels, waste disposal transportation, or investments. For many organizations, the scope 3 emissions provide a dominant impact category.
Scope 3 Emissions – The Biggest Impact Reduction Potential
As you can imagine, scope 1 and 2 emissions are more easy to measure than scope 3 emissions.
But, scope 3 emissions often provide a huge improvement potential, e.g. through the introduction of circular solutions. And although this impact is indirect, it is very strongly influenced by a company’s actions.
For example, think about product innovations to reduce waste processing impacts and the end of your supply chain, or the use of renewable materials to reduce upstream production impacts.
Hence, to realize our ambitions in terms of circular economy, measuring and managing these emissions provide a critical success factor.
Some claim that scope 3 emissions are not essential. They claim that the accountability for emissions lies with other actors in the value chain. However, experience with life cycle thinking already has already proven in the past that ownership over value chain (scope 3) emissions will drive true innovation and the emergence of circular innovations.
The increasing awareness among many companies has caused them to take more accountability over their scope 3 emissions. Which provides bigger opportunities for reducing impact.
Measuring scope 3 emissions is actually doable
Often companies are well aware that scope 3 emissions are dominant factors in many sectors, and hence they want to work on it.
Given the fact that measuring and managing GHG emissions is becoming more critical to organizations’ sustainable missions, there is an increased need for solid technology, to help companies with this critical task.
Ecochain’s Environmental Intelligence Platform
Your direct, indirect, and supply chain emissions are key metrics for your sustainability strategy and sustainability reporting.
And in order to pursue your sustainability strategy, you need to understand your environmental hotspots and potential alternatives to reduce emissions. The so-called what-if scenarios (what happens if I replace a resource with a more sustainable resource).
Our Environmental Intelligence Program provides you with all these benefits in one robust and reliable tool.
With our software you are able to:
1. Calculate your entire portfolio’s scope 1, 2, and 3 (upstream and downstream) emissions and compare them (to previous years).
2. Find the biggest hotspots in your emissions and identify the highest potential points for reducing your emissions.
3. Create what-if scenario’s on where you can reduce your carbon emissions and use this intel for reduction targets in your strategy.
Move your company towards carbon neutrality
Read more about the 5 steps you can take regarding GHG emissions to manage your climate strategy. Just click the button below.
Our software helps you ensure that your company is measuring all the GHG Protocol requirements and offers you all the necessary environmental calculations and results in a clear, accessible, and effective way.