Introduction
GHG emissions disclosure is a critical tool for climate change mitigation and accountability. It is a key step toward achieving emissions reduction goals. To avoid the worst impacts of climate change, global greenhouse gas emissions must be reduced by nearly half by 2030 and ultimately reach net zero.
A climate change strategy is a comprehensive plan developed by a company to actively reduce its greenhouse gas emissions and mitigate the impacts of climate change on its operations, supply chain, and overall business. An effective climate change strategy requires a detailed understanding of a company’s GHG impact. A corporate GHG inventory is the tool to provide this understanding. It allows companies to take into account their emissions-related risks and opportunities and focus company efforts on their greatest GHG impacts.
Measuring the GHG footprint has various benefits to a company. To begin with, it allows the company to become a carbon neutral organisation. Secondly, it allows a company to monitor their climate strategy and make adjustments to continue improving their climate performance. Thirdly, the company can identify GHG emission hotspots and increase the potential for emissions reductions. Emissions reduction is cost saving since the less fuel burnt, the more money saved. Lastly, it helps a company become a sustainable business brand, improving its reputation among stakeholders.
A company’s emissions are divided into direct and indirect emissions.
Direct emissions are emissions from sources that are owned or controlled by the reporting company.
Indirect emissions are emissions that are a consequence of the activities of the reporting company, but occur at sources owned or controlled by another company.
The Greenhouse Gas Protocol categorises emissions into three scopes:
Scope 1 : These are emissions that result from sources directly owned or operated by a company. They include emissions from fuel used by company vehicles, boilers, and other assets, emissions from on-site production processes, emissions from leaks in air conditioners, refrigerators, and other equipment and emissions from burning fossil fuels for power grids, such as coal, natural gas, or oil.
Scope 2 : These are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. By using the energy, an organisation is indirectly responsible for the release of these GHG emissions.
Scope 3 : These are indirect GHG emissions that occur outside of an organization’s direct control but are still a result of its activities. They are also known as value chain emissions.
The scopes are defined to ensure that two or more companies do not account for the same emissions. For example, the scope 1 emissions of a power generator are the scope 2 emissions of an electric appliance user, which are in turn the scope 3 emissions of both the appliance manufacturer and retailer. Each of these four companies has different and often mutually exclusive opportunities to reduce carbon.
The power generator can generate power using lower-carbon sources.
The electrical appliance user can use the appliance more efficiently.
The appliance manufacturer can increase the efficiency of the appliance it produces.
The product retailer can offer more energy-efficient product choices.
GHG accounting of direct and indirect emissions by multiple companies in a value chain facilitates the simultaneous entities to reduce emissions throughout the society.
Developing a full corporate GHG emissions inventory enables companies to understand their full emissions impact across the value chain and focus efforts where they can have the greatest impact.
Next: Scope 3 Emissions