One might think it is obvious how companies go about when they measure their climate impact. As a matter of fact, it was not until the turn of the millennium that a framework was developed by the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD).
The standard in question is called the Green House Gas Protocol (GHG Protocol) and is the most widely used standard for measuring and reporting greenhouse gas emissions. This article serves as a crash course in climate accounting and will teach you everything you need to know about the GHG Protocol and scope 1, 2 and 3.
Why climate report with the GHG Protocol?
In order to reduce your climate impact, one must first find out which activities cause greenhouse gas emissions. The GHG Protocol* is the most established international framework for climate reporting and is used by governments, companies and organisations. The standard was developed to facilitate the reporting of greenhouse gas emissions and make the process more consistent and transparent. By using the GHG Protocol, companies can identify which activities in their value chain that generate most emissions and concentrate on reducing the biggest culprits first. The worldwide spread of the GHG Protocol also makes it easier than ever for companies to compare their results.
Greenhouse Gases & Emission Factors 101
Let’s go back a few steps and take it from the beginning. What kind of emissions are we talking about when we talk about climate change? Human emissions of greenhouse gases have increased gradually and today amount to approximately 35 billion tonnes per year.* The most common greenhouse gas is carbon dioxide (CO2), but methane (CH4), nitrous oxide (N2O) and other gases are also included. When put together, they are called carbon dioxide equivalents (CO2e) and is the unit used for climate calculations.
So, what is it that you calculate more exactly?
First, the activities that give rise to greenhouse gas emissions must be identified, e.g., the fuel consumption of company cars. By using so called emission factors, the activities can be converted into carbon dioxide equivalents. An emission factor indicates how much greenhouse gas emissions a certain activity causes per unit. For example, how many kilos of carbon dioxide equivalents are emitted per litre of petrol.
The famous “scopes” 1, 2 & 3
To simplify the GHG reporting, greenhouse gas emissions are divided into three different “scopes”. Scope 1 contains the company’s direct emissions, those which the business has direct control over and can more easily influence. Scopes 2 and 3 contain the company’s indirect emissions, those that occur outside the boundaries of the business and therefore might be more difficult to influence (but not impossible)! For the vast majority of companies, most emissions occur in scope 3. At present it is optional to report scope 3, while scope 1 & 2 are mandatory according to the GHG Protocol.
- Scope 1: direct greenhouse gas emissions from e.g. owned and leased vehicles and machinery, or the combustion of fossil fuels for factory operation or heating.
- Scope 2: indirect greenhouse gas emissions from purchased electricity, heating, cooling and steam.
- Scope 3: other indirect greenhouse gas emissions from sources not controlled by the company. To clarify where in the value chain the emissions occur, scope 3 is divided into “upstream” and “downstream” activities, e.g. what happens before and after the company’s own activities in the value chain. Upstream activities can be production of consumed material, employee commuting, business travel, production of equipment and downstream can be the processing, use and finishing of sold products.
The five commandments of the GHG Protocol
The GHG Protocol has five principles that one should follow and have in mind while calculating and reporting according to the standard. The principles of the GHG Protocol are:
Relevance: the reporting company must in a relevant way reflect the business’s emissions so that it can function as a basis for decisions for users both internally and externally.
Completeness: the reporting company shall cover all emissions within the specified system boundaries. Any expectations must be described and explained.
Consistency: the method of calculations must be consistent so that comparisons can be made over time. Changes in data, system boundaries, methods or the like must be documented.
Transparency: all background data, methods, sources and assumptions must be documented.
Accuracy: the estimated emissions should be as close to the actual emissions as possible.
Does reporting with the GHG Protocol sound complicated and perhaps even a little bit overwhelming? Do not worry! Historically, it has been a time-consuming and sometimes frustrating task for companies to report their emissions. But that belongs in the history books now. With Atmoz, only one small click is required.