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Do you know that greenhouse gas emissions have a dramatic impact on our planet’s climate? These emissions are changing our world as we know it, and the consequences are significant. Discover the ways in which greenhouse gas emissions affect our environment and learn how we can take action to mitigate their effects in this article.

What are greenhouse gas emissions?

Greenhouse gas emissions are gases that trap heat in the Earth’s atmosphere and contribute to climate change. These gases include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), and fluorinated gases such as hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Greenhouse gas emissions are a major concern for the environment and human health, as they contribute to global warming, climate change, and air pollution.

What are Scopes 1, 2 and 3 Emissions?

The different types of greenhouse gas emissions are categorised into three scopes based on the source of emission and level of control a company has over them:

1. Scope 1: Direct emissions from sources that are owned or controlled by the company, such as emissions from burning fossil fuels, on-site transportation, or emissions from chemical production processes.
2. Scope 2: Indirect emissions from the consumption of purchased electricity, heat, or steam that the company uses. This scope is related to the electricity and energy the company uses and is responsible for in their operations.
3. Scope 3: Other indirect emissions that occur in the company’s value chain, such as emissions from suppliers, customers, and other stakeholders. This occurs outside of the company’s operations, but are still associated with the company’s business operations.

Scope 1: Direct GHG emissions	Scope 2: Electricity indirect GHG emissions	Scope 3: Other indirect GHG emissions
Direct GHG emissions occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment.	Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.	Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. Some examples of scope 3 activities are extraction and production of purchased materials; transportation of purchased fuels; and use of sold products and services.

What is CDP Emissions Protocol?

CDP (formerly known as the Carbon Disclosure Project) is a global non-profit organisation that operates a widely recognised environmental reporting system. CDP’s goal is to encourage companies, cities, states, and regions to disclose their environmental impact and management strategies, particularly in the areas of climate change, water security, and deforestation.

The CDP protocol is a set of standardized questions that CDP sends to companies, requesting them to report their environmental data. The questions are organized into different categories, such as emissions reduction targets, governance, and risk management. 

Companies that disclose their environmental data to CDP receive a score based on the completeness and quality of their responses. This score is published in CDP’s annual report and is used by investors, customers, and other stakeholders to assess a company’s environmental performance and risks.

Joining CDP is free, and any company can participate, regardless of its size or industry. To join, companies need to register on the CDP website, select the relevant questionnaire, and provide their environmental data. CDP offers guidance and support to companies throughout the reporting process, including training, webinars, and resources.

Participating in CDP can bring numerous benefits to companies, including improved transparency, reduced risks, enhanced reputation, and access to new opportunities. By disclosing their environmental data, companies can identify areas where they can improve their sustainability performance, communicate their achievements to stakeholders, and meet increasing regulatory and investor demands for environmental reporting.

By joining CDP, companies can contribute to building a sustainable future while benefiting from improved transparency, risk management, and reputation.

What is Greenhouse Gas Protocol (GHG Protocol)?

The Greenhouse Gas Protocol (GHG Protocol) is a widely recognised and widely used accounting framework for quantifying and managing greenhouse gas emissions (GHG) produced by individuals, organisations and governments. The GHG Protocol was developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) in 1998.

The GHG Protocol provides a standardised method for measuring and reporting GHG emissions, which enables organizations to identify emission sources, set reduction targets, and track progress over time. The protocol provides guidance on how to account for GHG emissions from various sources, such as energy use, transportation, and waste disposal, among others.

It is a widely recognised standard for GHG accounting, and many organisations, governments, and other entities use the protocol to measure and manage their GHG emissions. The GHG Protocol has also been integrated into various other sustainability reporting frameworks and initiatives, such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP). Governments, cities, companies, and organisations utilise its guidelines to convert their actions into measurable CO2 reduction initiatives.

What is the Paris Agreement?

The Paris Agreement and the GHG Protocol are both related to addressing climate change by reducing greenhouse gas emissions. The Paris Agreement is a legally binding international treaty that was adopted by the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. Its goal is to limit global temperature rise to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.

The Paris Agreement and the GHG Protocol are interconnected because the Paris Agreement provides the overarching framework for global climate action. In contrast, the GHG Protocol provides a tool for measuring and tracking progress towards the goals set by the agreement. The Paris Agreement calls on countries to submit their own nationally determined contributions (NDCs) that outline their specific plans for reducing emissions, while the GHG Protocol provides a standardised approach for measuring and reporting emissions data that can be used by countries to develop and implement their NDCs. In this way, the GHG Protocol supports the implementation of the Paris Agreement by providing a consistent methodology for measuring and reporting emissions data across different countries and sectors.

What is the science-based emission target (SBT)?

A science-based emission target is a greenhouse gas (GHG) reduction target that is developed using scientific methods and data to ensure that it is consistent with the goals of the Paris Agreement.

A science-based emissions target is based on the best available scientific knowledge about the relationship between GHG emissions and their impact on the climate. The target is developed using an approach called “carbon budgeting,” which involves estimating the total amount of GHG emissions that can be released into the atmosphere while still keeping global warming below a certain level. This carbon budget is then divided among different sectors and countries, based on their contribution to global emissions, and used to set reduction targets that are consistent with the overall goal of limiting global warming.

To ensure that a target is science-based, it must meet certain criteria established by the Science Based Targets initiative (SBTi), a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). The SBTi provides a framework and guidelines for companies and organisations to develop science-based targets and validate them against the latest climate science.

Science-based targets are important because they provide a clear and measurable pathway for companies and organisations to reduce their GHG emissions in line with the Paris Agreement. By setting science-based targets, companies and organisations can demonstrate their commitment to addressing climate change and their willingness to take action to reduce their carbon footprint.

To adopt science-based emissions targets, companies can follow a four-step process:

1. Determine the company’s current emissions profile: Companies should first assess their current emissions profile, including their direct and indirect emissions, and identify the main sources of emissions.
2. Set science-based emissions targets: Companies can use the Science Based Targets initiative’s (SBTi) methodology and tools to set science-based emissions targets that are aligned with the latest climate science and the goals of the Paris Agreement. The SBTi provides guidance on setting targets for different sectors and types of companies.
3. Develop a plan to achieve the targets: Companies should develop a detailed plan outlining the steps they will take to achieve their science-based emissions targets. This plan should include measures to reduce emissions from the company’s operations, supply chain, and products or services.
4. Report on progress: Companies should regularly report on their progress towards their science-based emissions targets and disclose their emissions data in a transparent and consistent manner. This reporting can help to build trust with stakeholders, demonstrate accountability, and encourage continuous improvement.

Why should corporates report and account for greenhouse gas emissions?

Corporates should account for greenhouse gas emissions for several reasons:

1. Environmental responsibility: Greenhouse gas emissions are a significant contributor to climate change, which has numerous environmental impacts, such as rising sea levels, more frequent natural disasters, and biodiversity loss. By measuring and reporting their emissions, companies can identify areas where they can improve their environmental performance and reduce their impact.
2. Reputation: Companies that take responsibility for their greenhouse gas emissions and take steps to reduce them are often viewed more favourably by consumers, investors, and other stakeholders.
3. Compliance: Many countries and regions have regulations and policies in place to reduce greenhouse gas emissions, and companies that do not comply may face penalties or other consequences.
4. Financial benefits: Reducing greenhouse gas emissions can lead to cost savings through increased energy efficiency, reduced waste, and lower operating costs.
5. Risk management: Climate change and the impacts of greenhouse gas emissions pose a significant risk to many businesses. Accounting for greenhouse gas emissions can help identify potential risks and opportunities for mitigation.

Accounting for and reporting greenhouse gas emissions can help companies manage their risks. Climate change and the impacts of greenhouse gas emissions pose significant risks to many businesses. By identifying potential risks and opportunities for mitigation, companies can better manage their risks and improve their long-term sustainability.

How to reduce Scope 1, 2 and 3 emissions?

Reducing greenhouse gas emissions is crucial for companies to address the impacts of climate change. One way for companies to do this is by measuring and reducing their Scope 1, Scope 2, and Scope 3 emissions. Here is a step-by-step tutorial on how companies can do this.

Step 1: Understand the different scopes of emissions 

Before a company can measure and reduce its greenhouse gas emissions, it needs to understand the three scopes of emissions:

• Scope 1 emissions: Direct emissions from sources that the company owns or controls, such as fuel combustion, process emissions, and fugitive emissions.
• Scope 2 emissions: Indirect emissions from the consumption of purchased electricity, heat, and steam.
• Scope 3 emissions: Indirect emissions from sources that are not owned or controlled by the company but are related to its activities, such as purchased goods and services, business travel, and waste disposal.

Step 2: Establish a baseline

To measure emissions, companies need to establish a baseline that represents their current level of emissions. This can be done by gathering data on energy use, fuel consumption, and other relevant activities. Companies should ensure that they have accurate and complete data, including information on the source of the emissions.

Companies can use emission factors, which are standardized values for the amount of greenhouse gases produced per unit of activity, to convert activity data, such as fuel consumption or production volumes, into emissions.

For example, to calculate emissions from fuel combustion, a company can multiply the amount of fuel consumed by the appropriate emission factor for that fuel. The emission factor may vary depending on the fuel type, such as diesel or natural gas, and the country or region where the fuel is used.

Step 3: Set GHG reduction targets

Once the baseline is established, companies can set reduction targets for each scope of emissions. These targets should be ambitious, yet realistic and achievable, and aligned with the company’s overall sustainability goals.

We can help companies set emissions reduction targets and develop strategies to achieve them by applying the best market practices and available instruments for achieving the goals.

We have a good understanding of the latest market practices and available instruments, such as carbon credits, renewable energy certificates, and power purchase agreements (PPAs), to help companies identify the most effective and cost-efficient ways to reduce their emissions.

You can learn more about available services here, as well as our latest renewable products range here.

Step 4: Implement emission reduction strategies

Companies can implement various strategies to reduce their greenhouse gas emissions, such as:

• Improving energy efficiency
• Switch to renewable energy sources via Power Purchase Agreements (PPAs) or Renewable Energy Certificates (RECs)
• Implementing a waste reduction program
• Encouraging sustainable business travel, such as promoting video conferencing and using public transport
• Encouraging suppliers to reduce their emissions

Step 5: Monitor and report progress

To ensure that emission reduction strategies are effective, companies should monitor their progress regularly. This can be done by collecting data on energy use, fuel consumption, and other relevant activities and comparing them with the baseline. Companies should also report their progress to stakeholders, such as investors, employees, and customers, to demonstrate their commitment to sustainability and transparency.

In the previous article, we discussed about electricity spend and consumption reporting via a supplier invoice breakdown template. You can download a free copy here.

In conclusion, companies can measure and reduce their Scope 1, Scope 2, and Scope 3 emissions by understanding the different scopes of emissions, establishing a baseline, setting reduction targets, implementing emission reduction strategies, and monitoring and reporting progress. By taking action on emissions reduction, companies can contribute to building a more sustainable future while also improving their business performance and reputation.

What is the difference between country-based and supplier-based emission factors?

Country-based emission factors are calculated based on the average carbon intensity of the electricity grid in a particular country or region. This means that the emission factor may not reflect the actual carbon intensity of the electricity used by a particular company. However, country-based emission factors can be used when supplier-based emission factors are not available.

Supplier-based emission factors are specific to the electricity supplier and reflect the actual carbon intensity of the electricity supplied to the company. Supplier-based emission factors can provide a more accurate representation of the company’s emissions, but may require collaboration with the supplier to obtain the necessary data.

Companies can use country-based or supplier-based emission factors, depending on the availability and accuracy of the data. CDP recognises that both country-based and supplier-based emission factors have their advantages and limitations and encourages companies to use the approach that provides the most accurate and reliable data.

Country-based emission factors are often used when supplier-based data is not available or if a company sources electricity from multiple suppliers. This approach is easier to use and requires less collaboration with suppliers, but may not reflect the actual carbon intensity of the electricity used by a particular company.

Supplier-based emission factors, on the other hand, provide a more accurate representation of a company’s emissions, but require collaboration with suppliers to obtain the necessary data. This approach can be more complex and time-consuming. However, it can provide a more accurate understanding of a company’s impact.

Corporate Scope 2 Emission Standard

The Corporate Scope 2 Emission Standard is a framework developed by the Greenhouse Gas Protocol to help companies measure and manage their greenhouse gas (GHG) emissions associated with the consumption of purchased electricity, heat, steam or cooling. Scope 2 emissions are indirect emissions that occur from the generation of the energy that a company consumes and are typically the second-largest source of emissions for many companies, after Scope 1 emissions from their own operations. You can learn more about the Scope 2 standard here.

The Scope 2 Emission Standard provides two methods for calculating Scope 2 emissions:

1. The market-based method: This method allows companies to purchase renewable energy certificates (RECs) or similar instruments to offset their emissions from purchased electricity. This method provides a way for companies to support the development of renewable energy sources and encourage the transition to a low-carbon economy.
2. The location-based method: This method is based on the average emissions intensity of the electricity grid where a company is located. This method provides a way for companies to measure their emissions more accurately and take into account the emissions associated with the specific electricity grid that serves their operations.

To reduce their Scope 2 emissions, companies can take action to increase their use of renewable energy sources, improve their energy efficiency, and collaborate with stakeholders to promote the development of clean energy sources.

Corporate Value Chain (Scope 3) Emission Standard

The Corporate Value Chain (Scope 3) Standard is a framework developed by the Greenhouse Gas Protocol to help companies measure and manage their indirect greenhouse gas (GHG) emissions, which are associated with the full lifecycle of their products or services, including emissions from their suppliers, customers, and other stakeholders. Scope 3 emissions are typically the largest source of emissions for many companies, accounting for up to 80% or more of their total emissions.

It is important for companies to address their Scope 3 emissions because these emissions are a significant contributor to climate change and can have a major impact on a company’s reputation, brand value, and financial performance.

There are several instruments that companies can deploy to reduce their Scope 3 emissions, including:

1. Supply chain proactive engagement: Companies can work with their suppliers to encourage them to adopt more sustainable practices, such as using renewable energy, reducing waste, and improving their energy efficiency. This can help to reduce the emissions associated with the production and transportation of raw materials.
2. Sustainable Product Design: Companies can develop more sustainable products and services that are designed to minimize the environmental impact of their lifecycle, from production to disposal. This can include using more sustainable materials, reducing the energy and water required for production, and designing products that are easier to recycle or dispose of.
3. Transport and logistics optimization: Companies can optimize their transportation and logistics operations to reduce emissions associated with the distribution of their products or services. This can include using more efficient modes of transportation, optimizing routes, and reducing the amount of packaging required.
4. Renewable energy procurement: Companies can procure renewable energy to power their operations and reduce their emissions associated with electricity consumption. This can include investing in onsite renewable energy systems, signing power purchase agreements (PPAs) directly with renewable asset owners and purchasing renewable energy certificates (RECs) to provide extra revenue streams for renewable energy developers so they can maintain existing and invest in new renewable assets.

How can a company claim to use only renewable energy?

A company can claim to use only renewable energy by ensuring that all the electricity it consumes comes from renewable sources. The most popular market practices for companies to achieve this goal include:

1. Power Purchase Agreements (PPAs): A PPA is a contract between a company and a renewable energy provider, such as a wind or solar farm. The company agrees to purchase a certain amount of renewable energy at a fixed price over a specified period. PPAs are popular because they provide long-term price certainty and support the development of new renewable energy projects.
2. On-site renewable energy generation: Companies can install their own renewable energy systems, such as solar panels or wind turbines, on their premises to generate electricity for their own use. This approach is especially popular for companies with large roof spaces or land available for renewable energy installations.
3. Renewable Energy Certificates (RECs): A REC is a certificate that represents the environmental attributes of one megawatt-hour (MWh) of renewable energy generation. Companies can purchase RECs to offset their non-renewable energy consumption and claim to be using 100% renewable energy. RECs are popular because they are a cost-effective way for companies to support the development of new renewable energy projects.
4. Green tariffs: Some utilities offer green tariffs, which allow companies to purchase renewable energy from their utility provider. This approach is popular because it provides a simple and convenient way for companies to access renewable energy.
5. Carbon offsetting: Companies can purchase carbon offsets to compensate for their greenhouse gas emissions from non-renewable energy consumption. Carbon offsets represent the reduction or removal of greenhouse gas emissions from a project or activity, such as a renewable energy project or a forest conservation project.

These practices allow companies to reduce their carbon footprint, support the development of new renewable energy projects, and demonstrate their commitment to sustainability. For more information about PPAs and RECs continue to read our blog and subscribe to the growing community.

Conclusions

Corporations should take responsibility for their emissions by accounting for them and taking steps to reduce them. Understanding the different scopes of emissions and the sources of greenhouse gases can help companies develop effective strategies for mitigating their impact and improving their sustainability performance. From understanding the different scopes of emissions to the importance of corporate accounting and reporting, we must work together to address this challenge.

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And if you have any questions or need support in accounting and reporting for greenhouse gas emissions, please don’t hesitate to reach out. You can contact us via the contact form on this site, and we’ll be happy to assist you in any way we can. Together, we can take action and make a positive impact on our planet’s climate.

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