Discussion around the effort to combat climate change and decarbonization has intensified in recent years. This is something we have all been waiting for and it is now time for companies to look closely at their own direct and indirect emissions. Central to this is the need to efficiently measure and track greenhouse gas (GHG) emissions. Businesses must now take a hard look at their carbon footprints to design and deliver effective climate solutions to ultimately achieve sustainability goals.
Helpfully, there is a standardized approach to GHG reporting, as defined by the GHG Protocol Corporate Standard, classifying these into three distinct ‘scopes’, covering both direct and indirect actions. But do we, as consumers and businesses, understand what these scopes are and what activities they encompass?
Three scopes of emissions
The three specific scopes defined by the GHG Protocol relate to who ‘owns’ those emissions. They are:
- Scope 1 – These capture GHG emissions which come directly from operations that are owned or controlled by a company. Examples include onsite energy use, such as heating or refrigerants as well as fuel consumed by owned and leased vehicles.
- Scope 2 – These include all the indirect GHG emissions from the generation of purchased or acquired heating and energy sources consumed by a company. Examples include electricity, steam, heating, or cooling.
- Scope 3 – These involve indirect emissions (not included in Scope 2) that occur in the value chain of a company, including both upstream and downstream emissions. This might be in goods and services purchased, upstream and downstream transportation and distribution as well as employee and business travel, leased assets and waste generated during operations. Typically, we find for the average business, over 90% of their CO2 emissions lie in the Scope 3.
What are the benefits of emissions reporting?
Reporting on Scope 1 and 2 emissions will be crucial for many businesses and many need to prepare to report emissions across the entire value chain (Scope 3).
The Science Based Targets Initiatives’ (SBTi) new Corporate Net-Zero Standard provides guidance for companies to effectively set meaningful science-based targets to do exactly that during their net-zero and decarbonization journeys, using effective and robust reporting. Developed through extensive stakeholder consultation, the standard provides a mechanism for target-setting across a range of sectors, allowing companies to exhibit their carbon-reduction efforts and respond to demands for climate action.
The framework is comprised of four key elements: first, setting short-term targets; second, setting long-term targets; third, addressing value chain emissions and fourth; achieving net-zero emissions.
Companies who put effective processes in place through emissions reporting, underpinned by frameworks such as the standard set out by the SBTi, will reap rewards in both the short and longer-term. They can see improved transparency, customer trust, brand, and reputation, to facilitating positive engagement with both employees and consumers.
Moreover, through reporting, businesses can identify key value chain players and the associated hotspots and weaknesses they bring, allowing for a better understanding of their exposure so they can better resource, energy, and climate-related risks.
Looking to find out more about decarbonization? Take a look at our blog outlining decarbonization-as-a-service, and if you’d like to understand the important role it will play in the success of COP26, read more here.