Navigating the path towards a sustainable future requires a comprehensive understanding of our carbon footprint and the tools to effectively mitigate it.
The Greenhouse Gas Protocol (GHG Protocol) serves as a robust framework that provides internationally accepted standards to measure, manage, and reduce greenhouse gas emissions.
This Academy post aims to delve into the details of the GHG Protocol, its foundational principles, the significant revisions it underwent, and how it contrasts with ISO 14001 and ISO 14064.
Join us as we unpack these essential topics to empower you on your decarbonization journey.
The GHG Protocol is a comprehensive, global framework for understanding, measuring, and managing greenhouse gas emissions.
It was established by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) to set a consistent standard for businesses and organizations to quantify and report their greenhouse gas emissions.
The GHG Protocol covers the complete spectrum of greenhouse gases and sets out guidelines for calculating direct and indirect emissions. It categorizes emissions into three 'scopes':
The GHG Protocol is widely recognized and used by governments, businesses, and NGOs around the world as a tool to track their environmental impact, create effective strategies for reduction, and communicate their progress towards sustainability goals.
The GHG Protocol is underpinned by five key principles. These principles guide organizations in achieving accurate, consistent, and transparent emissions reporting. Those five principles are the following:
Let’s take a closer look at each of these five principles underpinning the GHG Protocol:
Tailor the greenhouse gas inventory to reflect the true emission sources and meet the needs of users – both internal and external. This principle emphasizes the need for businesses to identify and assess all relevant GHG emissions related to their activities.
Document and account for all emission sources and activities within the chosen inventory boundary. By capturing all sources of emissions, companies ensure they're not missing any opportunities for reduction.
Use consistent methodologies to allow for meaningful comparisons of emissions over time. Regularly updated data, analyzed with uniform methods, leads to reliable tracking of progress towards emission reduction goals.
Disclose sufficient and clear information to enable users to make decisions with reasonable confidence. Transparency in reporting is fundamental to building trust with stakeholders and the public.
Strive to reduce uncertainties in reported figures. While recognizing the practical constraints of data collection, consistent efforts should be made to improve the precision of the greenhouse gas inventory.
Incorporating these principles into your carbon management strategy can improve the quality of your calculations, drive progress towards sustainability goals, and contribute to your long term decarbonization efforts.
Understanding the distinctions between ISO 14064, ISO 14001, and the GHG Protocol is important to understand the needs of your organization and determine the best starting point for building a long-term sustainability strategy.
This is an international standard developed by the International Organization for Standardization (ISO) that deals specifically with the quantification, reporting, and verification of greenhouse gas emissions.
It provides a set of tools for programs to measure, quantify, and reduce GHG emissions and supports organizations in participating in carbon trading schemes.
ISO14064 is the least popular standard, mostly due to it being a more technical standard specifically focused on the quantification and reporting of greenhouse gas emissions.
While it's a valuable tool, its adoption is limited due to its more technical nature and specific focus.
ISO 14001 is a globally recognized standard for environmental management systems (EMS). It provides a framework that an organization can follow, rather than establishing environmental performance requirements.
The goal of ISO 14001 is to help organizations develop a management system that aligns business strategies with environmental responsibilities, thereby reducing their environmental impact.
The standard is mostly applied by large enterprises that have developed custom, in-house tooling for internal strategy building and reporting purposes.
ISO 14001 does not act as a basis for further regulatory requirements, although it is a widely accepted standard to validate the legitimacy of a company’s measurement initiatives.
Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG Protocol is a comprehensive, global, standardized framework for measuring and managing greenhouse gas emissions.
This framework facilitates business-oriented strategies for emissions management, providing guidelines for corporate-level measurement and reporting.
While ISO 14064 and the GHG Protocol both focus on greenhouse gas emissions, ISO 14064 is more focused on the technical aspects of emissions quantification, reporting, and verification, while the GHG Protocol provides broader guidance on managing emissions at the corporate level.
Although generally considered to provide lower accuracy on measuring emissions, ISO 14001 is still a comprehensive framework that addresses various broader aspects of environmental management, including resource use and environmental planning.
All three frameworks are essential resources for organizations committed to environmental responsibility, sustainability, and decarbonization. Each serves a different purpose and can be used in conjunction with the others to create a comprehensive environmental management and reporting system.
The GHG Protocol is the most widely used tool for carbon accounting on a global scale. The framework derives its popularity from the comprehensive and flexible guidelines for quantifying and managing greenhouse gas emissions.
Its user-friendly approach, clear instructions, and adaptability make the GHG Protocol a trusted choice for standardization across emissions monitoring initiatives.
Moreover, it is anticipated that the methodologies and frameworks of the GHG Protocol will play a pivotal role in assisting companies to adhere to forthcoming regulations.
With the EU CSRD highlighting the importance of transparency and consistency in sustainability reporting, and the GHG Protocol emphasizing Scope 3 emissions - also known as value chain emissions - this aligns perfectly with the EU's escalating focus on comprehensive sustainability management.
Each of the three standards serves different purposes and can be used together to create a comprehensive environmental management and reporting system.
The choice of which to use can depend on a variety of factors, including the specific needs and capacities of the organization, as well as the regulatory environment in which it operates.
A greenhouse gas is any gaseous compound in the atmosphere that is capable of absorbing infrared radiation, thereby trapping and holding heat in the atmosphere.
This process, known as the greenhouse effect, is essential for life on earth as it helps maintain the planet's overall temperature.
The 6 main greenhouse gasses are the following:
However, human activities, notably the burning of fossil fuels and deforestation, have led to a dramatic increase in the concentration of these gases, contributing to global warming and climate change.
To facilitate comparison and management of these different gases, they are often presented as carbon dioxide equivalents (CO2e), a standard unit that reflects each gas's global warming potential relative to CO2, the most common greenhouse gas.
The Global Warming Potential (GWP) is a measure of how much heat a greenhouse gas traps in the atmosphere up to a specific time horizon, relative to carbon dioxide.
It's used to compare the ability of each greenhouse gas to trap heat in the atmosphere relative to another gas.
The Intergovernmental Panel on Climate Change's Fourth Assessment Report (AR4) has listed he GWPs of these gases over a 100-year period:
By definition, the GWP of CO2 is 1, as it serves as the reference point for other gases. Carbon dioxide is the primary greenhouse gas emitted through human activities, primarily as a result of fossil fuel combustion for energy and transportation.
It's also produced and released during certain chemical reactions, such as the manufacture of cement. CO2 is the reference gas against which other greenhouse gases are measured, making it a key player in global warming and climate change.
Methane has a GWP of 25, meaning it's 25 times more effective at trapping heat in the atmosphere over a 100-year period than carbon dioxide.
According to the US Environmental Protection Agency (EPA) and the IPCC, human-driven methane (CH4) emissions primarily stem from agriculture, accounting for 40% of these emissions, split roughly evenly between livestock (especially cows) and rice cultivation.
The production and distribution of coal, oil, and natural gas contribute about 30%, while landfills and waste treatment contribute about 20% of human-caused methane emissions. The remaining 10% comes from biomass burning.
Nitrous oxide has a GWP of 298, making it nearly 300 times more potent than carbon dioxide over a 100-year period.
Nitrous oxide is released from agricultural and industrial activities, during combustion of fossil fuels and solid waste, and during certain chemical reactions such as in agricultural soils, specifically during the microbial processes of nitrification and denitrification as a result of soil fertilization.
The GWP of F-gases and SF6 can vary significantly depending on the specific gas. Hydrofluorocarbons (HFCs) can have a GWP ranging from less than 1 to over 14,800, while perfluorocarbons (PFCs) can have a GWP as high as 7,390.
Sulphur hexafluoride is one of the most potent greenhouse gases, with a GWP of 22,800. HFCs and PFCs are most commonly found in refrigeration and air conditioning equipment, while SF6 is used in power grids to insulate the live electrical parts.
Emissions are classified into three distinct 'Scopes' - Scope 1, Scope 2, and Scope 3 - to help companies understand and categorize their carbon footprint.
Scope 1 emissions are direct emissions that come from sources owned or controlled by the company. They're typically from activities like onsite fuel combustion, company vehicles, and fugitive emissions - those that leak from equipment due to system failures or disruptions.
Scope 2 emissions are indirect emissions resulting from the generation of electricity, steam, heating, or cooling that the company purchases. This includes the emissions from the burning of fossil fuels like coal, oil, and gas at the power plant that provides the company's electricity.
Scope 3 emissions (or value chain emissions) are also indirect emissions, but they occur outside the company's own operations. They arise from sources not owned or directly controlled by the company but are associated with its activities.
This encompasses a wide range of sources, like business travel, employee commuting, cloud services, waste disposal, and most significantly, the emissions from the lifecycle of the products or services the company sells, from raw material extraction to end-of-life disposal or recycling.
To effectively manage and reduce greenhouse gas emissions, companies must go beyond just considering the three to five most common sources within Scope 3, such as business travel or employee commuting.
A robust, future-proof decarbonization strategy requires a comprehensive understanding and measurement of the full spectrum of Scope 3 emissions. Overlooking less obvious sources can lead to significant gaps in emissions profiles and undermine decarbonization efforts.
When it comes to different approaches to measuring GHG emissions, there are several routes you could take. Let’s take a look at some options you could choose from, and discuss which one would be best for your business.
Carbon accounting can be done in one of either ways: activity-based or spend-based. Here's a quick rundown of the difference between the two.
Activity-based carbon accounting is a direct method of measuring GHG emissions based on specific activities within a business.
This might include measuring the amount of electricity consumed, the amount of fuel used for transportation, or the emissions from a manufacturing process.
The emissions are calculated by multiplying the activity data (e.g., kWh of electricity, liters of fuel) by emission factors that are specific to the source and type of the greenhouse gas emissions.
This method provides a very accurate measure of direct emissions, but it requires detailed data and can be time-consuming and complex, particularly for smaller companies with limited capacity.
Spend-based carbon accounting, on the other hand, estimates a company's greenhouse gas emissions based on its financial expenditure.
This method applies average emission factors to the amount of money spent in various categories of goods and services, such as services, travel, or raw materials.
These categories are typically based on standard industry classifications.
Spend-based accounting is a simpler and quicker method, as it requires less detailed data and fewer calculations. However, it is less precise than activity-based accounting, as it relies on average emission factors rather than specific measurements.
If your business is a small- or medium-sized enterprise, it’s probably best to opt for a hybrid approach, mixing activity- and spend-based carbon accounting. This allows for better accuracy, precision and cost savings, amongst some other benefits.
By adopting a hybrid approach, SMEs can achieve a balance between accuracy and simplicity.
They can focus on collecting detailed activity data and calculating emissions for activities with significant impact, while using spend-based accounting for less significant or harder-to-measure activities.
This way, they can obtain more accurate and precise emissions data for important emission sources while still gaining a broader understanding of their carbon footprint through spend-based estimates.
SMEs often have limited resources, making it challenging to allocate significant time and effort to detailed activity-based accounting.
By adopting a hybrid approach, SMEs can prioritize their resources and efforts, dedicating them to activities with higher emissions and potential for emissions reductions.
This way, they can efficiently manage their carbon accounting process without overwhelming their capacity.
Activity-based accounting requires detailed data collection on various activities, which can be time-consuming and resource-intensive for SMEs.
However, spend-based accounting relies on readily available financial data, which is often easier and quicker to collect.
By utilizing spend-based accounting for certain categories or processes, SMEs can streamline their data collection process and reduce the burden of data gathering.
Implementing a carbon accounting platform such as Coolset can help streamline data collection.
A hybrid approach also commonly provides cost savings for SMEs. Detailed activity-based accounting may require specialized expertise or external consultants, which can be costly.
By leveraging spend-based accounting for certain aspects and implementing the right tooling, SMEs can reduce the need for external assistance and manage their carbon accounting in-house more effectively.
As SMEs grow and evolve, their carbon accounting needs may change. A hybrid approach offers flexibility and scalability to accommodate these changes.
SMEs can start with a simpler spend-based accounting framework and gradually incorporate more detailed activity-based accounting as their capacity and resources allow.
This adaptability allows SMEs to align their carbon accounting with their growth trajectory and evolving sustainability goals.
Two critical components of the Greenhouse Gas Protocol framework are the concepts of 'organizational boundaries' and 'operational boundaries'.
While organizational boundaries help determine 'which' entities are responsible for emissions, operational boundaries determine 'what kind' of emissions are accounted for.
Companies using a decarbonization platform like Coolset can leverage these principles to ensure they are capturing the full scope of their environmental impact, facilitating more effective mitigation strategies.
In more detail:
Organizational boundaries determine which operations, subsidiaries, or investments a company is responsible for in terms of GHG emissions. They define which emissions from which entities should be included in a company's GHG inventory.
The GHG Protocol offers two approaches to setting these boundaries:
In the equity share approach, a company accounts for GHG emissions from operations based on its share of equity in that operation.
On the other hand, the control approach requires a company to account for 100% of the GHG emissions from operations over which it has control, whether that control is financial or operational.
This could mean that a low percentage of ownership doesn’t equate to a low percentage of responsibility, and vice versa.
Operational boundaries, on the other hand, relate to the types or sources of GHG emissions that a company includes in its inventory. These boundaries encompass emissions from sources that a company owns or controls and can further be categorized into three scopes:
Operational boundaries have historically been a point of discussion, as different organizations take a different approach to the required accuracy and coverage of their measurements.
At Coolset, we believe the key to a successful decarbonization strategy lies not only in identifying and reducing emissions, but also in ensuring that all emissions are accounted for.
The definition of boundaries (organizational, operational, etc.) is essential to proper greenhouse gas reporting. Here are 4 simple steps to defining these boundaries.
First, decide which entities and operations within your organization will be included in the GHG inventory. This involves choosing between the 'control' or 'equity share' approach based on the GHG Protocol.
The control approach requires accounting for emissions from operations over which your company has control, while the equity share approach requires accounting for emissions proportional to your share of equity in an operation.
Although this may vary across companies and industries, we commonly recommend focussing on operational control, as this provides leverage for future emissions reductions.
Identify the types of emissions you'll include in your inventory. Operational boundaries encompass all direct and indirect emissions your organization is responsible for, categorized into three scopes:
Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions in your value chain).
While reporting Scope 1 and 2 emissions is typically required for compliance, the importance of Scope 3 emissions across the value chain is steadily growing.
These days, clients, partners and investors are making decisions based not only on financial performance, but also on climate performance.
Measuring and reducing Scope 3 emissions can lead to reduced costs, increased operational efficiency, and improved competitiveness for businesses.
Based on the defined organizational and operational boundaries, list out all possible sources of emissions. This includes everything from company vehicles and production equipment to purchased electricity and business travel.
Not all emissions sources are created equal. Some will be more significant contributors to your company's total emissions than others.
Prioritize these key sources to ensure your GHG reporting and reduction efforts focus on areas with the biggest potential impact.
Accurately mapping and prioritizing emission sources can also be streamlined by using an automated decarbonization platform, such as Coolset.
Finally, remember that defining boundaries isn't a one-time task. As your organization grows or changes, so too will your emissions profile. Regularly review and update your boundaries to ensure your GHG reporting remains accurate and relevant.
Coolset's user-friendly platform supports companies in measuring, managing, and reducing their carbon footprint.
With tools like automatic data ingestion, actionable reduction recommendations and integrated reporting, our customers streamline data collection and focus their efforts on reducing and reporting their impact in weeks instead of months.
In the meantime, why don’t you read up on how HelloPrint implemented Coolset to track and report on their decarbonization initiatives.
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