How can your company ensure that the climate change promises it makes are sustainable and credible?
How do you prove that the actions companies are taking have robust data and are reported consistently?
Why understanding of GHG impacts are crucial to a collective climate journey?
Let us break down the Greenhouse Gas Protocol and see how important it is for companies, what are the GHG scopes and what are the various GHG Protocol standards.
The Paris Agreement commits countries to reduce greenhouse gas emissions to keep the global temperatures rise below 1.5˚C in order to avoid the climate change impacts. The GHG Protocol arose out of the necessity to help countries and companies account for, report and mitigate emissions based on an action agenda with the need for standardized measurement of GHG emissions to address climate change.
The Greenhouse Gas protocol (GHGP) is a comprehensive global, standardized framework for measuring and managing emissions that provides accounting and reporting standards, sector guidance and calculation tools for businesses and governments.
What is the GHG Protocol?
GHG Protocol was established in 1998 formed through a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). It helps companies to reduce their greenhouse gas emissions by setting standards to help them manage their emissions. The GHG Protocol is the global standard for public and private sector entities to measure GHG emissions and its standards apply to operations, value chains and the climate change mitigation actions.
Globally these standards are used for carbon accounting in CDP and other ESG frameworks.
92% of Fortune 500 companies responded to the CDP questionnaire with GHG emissions measurements that applied GHG Protocol standards in 2016.
GHG Protocol helps us track and monitor GHG emissions for individual entities and supports GHG emission reduction by helping companies identify ways to reduce impact of climate change. The GHG Protocol has established Scope 1, 2 and 3 emission categories for GHG emission measurement. In addition to these scopes, it has standards for a wide variety of use cases. The GHG Protocol has developed tools and training for carbon emissions calculation.
How does the GHG Protocol work?
GHG Protocol works closely with governments, industry associations, businesses, NGOs and other organizations to develop comprehensive global standardized frameworks to help them measure, manage, report and reduce their carbon emissions. GHG emissions cause climate change and specific activities cause them.
Companies need guidelines for data collection, measurement and reporting to account for reduction of emissions in a consistent manner and the GHG protocol standards helps to achieve this. The standards are updated, and new ones are added for specific use cases. GHG emissions can be targeted in their organizations and value chains which helps organizations to gain a better clarity on their actions to address climate change.
GHG Protocol promotes a data driven approach to make the complex problems of climate change more manageable.
GHG Protocol standards identify the hot spots in value chains and identify activities that generate more emissions.
Who uses the GHG Protocol and why is it important?
The GHG protocol has been adopted by many companies and organizations as a widely used greenhouse gas accounting standard.
92% of Fortune 500 companies responded to the CDP questionnaire with GHG emissions measurements that applied GHG Protocol standards in 2016.
The businesses in the transport, industrial, energy and agriculture sector are the largest contributors of about 70% to global GHG emissions and they have an important responsibility to track and reduce their emissions. Greenhouse gases trap heat and cause extreme heat, drought, floods and biodiversity loss.
The Kyoto protocol and subsequently the Paris Agreement aim to limit the global temperatures to mitigate these effects of climate changes. In order to measure and track the GHG emissions, companies need to use the widely accepted GHG protocol. This helps them to address stakeholder needs and get visibility, transparency and accountability on climate actions.
Benefits of GHG Protocol
Better understanding of a company’s carbon footprint
- Company gets to know the risks or opportunities associated with GHG emissions
- Transparency with public reporting. Companies reporting on GHG emissions and the reduction action taken can improve stakeholder trust and can also support reporting to government, eco-labelling and GHG certifications.
- Regulatory Compliance. Some governments require mandatory disclosure of GHG emissions. Methodologies of GHG protocol can help companies to streamline to regulatory compliance.
Adherence to ESG frameworks and the SBTi
- Initiatives. The recommendations of these frameworks are rigorous and GHG helps in this
- GHG Trading Programs. GHG protocol helps in providing support for accounting for GHG pricing programs, carbon markets, carbon tax calculations.
- Voluntary Reduction programs. GHG protocol is a credible methodology to ensure early voluntary reductions for future regulatory programs.
What are GHG Protocol Scopes?
While measuring and tracking GHG emissions, companies need to delineate the scope of emissions they refer to in their reports. The scope based classification developed by GHG Protocol sub divides the direct and indirect sources of emissions in businesses. GHG protocol is well known for these GHG emission scopes. The 3 main scopes are
- Scope 1 : ( Direct Emissions) Emissions that occur as a direct result of the company’s own operations
- Scope 2 : (Indirect Emissions) Emissions that are generated from the consumption of purchased electricity, steam, heat and cooling
- Scope 3 : (Indirect emissions) The indirect emissions that occur in the supply chain including the upstream and downstream operations.
Companies that use the GHG protocol are required to report the Scope 1 and Scope 2 emissions. Reporting Scope 3 emissions are voluntary, but they are recommended as they contribute to 90 % of a company’s emissions.
Companies create GHG emissions directly in their offices and packhouses and indirectly from the energy they consume, and their products produce across their life span and these are reflected as scopes.
GHG emissions scopes benchmark the accounting system of a company, their progress across industries and any gaps present
Scope 1 emissions
These are the direct emissions from sources owned or controlled by the reporting company. These include fossil fuels that could be emissions released due to combustion of fuels to generate electricity or heat, or it could be emissions released during industrial processes, emissions released from combustion of company owned mobile sources or GHG releases which could be intentional or unintentional during operations.
Scope 2 emissions
Scope 2 emissions are the indirect emissions that result from the consumption of purchased energy such as electricity, heating or cooling. This is indirect because the emissions occur due to the reporting company’s energy usage but released outside of facilities it controls. Almost 40% of global GHG emissions can be traced to energy generation. The 2 methods of scope 2 accounting are the market based and location-based approach.
Scope 3 emissions
Scope 3 emissions are the remaining indirect emissions that result from a company’s activities that are not related to purchase energy but include production of purchased materials, travel, product distribution and end of cycle treatment. They are divided into upstream and downstream activities, with almost 15 categories.
Scope 1 and Scope 2 emissions are easier to measure than Scope 3 emissions. But Scope 3 emissions provide a huge potential through the introduction of circular solutions. In terms of a circular economy, measuring and managing scope 3 emissions is critical. Ownership of value chain emissions provides control, and this increasing awareness has caused many companies to take full accountability of their Scope 3 emissions.
The GHG protocol provides standardized frameworks for companies, organizations and countries to help them reach their climate goals. GHG has developed various standards for organizations of all types and by applying these GHG Protocol standards, they can report their carbon footprint and reduce the GHG emissions.
What are the different GHG Protocol Standards?
Each of the GHG Protocol standard addresses a unique need for various situations. These could be Long-term emission reduction projects, corporate level emissions, Reporting of emissions at other places.
- Corporate Standard
The GHG Protocol for Corporate Accounting and Reporting Standard is meant for companies preparing a corporate level GHG emissions inventory. This standard provides instructions and recommendations for companies’ top build effective strategies to reduce GHG emissions and the gaps and increase transparency and standardization.
The GHG Corporate Accounting and Reporting Standard provides the guidance for GHG accounting principles, inventory scopes, GHG emission sources, base year and tracking and monitoring of emissions.
- GHG Protocol for Cities
Cities are responsible for 75 % of global carbon emissions and represent a significant chance to reduce carbon emissions and tackle climate change. The global Protocol for Community- Scale GHG Emission Inventories (GPC) is a comprehensive reporting and accounting framework for GHG emissions in cities. It allows consistent and transparent measurements of GHG emissions within cities, allowing for scaling to national levels. It supports benchmarking across regions.
- Mitigation Goal Standard
The GHG Mitigation Goal Standard provides instructions for devising national and sub national mitigation goals to evaluate and report progress towards the achievement of goals. It helps to follow up on the actions and policies chalked to reduce GHG emissions and help governments reach targets and report to international organizations. It supports countries in achieving their Nationally Determined Contributions (NDCs) as signatories of Paris agreement.
- Corporate Value Chain (Scope 3) standard
The GHG Protocol Corporate Value Chain (Scope 3) Standard sets out the guidance to assess GHG emissions of their entire value chain and identify the hot spots. It helps to look at emissions outside the organization. 80 % of the corporate emissions fall into this category. The tracking and monitoring of these emissions are complex. The value chain emissions include those that result from production, transportation or use of corporate’s product or service.
- Policy and Action Standard
GHG Protocol Policy and Action Standard sets out a standard framework for evaluating effectiveness of policies and actions. It helps governments to assess the improvements required to reduce GHGs and build effective strategies with a better understanding. It helps policy makers to compare and understand the regulations, laws, carbon taxing and other pricing mechanisms in a standardized format.
- Product Standard
The GHG Protocol Product Life Cycle Standard looks at the full life cycle of a product to identify where the highest emissions take place and where there is a great potential to remove them. This standard streamlines the production process, reduces costs and removes risks thereby providing companies the competitive edge.
Life cycle analysis estimates the environmental impacts of a product across the entire life cycle from production to decomposition.
This has helped organizations to have lower carbon footprint and make design changes to reduce emissions
- Project Protocol
The GHG Protocol Project Accounting is a comprehensive accounting tool to help organizations quantify the benefits of climate change mitigation projects It helps to provide methods for reporting GHG reductions from such projects. Project developers, administrators, designers and programs that incorporate GHG projects can use this standard. The carbon accounting is rigorous and needs to be verified and this standard provides the necessary framework.
Conclusion
The GHG protocol provides globally recognized standards for measuring and reporting GHG emissions that are compliant with major ESG reporting frameworks such as CDP. To meet the expectations and be recognized as acclimate leader, companies must demonstrate transparency and accountability when it comes to measuring, tracking and reducing the GHG emissions.
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