Charles Dubouix
GHG accounting (1/2): Methodologies & Scopes Measuring greenhouse gases emissions
- Carbon accounting and GHG accounting provide transparency on a business's carbon dioxide emissions. It produces numerical data to understand how carbon intensive is a company and which emissions could it be responsible for.
- Different methodologies categorize emissions into perimeters known as "scopes," with Scope 1 being direct emissions, Scope 2 being emissions induced from indirect energy purchasing (mostly production of electricity or heating), and Scope 3 being indirect upstream and downstream emissions.
- Although shippers don't directly emit Scope 3 emissions addressing them is essential to enhance their reputation, optimize their supply chains, comply with regulations and eventually gain a competitive advantage. Reducing carbon emissions in transportation should be a top priority, as it is one of the main drivers of Scope 3 emissions.
Difference between Carbon accounting and GHG accounting
Carbon accounting refers to the method used to calculate how much carbon dioxide emissions a business is responsible for.
However, businesses are responsible for the emissions of other greenhouse gas
GHG accounting enables us to take them (other greenhouse gases) into account by converting all GHG emissions related to the business’ activity into CO2 equivalents.
Measuring: The first answer to reach net zero emissions by 2050
To meet the Paris Agreements’ objectives, we must reach net zero by 2050 at the global level. This means that all businesses must commit to reducing their CO2 emissions.
In order to find where they can reduce their CO2 emissions, companies must identify their most emitting activities to prioritize their decarbonization investments.
In concrete, how do we measure GHG emissions?
To measure a company's greenhouse gas emissions, there are different, but really close, methodologies, including Bilan Carbone (France), GHG Protocol and ISO 14064 (International). These methodologies categorize emissions into perimeters, known as "scopes".
GHG protocol and Bilan Carbone identify 3 scopes :
- Scope 1: direct emissions
- Scope 2: Indirect upstream emissions
- Scope 3: Indirect downstream emissions
To obtain the global GHG emissions of your business, you only need to sum all the emissions of the different scopes and categories
As a shipper, transport emissions fall in your scope 3 if you do not own vehicles. However Scope 3 emissions are not direct emissions so why is it important to care about them?
- Reputation and Corporate Social Responsibility (CSR): Demonstrating a commitment to reducing Scope 3 emissions can improve your company's reputation and enhance your CSR initiatives. As environmental awareness grows, customers and stakeholders increasingly prefer companies that take active steps to minimize your carbon footprint.
- Supply Chain Optimization: Understanding and managing Scope 3 emissions can help you identify inefficiencies and areas for improvement within your supply chains. By optimizing transportation routes, consolidating shipments, or selecting more environmentally friendly transport modes, you can reduce emissions while potentially decreasing costs.
- Regulatory Compliance: As governments worldwide implement stricter environmental regulations, companies may be required to report and reduce your Scope 3 emissions. Proactively addressing these emissions can help you ensure compliance and avoid potential penalties.
- Competitive Advantage: As more businesses focus on sustainability, being able to showcase lower emissions throughout the supply chain can give you a competitive edge. This advantage may attract environmentally conscious clients and partners, boosting the company's overall market position.
- Risk Management: Engaging with and monitoring transportation providers' emissions helps you better understand your environmental risks. By actively managing these risks, you can mitigate potential disruptions and adverse impacts on your business.
Any effective system of greenhouse gas (GHG) accounting needs to measure each company’s supply-chain carbon impacts accurately, providing visibility and incentives for it to make more climate-friendly product-specification and purchasing decisions.
GHG accounting (deepdive): Setting target with the SBTI