Why is there an influx of requests for company Greenhouse Gas (GHG) emissions data?
In the past six months, we have seen a major increase in the number of GHG Inventory requests. This has been spurred by some of the largest companies across the country (e.g., Target, JP Morgan Chase, Google, Microsoft) including a not-so-subtle change to their supplier requirements as part of their Carbon Neutral goals.
To remain competitive, companies need to begin tracking and reporting their own GHG emissions and, in some cases, setting their own Carbon Neutral goals. This trickle-down effect is the ripple that is driving the next wave of market transformation in supplier partnerships.
What goes into a GHG inventory?
Calculating GHG inventories is not as daunting as it may seem. You likely already track data related to the cost of electricity, raw materials, shipping, transportation, and other such business-related activities in your current business practice. With a GHG inventory, you are also tracking the emissions associated with these activities by applying the appropriate emissions factors and Global Warming Potentials (GWP).
When quality data does not exist, or GWP values are not available, approximation factors can be used based on industry data that may fill gaps in the inventory in a reasonable manner. These partial inventories account for all areas that you have high quality data, while also clearly stating any assumptions made, and outlining plans to eliminate gaps and strengthen your data set moving forward.
To address these gaps and transition from a partial to a full inventory, companies are now turning to their suppliers to collect operational emissions data. If you are one of these companies that have received new supplier codes of conduct or requests by customers to disclose information to the third-party framework Carbon Disclosure Project (CDP), do not ignore these requests. Many large players are committing to only work with suppliers that can meet these requests and help them reach their emissions goals. Use this request as an opportunity to partner with your customer, build a stronger relationship to improve sales, and find solutions to better collect and reduce emissions.
Simplifying Emissions Accounting
The standard for how to account for and document your GHG emissions is still evolving as more information becomes available. The most common business-friendly standard, the Greenhouse Gas Protocol, is in line with ISO 14064 (ISO 14064-1:2018 Greenhouse gases – Part 1: Specification with guidance at the organizational level for quantification and reporting of greenhouse gas emissions and removals) and focuses on organization level quantification of GHG emissions.
Validation is an important step when moving from completing an inventory for internal use to reporting it publicly. Being able to add the ISO 14064 compliant footnote to your marketing material adds a measurable level of confidence to the public and potential customers.
This standard breaks down emissions into three reporting levels, Scope 1, 2, & 3. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain.
Scope 3 is further broken down into 17 different categories for partial reporting purposes. At a minimum, companies that are doing partial GHG inventories are documenting their Scope 1 & 2 emissions. As a next step, companies are also documenting their largest Scope 3 categories. We have found that it is much easier to gather the data needed to calculate GHG emissions based on the following business categories, and then mapping the data to the relevant scopes:
Facilities – This includes all of your building’s energy costs (e.g., electricity, natural gas, water, purchased chilled water/steam) including lights, receptacle loads, HVAC, and any other background consumption by the design and location of the space you are occupying. For most companies, this will also include all maintenance work that involves refrigerant.
Operations – This covers the emissions generated from everything that is consumed by operating your business. For an office building this could be as simple as covering how much paper/toner is being purchased, how much waste is being generated, and the impact of employee commuting and business travel. For a manufacturing facility, this can get more complicated if your production line includes welding and other processes that generate gases that have a significant GWP. Additionally, many companies are vertically integrated and own their own transportation fleet. The emission from this transport needs to be included as well.
Value Chain – This piece represents all the goods and services you buy or sell as part of your business, from creation through disposal of those goods (i.e., cradle-to-grave). For example, if your company hires out a third-party transportation company to pick up your finished products and deliver them to the end user, then the emissions associated with that third party still needs to be counted.
At minimum, you will want to account for your Facilities and Operations based emissions. Using the Greenhouse Gas Protocol, this generally translates into a full Scope 1 & 2 inventory with accounting of your largest Scope 3 emissions categories.
How 3R Sustainability can help!
If you are just beginning your emissions journey, the consultants at 3R can help you prepare for these customer requests by establishing the collection and management of data needed to baseline your GHG inventory. After the initial inventory is calculated, we can partner with you to set realistic goals and establish a prioritized action plan for reduction and reporting based on your business type and stakeholder expectations. We pride ourselves in providing education to our clients, so if desired, the inventory process can be owned internally moving forward.
3R prepares each inventory to be compliant with ISO 14064 (if quality data is available) and can partner with sister company, SRI Quality Systems Registrar, to pursue data validation, if appropriate.
For companies already familiar with a partial/full inventory and are ready to set a carbon neutral goal, 3R Sustainability can assist in creating the roadmap that makes the most business sense to reach your target. With an established inventory and plan, 3R (a CDP accredited solutions provider) can then assist your company in responding to your customer requests, which may include:
- Setting Science Based Targets (SBTi)
- Preparing a reporting in alignment with the Task Force on Climate-Related Financial Disclosures (TCFD)
- Response to the CDP
Contact us today for more information!