How to Measure Your Company’s GHG Emissions

Launched in 2001, the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, was developed by a multi-stakeholder partnership led by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), and provides guidance to organizations so they can accurately report on greenhouse gas (GHG) emissions, also known as a carbon footprint.

The GHG Protocol Corporate Standard outlines standards and guidance for organizations preparing a GHG emissions inventory. It covers the accounting and reporting of the six greenhouse gases outlined in the Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). The goals of these standards include:

• Ensuring that GHG inventories are a true and fair account of emissions.
• Simplifying and reducing the costs of compiling a GHG inventory.
• Helping businesses to manage and reduce their GHG emissions.
• Facilitating participation in voluntary and mandatory GHG programs.

The Standard emphasizes the importance of applying accounting and reporting principles like relevance, completeness, consistency, transparency, and accuracy to GHG accounting and reporting. It also provides guidance on setting organizational and operational boundaries, tracking emissions over time, and identifying and calculating GHG emissions.

Steps to Measure and Report GHG Emissions:

1. Setting Organizational Boundaries: Organizations must decide on a consolidation approach for GHG emissions, choosing either the equity share or control approach. The equity share approach involves accounting for emissions according to the organization’s share of equity in operations. The control approach involves accounting for all emissions from operations over which the organization has control, which can be defined in financial or operational terms.
2. Setting Operational Boundaries and Scopes: After determining organizational boundaries, organizations must set operational boundaries by categorizing emissions as direct (Scope 1) and indirect. Indirect emissions are further divided into Scope 2 (emissions from the generation of purchased electricity) and Scope 3 (all other indirect emissions).
3. Identifying and Calculating GHG Emissions: Organizations need to identify potential sources of GHG emissions within their defined boundaries and use standardized approaches and principles to calculate these emissions. This may involve using emission factors, activity data, and specific calculation tools developed for various industry sectors.
4. Managing Inventory Quality: Implementing quality management practices for GHG inventory preparation, including data collection, calculation, and reporting processes, ensures the reliability and accuracy of the emissions data reported.
5. Reporting GHG Emissions: Organizations are encouraged to report their GHG emissions in a manner consistent with the GHG Protocol Corporate Standard, providing transparent, accurate, and complete information about their GHG emissions. Reporting should cover Scope 1 and Scope 2 emissions at a minimum, with Scope 3 reporting being optional.

The GHG Protocol Corporate Accounting Standard not only aids organizations in understanding and managing their GHG emissions but also aligns with broader sustainability goals by encouraging emissions reduction and efficient management of resources.

How to Calculate Scope 1, 2, and 3 GHG Emissions with Formulas:

Calculating Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions involves different methodologies based on the source of emissions. Here’s a breakdown of the general approaches for calculating each scope, as well as the formula for calculating:

Scope 1: Direct Emissions

Formula: Emissions = Activity Data × Emission Factor

• Activity Data: This represents the quantity of fuel consumed or the scale of an activity that results in GHG emissions (e.g., liters/gallons of diesel consumed, kilometers/miles driven by company vehicles, cubic meters/yards of natural gas burned).
• Emission Factor: This is the coefficient that quantifies the emissions of a greenhouse gas per unit of activity data (e.g., kg CO2e per liter of diesel consumed). These factors are often provided by government agencies, industry associations, or the IPCC (Intergovernmental Panel on Climate Change).

Scope 2: Indirect Emissions from Purchased Electricity

Market-Based Method Formula: Emissions = Electricity Consumed × Emission Factor (Supplier-Specific or Residual Mix)

Location-Based Method Formula: Emissions = Electricity Consumed × Emission Factor (Grid Average)

• Electricity Consumed: This is the amount of electricity the company has purchased and used, typically measured in kilowatt-hours (kWh).
• Emission Factor (Supplier-Specific or Residual Mix): For the market-based method, this factor reflects the emissions intensity of the purchased electricity, considering contractual instruments (e.g., renewable energy certificates).
• Emission Factor (Grid Average): For the location-based method, this factor reflects the average emissions intensity of the grid from which the electricity is consumed.

Scope 3: Other Indirect Emissions (Upstream & Downstream Value Chain)

Scope 3 calculations can be more complex due to the variety of possible emission sources, including upstream activities like the production of purchased goods and downstream activities like the use of sold products. The formula generally follows the same structure as Scope 1 but applies to a wider range of activities.

Formula for a Specific Category: Emissions = Activity Data × Emission Factor

• Activity Data: This represents the quantity related to each specific Scope 3 category (e.g., tons of raw material purchased, miles traveled by outsourced shipping, waste disposed).
• Emission Factor: This is the coefficient that quantifies the emissions of a greenhouse gas per unit of activity data, specific to each Scope 3 category. Because of the wide range of activities, obtaining accurate emission factors can be more challenging and may require industry-specific data or lifecycle assessment studies.

Note: For accurate Scope 3 calculations, organizations often rely on sector-specific guidance, supplier data, or estimations based on economic input-output models, especially when direct activity data or specific emission factors are not available.

Given the complexity and variety of sources within Scope 3, companies are encouraged to prioritize significant sources of emissions and use best available data, keeping in mind the principles of relevance, completeness, consistency, transparency, and accuracy.

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