Why Monitor Scope 3 Emissions ?
- Why It Makes Business Sense: Companies can benefit from addressing GHG emissions. By doing so, they can find ways to make more money, reduce risks, and gain a competitive edge. As the effects of climate change become more noticeable and governments create new rules and incentives to reduce emissions, businesses that are prepared for this shift will be in a better position to thrive.
- The Importance of Understanding Emissions: To tackle climate change effectively, companies need to understand how much GHG they’re responsible for. This is where a “corporate GHG inventory” comes in handy. It’s like a tool that helps companies figure out which parts of their business are causing the most emissions. This knowledge allows them to focus on reducing emissions where it matters most.
- Expanding Focus Beyond Their Own Operations: In the past, companies mainly looked at emissions from their own operations (like factories and offices). Now, they’re realizing that they should also consider emissions connected to their supply chains (the companies and processes that provide them with materials and services) and the products they sell. This broader view helps them manage GHG-related risks and opportunities more effectively.
- The GHG Protocol’s Role: The GHG Protocol is an organization that has created standards and tools to help companies measure and manage their GHG emissions. They’ve developed a specific standard for companies to account for emissions in their value chains (Scope 3 emissions). The goal is to make this standard widely accepted and used by working with industry groups and governments to promote it worldwide.
Greenhouse Gas Protocol
The Greenhouse Gas Protocol (GHG Protocol) is a multi-stakeholder partnership of businesses, nongovernmental organizations (NGOs), governments, and others convened by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). Launched in 1998, the mission of the GHG Protocol is to develop internationally accepted greenhouse gas (GHG) accounting and reporting standards and tools, and to promote their adoption in order to achieve a low emissions economy worldwide.
Purpose of this Standard
What is the GHG Protocol Scope 3 Standard?
The GHG Protocol Scope 3 Standard is like a rulebook for companies and organizations. It helps them measure and report their greenhouse gas emissions (GHG emissions) more accurately. But here’s the special part: it doesn’t just look at emissions from their own activities, like factories and offices. It also looks at emissions from everything related to their business, like the things they buy, sell, and use indirectly.
Why Do Companies Use This Standard?
Companies use this standard for a few good reasons:
- Understanding the Full Picture: It helps companies see the big picture of how their actions affect the environment. It’s like seeing all the ripples when you throw a stone into a pond, not just the splash where the stone lands.
- Reducing Emissions: It helps companies find ways to pollute less and reduce their impact on the planet. This is important because we want to protect the environment.
- Transparent Reporting: It makes it easier for companies to tell the public how they’re doing when it comes to their environmental impact. This is good because people want to know if companies are being responsible.
What Were the Goals When Making This Standard?
When they created this standard, they had three main goals:
- True and Fair Numbers: They wanted to make sure that the numbers companies report are accurate and fair. It’s like making sure everyone plays by the same rules in a game.
- Helping Companies Reduce Emissions: They wanted to help companies come up with plans to cut down on emissions. Think of it like giving a company a roadmap to pollute less.
- Clear Reporting: They wanted to make sure that when companies tell the public about their emissions, they use a clear and common way of doing it. It’s like making sure everyone speaks the same language.
What’s the Bottom Line?
This standard isn’t just about numbers and accounting. It’s about helping companies understand their impact on the environment, come up with ways to do better, and tell the world about it. Companies can start using this standard step by step, making improvements over time to be more environmentally friendly. It’s all about making better choices for the planet.
Relationship to the GHG Protocol Corporate Standard
How Does It Connect to the Corporate Standard?
This Scope 3 Standard is like an extra chapter added to another book called the “GHG Protocol Corporate Accounting and Reporting Standard.” That other book has been around since 2001 and is used by lots of companies worldwide to report how much they pollute. The Scope 3 Standard works together with the main book to help companies be even better at understanding and reporting their impact on the environment.
What’s in the Main Book (Corporate Standard)?
The main book (Corporate Standard) has three parts called “scopes“:
Scope 1: This is about pollution that comes directly from things a company owns or controls, like factories.
Scope 2: This is about pollution that comes indirectly from things like the energy the company buys to run its operations.
Scope 3: This is everything else, like pollution caused by making and transporting the things the company uses and sells.
Why Did They Add the Scope 3 Standard?
Since the main book was written in 2004, companies have gotten better at measuring and reporting their pollution from Scope 1 and Scope 2. But they realized that there’s a lot more pollution happening in the things they buy and sell (Scope 3) that they weren’t looking at. This extra pollution can be the biggest problem for the environment and a big opportunity to reduce it.
How Does It Help Companies?
By using both the main book and the extra chapter (Scope 3 Standard), companies can understand all the pollution they create, not just part of it. This helps them figure out where they can make the most significant improvements to protect the environment.
What’s the Reporting Options?
Companies have two choices when it comes to reporting:
The main book (Corporate Standard): They must report on Scope 1 and Scope 2 pollution, but Scope 3 reporting is optional.
The extra chapter (Scope 3 Standard): This provides more rules and guidance for reporting on Scope 3 pollution. It’s designed to make it easier for companies to be consistent when they report on Scope 3 emissions.
- Purchased goods and services emissions: Emissions associated with the production and transportation of materials and services purchased by the company.
- Capital goods emissions: Emissions associated with the production and transportation of assets like buildings and machinery.
- Fuel- and energy-related activities not included in Scope 1 or Scope 2: Emissions resulting from activities such as employee commuting, business travel, and distribution of products.
- Upstream and downstream transportation and distribution: Emissions from the transportation of products to and from the company.
Who should use this standard?
This standard is intended for companies of all sizes and in all economic sectors. It can also be applied to other types of organizations and institutions, both public and private, such as government agencies, non-profit organizations, assurers and verifiers, and universities. Policymakers and designers of GHG reporting or reduction programs can use relevant parts of this standard to develop accounting and reporting requirements. Throughout this standard, the term “company” is used as shorthand to refer to the entity developing a scope 3 inventory.
Scope of the Standard
What Does This Standard Do?
This standard is like a rulebook that helps companies measure how much pollution they create because of all their activities for one year. It looks at six main kinds of pollution gases, including carbon dioxide, methane, and others.
What Doesn’t It Do?
This standard doesn’t deal with figuring out how much pollution is avoided or reduced when a company tries to make up for its pollution. For example, if a company plants trees to absorb the carbon dioxide it released, this standard doesn’t count that. Another set of rules, called the GHG Protocol for Project Accounting, handles these kinds of things.
Why Use This Standard?
Companies use this standard to track their pollution over time. It helps them see if they’re getting better or worse at polluting. However, it’s not meant for comparing how one company’s pollution measures up to another’s. Differences in pollution reports might happen because companies use different methods or because they’re different in size or structure. To make fair comparisons, you’d need more details and a level playing field, like using the same methods and sharing extra information.
How to Make Fair Comparisons Between Companies?
To compare pollution between different companies, you need to make sure they’re using similar methods and data to calculate their pollution. You can also look at other information like how much pollution they create per unit of their products or services (intensity ratios) or other performance measures. Some industries or groups have their own rules to help with fair comparisons, too.
How was this standard developed?
Who’s Involved in Making the Rules?
To create rules for measuring and reporting greenhouse gas emissions (like carbon dioxide) in a fair and accurate way, many different groups of people work together. These groups include businesses, government agencies, non-profit organizations (NGOs), and academic institutions from all around the world.
How Did They Make the Scope 3 Standard?
Back in 2008, two organizations, WRI and WBCSD, decided to create a set of rules called the GHG Protocol Scope 3 Standard. They took three years to do it. To make sure they got it right, they formed a special team of 25 experts called the Steering Committee. These experts helped figure out the best way to make these rules.
Getting Ideas from Many People:
Then, in 2009, they gathered a bunch of people from different backgrounds, including 96 members from various industries, government agencies, schools, and non-profit groups. These folks worked together in what they called “Technical Working Groups” to create the first version of the Scope 3 Standard.
Testing and Improving:
In 2010, they asked 34 different companies from various industries to try out the first draft of the standard. These companies gave feedback on how well the rules worked in the real world. This feedback helped make the rules better.
Lots of Opinions:
Throughout this whole process, more than 1,600 people took part in something called the “Stakeholder Advisory Group.” They looked at each draft of the standard and gave their thoughts and suggestions.
Relationship to the GHG Protocol Product Standard
1. GHG Protocol Scope 3 Standard and Product Standard:
- Imagine you’re trying to understand and reduce pollution (like carbon emissions) from a company’s activities.
- There are two rulebooks, like instruction manuals: one is called the “GHG Protocol Scope 3 Standard,” and the other is the “GHG Protocol Product Standard.”
- Both manuals focus on looking at the entire journey of products, from when they’re made to when they’re used up. This includes everything related to those products.
2. What Each Standard Does:
- The “Scope 3 Standard” helps a company see where the most significant pollution is happening in its entire business, from making products to selling them.
- The “Product Standard” helps a company figure out which specific products are causing the most pollution and how to reduce that pollution.
3. Using the Right Manual:
- Companies pick the right manual based on what they want to achieve.
- If a company wants to understand how to reduce pollution throughout its entire business, it uses the “Scope 3 Standard.”
- If a company wants to focus on making specific products cleaner, it uses the “Product Standard.”
4. Using Data Together:
- Both manuals use some of the same information, like data from suppliers and other companies in the production and supply chain. So, you might collect this data once and use it for both manuals.
- It’s like using the same ingredients to make two different recipes.
5. Working Together:
- These manuals can be used separately, but they can also work together.
- For example, a company might use the “Scope 3 Standard” to find the biggest pollution problems across its business. Then, it can use the “Product Standard” to focus on making the worst-polluting products better.
- Or, it might use data from the “Product Standard” to help calculate pollution from its entire business using the “Scope 3 Standard.”
- The goal is to understand and reduce pollution both for the whole company and for specific products.
6. Adding It All Up:
- The total pollution from all of a company’s products, along with some other types of pollution (like employee commuting or business travel), should be close to the company’s entire pollution amount (scope 1 + scope 2 + scope 3).
- Companies don’t have to calculate pollution for each individual product when calculating scope 3 emissions. They can use some general categories instead.
7. Simplified Example:
- The picture in the explanation shows how pollution at the company level (corporate) matches up with the stages of a product’s life cycle (from making to disposal). It’s like connecting the dots between where pollution comes from and what products are responsible for it..
