Greenhouse gas accounting: How to calculate your CO2 footprint

What is GHG accounting?

Greenhouse gas (GHG) accounting has become increasingly important recently due to the growing issues caused by climate change. GHG accounting is the process of identifying, measuring, and reporting the total amount of GHG emissions that are released into the atmosphere as a result of an organization’s activities. Ultimately, you will get a full picture of your CO2 footprint. These emissions are categorized into three groups, or “scopes”, based on their source.

Scope 1 emissions come from sources that are owned or controlled by the organization. These emissions are typically the easiest to quantify and control, as they are directly under the organization’s purview. Examples of Scope 1 emissions include emissions from boilers, furnaces, and vehicles (trucks, cars, planes, ships) that are owned and operated by the organization.

Scope 2 emissions are indirect emissions associated with the consumption of energy. Examples of Scope 2 emissions include emissions from electricity purchased from a utility company, steam purchased from a district heating network, or cooling from a chilled water system.

Scope 3 emissions come from sources that are not directly controlled by the organization but are associated with its activities. These emissions can be the most challenging to quantify and control, as they may involve multiple organizations in the value chain. Scope 3 emissions typically account for the largest part of all types. Examples of Scope 3 emissions include business travel, employee commuting, purchased goods and services (and all related emissions), waste disposal, and upstream and downstream activities in the supply chain.

Why start now?

Many governments have already implemented regulations that require companies to measure and report their GHG emissions.
Large enterprises are required to track their emissions, and the threshold (number of employees) is constantly being lowered to ensure that eventually, all businesses will track their GHG emissions.
Smaller companies might not yet be required to track their GHG output by law, but many feel pressure from their enterprise clients to do so (emissions from a small company can contribute to the Scope 3 emissions of a large enterprise). Starting early with GHG accounting and tracking will not only help businesses comply with regulations, but also help them identify areas where they can reduce their emissions and improve their environmental performance. Additionally, companies can position them better with larger enterprises if they track emissions and have a lower footprint than their competitors.

How to calculate your GHG footprint?

Different accounting and reporting frameworks can be used to calculate GHG emissions. One framework is the GHG Protocol, which provides guidelines on how to measure, report, and verify GHG emissions.

The GHG Protocol divides emissions into three scopes, as explained above, and provides guidance on which emissions to include in each scope and how to calculate them.

To calculate your GHG footprint using the GHG Protocol, follow these general steps

  1. identify the sources of your emissions
  2. gather data related to each source, such as fuel consumption, electricity usage, and transportation
  3. convert the data into GHG emissions using conversion factors

There are more frameworks, including CDP, GRI and SBTi guidelines to name the most prominent ones.

Why is data so important?

Data availability is a critical issue in GHG accounting, as it is essential to track emissions accurately and transparently. However, the availability and quality of data can vary widely, making it challenging to develop a comprehensive GHG level. Many companies do not have complete or accurate data on their energy consumption, transportation, and waste generation, which are the primary sources of GHG emissions. This lack of data can lead to inaccuracies and errors in GHG accounting, making it difficult to set meaningful emission reduction targets and track progress over time. Moreover, some companies may be reluctant to share their data, either due to privacy concerns or fear of negative publicity if their emissions are high. As a result, it is crucial for businesses to prioritize data collection and ensure that the data is accurate and reliable. This can be achieved through implementing data management systems, conducting regular audits of data sources, and engaging with suppliers to obtain data on their emissions.

Outlook

It has never been so crucial for firms to measure and act on their carbon footprint. All companies will eventually have to report their GHG emissions, either due to regulation or when supplying a large enterprise which needs the data for its own reporting. Starting now will make the process easier and can help to set yourself apart from competitors.
We can only reduce our emissions if we know our baseline.