Greenhouse gas (GHG) emission management and reporting have become critical for organizations worldwide as they seek to mitigate their environmental impact and demonstrate sustainability. By accurately measuring and reporting your GHG emissions, your company can contribute to global climate goals and showcase its commitment to environmental responsibility. To make it easy to keep track, let's break down the emissions management process into 4 clear and simple steps.
Step 1: Prepare your emission management
Determine your accounting standard
The first step in preparing your GHG emissions management for reporting is to identify and select the appropriate accounting standard. Companies are either legally required to disclose their greenhouse gas emissions, or they can report them voluntarily.
If companies voluntarily disclose their emissions, the calculation standard can be freely chosen. The most well-known standards for companies are ISO 14064-1 and the GHG Protocol Corporate Accounting and Reporting Standard. Additionally, there are also other industry-specific standards.
If disclosure is required by law, the first step is to find out which rules apply to the emissions calculation within the respective regulation. For example, CSRD/ESRS, IFRS S, and SFDR reporting require disclosure of Scope 1, 2, and 3 emissions.
| With Envoria's Regulation Finder, you can quickly and easily find out which ESG regulations might apply to your company. |
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Set organizational and operational boundaries
Once the accounting standard is chosen, the next step is to define the organizational and operational boundaries for your GHG emissions management.
Organizational boundaries determine which entities (e.g., subsidiaries, joint ventures, partnerships) and assets (e.g., facilities, vehicles) are included in the Scope 1, 2, and 3 GHG emissions inventory. This is of particular importance for large corporations with multiple subsidiaries, joint ventures, associated companies, etc. Clearly defining these boundaries is crucial for an accurate and comprehensive assessment of your GHG emissions.
With Envoria's Regulation Finder, you can quickly and easily find out which ESG regulations might apply to your company.
Operational boundaries define which specific emission sources (e.g., natural gas boilers or purchased electricity) are included in the inventory. A distinction is drawn between:
Scope 1 emissions are direct GHG emissions that occur from sources that are owned or controlled by a company
Scope 2 emissions are indirect GHG emissions from the generation of purchased energy consumed by the company (upstream activity).
Scope 3 emissions are indirect GHG emissions resulting from a company’s upstream and downstream activities, but occur from sources not owned or controlled by the company.
GHG emissions typically occur from the following four source categories:
Stationary combustion, e.g., from heaters, turbines, etc.
Mobile combustion, e.g., from automobiles, airplanes, etc.
Process emissions, e.g., from physical and chemical processes
Fugitive emissions, e.g., unintentional releases from equipment leaks
To identify Scope 1, 2, and 3 emissions, each of these categories should be examined to determine if direct or indirect emissions in your company result from them. In this way, you can identify all emission-generating business activities of your company.
| What are the GHG Protocol and scope emissions? Find more information on Scope 1, 2, and 3 emissions, the GHG Protocol, and reporting challenges here. |
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Choose your base year
Finally, the year to which your emission calculation refers must be selected. The base year serves as a reference point against which future emission reductions or increases can be measured. Especially for companies that are obliged to report, it is important that the data basis remains the same in order to make comparisons.
Step 2: Assess your company’s emissions
Collect your data
In order to assess your company's emissions, you first need to collect all the necessary emission data. The first step should therefore be to review the data requirements and determine the methods for data collection. To enable reliable data collection, data collection techniques, tools, and guiding materials need to be defined. Then, compile and review facility data, such as electricity and gas, and identify proxies to fill gaps.
Emission data for Scope 1 emissions can mostly be retrieved from purchased volumes of commercial fuels or fuel use (such as natural gas and heating oil).
Emission data for Scope 2 emissions can mostly be retrieved from measured electricity consumption or supplier-specific, local grid.
Emission data for Scope 3 emissions is the most difficult to collect due to a lack of data, resources, and standardized methodology. It can be mostly retrieved from activity data such as fuel use or passenger miles, but also from published data or third-party data.
Determine your emission factors
It is uncommon to directly measure GHG emissions by observing concentration and flow rate. Instead, using documented emission factors is the most common method to calculate GHG emissions. Emission factors represent the quantity of a GHG emitted to the atmosphere associated with a specific activity. The choice of your emission factors depends on various factors, including your region, industry, and the year of calculation.
For example, the amount of CO2 emitted to the atmosphere when generating electricity is typically expressed as kg CO2 per megawatt-hour (MWh) electricity generated (kg CO2/MWh). This means, the emission factor states how many kg of CO2 are emitted by 1 MWh of electricity.
Emission factors can be retrieved from databases from a number of free and paid sources, including:
Open-source databases from environmental agencies, such as the IPCC
Commercial databases from providers, such as Ecoinvent
Industry-specific databases, such as HBEFA which provides emission factors for all current vehicle categories
Federal Environmental Agency and other national government agencies
Did you know? The Emission Management module of Envoria’s ESG reporting software allows companies to access more than 60,000 emission factors, helping them calculate their emissions without the exhausting search of external databases.
Calculate your emissions
Different methods of determination are used on a voluntary or mandatory basis to calculate emissions. Let us take a look at the basic one:
Once you have collected the quantitative data for your emission-generating business activities, select the suitable emission factors and multiply the data from the respective business activities by it. The result indicates your greenhouse gas emissions in CO2 equivalents.
| What are CO2 equivalents? A CO2 equivalent is a measure that converts quantities of GHGs to the equivalent amount of CO2 based on their global warming potential. The global warming potential is the amount of global warming that a GHG causes over a period of time. This is important because there are other significant greenhouse gases besides CO2 that are harmful to the climate. These include methane, nitrous oxide, hydrochlorofluorocarbons (HCFCs), hydrofluorocarbons (HFCs), and ozone. By indicating CO2 equivalents, different bundles of GHGs emitted through a specific business activity can be compared in terms of their global warming potential. |
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Most companies will need to use more than one emission factor to cover all their GHG emission sources. By adding up all the CO2 equivalents determined, you can calculate your total GHG emissions per reporting period.
In addition, a variety of other tools and methods exist for calculating GHG emissions. These can be divided into two main categories.
Cross-sector tools: These can be applied to different sectors, e.g., for identifying emissions from stationary and mobile combustion.
Sector-specific tools: These are designed to calculate emissions in specific sectors such as aluminum, iron and steel, cement, oil, and gas.
| Are you looking for a short and concise overview of emission management, including the Corporate Carbon Footprint and GHG Protocol? Download our Emission Management Visual Guide. |
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Step 3: Set emission targets
The calculation results of your emissions provide you with insights into your emission hotspots and reduction potentials. Use them as a basis for developing a long-term emissions strategy and deriving and implementing concrete measures. Emission targets can aim at avoiding, reducing, or compensating for GHG emissions. The rule is to avoid before reducing and to reduce before compensating.
Avoid and reduce emissions
The most important component in setting emissions targets should be measures to avoid or reduce GHG emissions in the company and its value chain. This results in avoidance and reduction potentials that can be directly controlled by your company and mostly relate to energy savings (Scope 1 and 2) as well as avoidance and reduction potentials that arise in the upstream and downstream value chain (Scope 3).
Examples:
Convert the company's fleet to electric cars (Scope 1)
Purchase and/or generation of renewable energies (Scope 2)
Avoid business travel through video conferencing (Scope 3)
Compensate emissions
Compensation (or "offsetting") comprises measures to avoid or reduce GHG emissions outside a company's value chain. For example, climate protection certificates can be purchased to provide financial support for various climate protection projects, e.g., to promote renewable energies or the conservation of forests. Since it is not decisive for global warming where greenhouse gases are emitted, emissions caused in one place can be offset in another. This means that offset projects can be chosen anywhere in the world.
A recent development in goal setting is the introduction of Science-Based Targets (SBTs) for determining emissions reduction targets. SBTs must be in line with the Paris Agreement – and thus be conform with the EU climate goal of keeping global warming well below 1.5°C.
Step 4: Disclose your emissions
The final step is to disclose emissions according to the standard or regulation chosen in Step 1. Internal as well as external stakeholders should be informed about the progress of your climate commitment.
In internal reporting and communication, it is crucial to address the different expertise of employees and to communicate in a transparent and understandable way. External reporting and communication allow your company to actively communicate your climate management to the public. This promotes dialogue with the stakeholders and can have a positive impact on corporate reputation.
How Envoria can help
Envoria’s software module for emission management can help you calculate your carbon footprint. Get guidance, templates for emission calculations, a dashboard for visualization, an export functionality to track your footprint, over 15,000 emissions factors already included in the database, and much more. Configure the module as it suits you best!
Book a free demo or ask for consulting services from our ESG experts. Contact us today to find out how Envoria can facilitate your emission management reporting.