SUSTAINABILITY
METRICS
EMISSIONS
REPORTING
SUSTAINABILITY METRICS
What are Sustainability Metrics?
Sustainability metrics are classified into Environment, Social
and Governance (ESG) metrics and in aggregate form the
framework of the triple bottom line - People, Planet, Profit.
There are many metrics that businesses can find are material
to them, many of which can be found in the reporting
guidelines of the SASB or the GRI.
One of the metrics which is currently being given a lot of
attention is emissions.
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Emissions Reporting
The main aims of emissions reporting is to reduce the direct and
indirect emissions in an organization’s operation.
Direct Emissions are referred to as Scope 1, whilst indirect
emissions are referred to as Scope 2 and Scope 3.
We will consider the differences of each.
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DIRECT GHG EMISSIONS
Direct emissions or Scope 1 emissions, refer to on-site
emissions from the generation of electricity, heating or
cooling. They can also be associated with physical or
chemical processing, transportation owned or controlled by
the organization, and fugitive emissions which may be
intentional or unintentional, from processes or equipment,
such as leaks or from refrigeration equipment.
HOW TO CALCULATE THEM
Scope 1 emissions is calculated by the summation of all the
sources in CO2e and are sometimes categorized under
country, source, business unit or activity.
HOW TO SET TARGET
Once the sources are identified and understood - it would be
wise to prioritize the next actions to be taken based on the
hierarchy:
REMOVE - REDUCE - REPLACE - OFFSET
Removing source of emissions is not always possible, so then
organizations look at reducing the emissions, ex. more
efficient boilers/furnaces. The next option would be to
replace carbon-intensive energy sources with low carbon
alternatives, ex the use of renewable forms such as biomass,
biodiesel etc..
Offsetting shouldn’t be included in the calculations, but it
offers a way to offset the remaining Scope 1 emissions, if the
other options are exhausted.
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INDIRECT GHG EMISSIONS
Indirect emissions or Scope 2 emissions, refer to emissions
resulting from purchased electricity, heating, cooling or
steam, and is reported as CO2 equivalent.
Scope 2 reporting requires companies to report two distinct
values – a location-based and a market-based value.
Location-based
This is a scope 2 value that is dependent on the energy
consumed with carbon intensity worked using the
location’s annual carbon intensity number.
Reductions of this is dependent on the location’s energy
mix with no influence possible by the company
Market-based
This is a scope 2 value that considers specific purchases
of renewable energy by the company.
Reductions of this is dependent on specific contractual
purchases by the company. So if a company chooses to
purchase only renewable energy, they can actually bring
down their scope 2 emissions to zero.
HOW TO CALCULATE THEM
Scope 2 emissions are calculated by the summation of all the
indirect energy, translated into metric tons of CO2 equivalent.
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OTHER INDIRECT GHG EMISSIONS
Scope 3 emissions, refer to emissions resulting as a
consequence of the organization's activities, but unlike Scope
2, the organization does not own them or control them
directly. These include upstream (ex. purchased goods and
services) and downstream (ex. transportation).
This scope becomes material for an organization, if the
organization exerts influence, as this scope would constitute
a significant source of emissions - especially if an
organization outsources a large part of its process.
This scope and its ratio to Scope 1 and Scope 2 varies greatly
between industries.
HOW TO CALCULATE THEM
Scope 3 emissions are very complex to calculate as it is not
always easy to capture reliable and suitable data across
large supply chains.
The focus should be on categories that are material and not
all the supply chain, but a focused version of it. The key is to
be consistent so that progress can be demonstrated and
transparent.
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OTHER INDIRECT GHG EMISSIONS
HOW TO SET TARGET
Scope 3 targets tend to be influenced greatly by
procurement strategies. Procurement practices that place
emphasis upon supplier ESG criteria, and hence use it to rate
suppliers, can put enough pressure on supply chains to make
commitments.
An example of this is net zero ambitions in some supply
chains that span all supply chain partners.
Examples of initiatives that reduce scope 3 include:
1 Creating supply chain transparency and ambitious
reduction targets
2 Work with suppliers to redesign products and/or
services
3
Use ESG criteria for supplier ranking
4 Engage with industry-specific initiatives for access to
best practices
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EMISSIONS INTENSITY
As per the energy metric, the emissions intensity is a
disclosure that makes the emissions metrics meaningful for an
organization because they normalize the number to take into
account fluctuations in the organization’s activity, such as
growth or decline.
This is calculated by summing up the total emissions for
Scopes 1, 2 and 3 and dividing them by the organization’s
specific metric, example emissions er product or service etc...
As much as possible and where it aids transparency, emissions
intensity should be broken down by business unit, country, type
of source and type of activity.
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HOW CAN WE HELP?
Would you like to get started in measuring your business
emissions?
Would you like to set your own baseline and targets?
Let us help you get started.
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GET IN TOUCH
WITH US
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