Ecological footprint, Carbon emissions
and GHG protocol
BM, Term 2
Session 6
25/10/2024
Ecological Footprint
• An area-based indicator that quantifies the intensity of
human resource use and waste discharge activity in relation
to a region’s ecological carrying capacity.
• Thus, the corresponding area of productive land and aquatic
ecosystems required to produce the resources used and to
assimilate the wastes produced by a defined population at a
specified material standard of living, wherever on earth that
may be located (Rees, 1992; Rees and Wackernagel, 1994)
• Assumptions:
• It is possible to keep track of most of consumption and waste by human
population
• The resource and waste flows can be converted to biotically productive
area
• Different biologically productive areas can be expressed in the same
unit once they are scaled proportionally to their productivity.
Ecological Footprint…
• If the ecological footprint of a human population is Example: Vancouver city
greater than the area which it occupies, the • Population- 472000
population must be doing one of the following:
• receiving resources from elsewhere, • Area-11400 ha (114sq km)
• disposing off some of its waste outside its area, • Average Canadian requires:
• depleting earth’s natural capital stocks. • Crop and grazing land- 1.1 ha
• Depleting refers to the withdrawal of more ecological • Wood and paper- 0.6 ha
services than the biotic capacity of the area can • Built up area- 0.2 ha
regenerate. E.g., harvesting timber at a rate faster • Forest (as carbon sink)- 2.3 ha
than it can regrow.
• Total: 4.2 ha
• To achieve global sustainability, the sum of all
regional footprints must not exceed the total area of • For total population: 2 mha
the biosphere. • Current availability: 11400 ha
Carbon footprint
• Company’s carbon footprint includes the total GHG
emissions that directly result from company’s onsite
operations (e.g., fossil fuel combustion in boilers and
fleet vehicles, chemical reactions in some
manufacturing processes etc).
• Where applicable, it also includes GHG emissions
associated with purchased electricity.
• A carbon footprint can also include other indirect
sources of GHG emissions such as those associated
with production and transportation of raw materials
and with the distribution and disposition of its
products.
GHG accounting
• Implies measuring and monitoring GHG emissions using standardized methods and reporting on
them per agreed-upon protocols.
• This enables companies, governments and individuals to measure the quantity of GHG emissions
resulting from their activities, both directly through their operations and indirectly through their
upstream supply chains and downstream customers.
• Corporate GHG accounting is especially important, as business is a primary driver of GHG
emissions.
• Just 100 companies are responsible for 70% of the world’s industrial GHG emissions (CDP
report, 2017)
• Benefits to companies:
• Managing GHG risks and identifying reduction opportunities
• Public reporting and participation in voluntary GHG programs
• Participating in mandatory reporting programs
• Participating in GHG markets
• Recognition for early voluntary action
Principles
• Relevance: Ensure the GHG inventory appropriately reflects the GHG emissions of the company and
serves the decision-making needs of users – both internal and external to the company.
• Completeness: Account for and report on all GHG emission sources and activities within the chosen
inventory boundary. Disclose and justify any specific exclusions.
• Consistency: Use consistent methodologies to allow for meaningful comparisons of emissions over
time. Transparently document any changes to the data, inventory boundary, methods, or any other
relevant factors
• Transparency: Address all relevant issues in a factual and coherent manner, based on a clear audit
trail. Disclose all relevant assumptions
• Accuracy: Ensure that the quantification of GHG emissions is systematically neither over nor under
actual emissions. Achieve sufficient accuracy to enable users to make decisions with reasonable
assurance
Types of emissions: For companies to comprehensively assess their climate impact, they need to measure not
only the emissions caused by their own operations, but also from the raw materials they source and use of the
goods they sell.
Source: WRI
Overview of the emission scopes
[Link]
Scope 1 and 2: details
Scope 1: Direct emissions Scope 2: Indirect emissions
• Stationary combustion: All fuels that • Electricity: GHG emission from
generate GHG emissions consumption of purchased electricity,
• Mobile combustion: emission from all steam, heating or cooling
vehicles owned or controlled by the firm, by
burning fuel.
• Fugitive emissions: Leaks from
refrigeration, AC units etc.
• Process emissions: emissions from
industrial processes; on-site
manufacturing
Scope 3 emission categories
[Link]
Setting organizational and operational boundaries
Organizational Boundary: Operational boundary:
Equity share approach: Company accounts for GHG Whether to account only for scope 1 and scope 2,
emissions based on its share of equity in the operation. or whether to include relevant scope 3 categories
for its operations.
Control approach: Company accounts for 100 percent of
the GHG emission from operations over which it has
control.
• Type of data and measurement:
a. Activity Data: Quantitative measures of a level of activity that results
in GHG emissions (e.g., fuel consumption, electricity use).
b. Emission Factors: Coefficients that convert activity data into GHG
emissions. These factors are typically derived from standardized
databases or studies.
• Calculating Emissions:
a. Emissions= Activity Data * Emission Factor
b. This calculation is done separately for each type of emission source
and then aggregated.
GHG inventory development and action
Where to act? How to act?
Set a GHG
Get Started: Collect Data and Develop a GHG emission
Scope and Plan Quantify GHG inventory reduction target
Inventory emissions management plan and track report
progress.
Reporting
• Reporting and disclosures
• Company sustainability reports, integrated annual reports, or specific environmental reports.
• Verification by third-party auditors ensures the accuracy and credibility of the reported data.
• Few reporting frameworks include:
➢ CDP (formerly Carbon Disclosure Project): A widely recognized platform for companies to
disclose their environmental impacts.
➢ GRI (Global Reporting Initiative): Provides standards for sustainability reporting, including GHG
emissions.
➢ Earlier TCFD (Task Force on Climate-related Financial Disclosures): Recommends disclosure
of climate-related financial risks. (This was disbanded at COP 28, and now IFRS S1 and IFRS S2 are
functional. IFRS S2- climate related disclosures)
• In India, while Scope 1 and Scope 2 are included by SEBI as part of KPIs under 9 ESG
principles, disclosure of Scope 3 remains voluntary.
Leading to decision making- Textile and garment sector
• Emissions are highly variable for various categories of garment companies, depending on whether they
are manufacturers or retailers etc.
• For manufacturers- upstream suppliers, Scope 1 and 2 emissions may be significant,
• For consumer-facing brands and retailers, Scope 3 emissions are typically the majority of total emissions.
• H&M Group’s 2019 sustainability report shows that Scope 3 emissions account for 99.6 per cent of total
emissions, almost half of these from fabric production.
• Scope 3 emissions are challenging to measure and manage, as brands or retailers may not have
detailed data on emissions related to their upstream suppliers
• Science Based Targets initiative (SBTi) encourage companies to set ambitious science-based targets
(SBTs) for GHG emissions reduction, in line with the aims of the Paris Agreement to limit warming to a
within 1.5°C or well-below 2°C pathway
• SBTi is a collaboration between the CDP, the United Nations Global Compact, WRI, and the World Wide Fund for Nature
(WWF). The aim of the initiative is to SBTs are encouraged for signatories of the UN Fashion Industry Charter for Climate Action.
includes a commitment to reduce industry emissions by 30 per cent by 2030, from a baseline of no earlier than 2015
• As of May 2020, there are 14 textile and apparel companies that have approved SBTs, and a further 34
that have committed to setting targets
• SBTi has developed guidance for the apparel and footwear sector on appropriate target-
setting methods and on best practices
• If a company’s Scope 3 emissions are more than 40 per cent of total emissions, a target is required
for Scope 3 emissions.
• If a Scope 3 target is required, companies must set one or more emission reduction targets and/or
supplier or customer engagement targets that cover at least two-thirds of their Scope 3 emissions
in line with the Scope 3 Standard.
• Targets must cover a minimum of five years and a maximum of 15 years from the date the target is
submitted to the SBTi.
• Companies should engage their suppliers and recommend they use the SBTi guidance to set
targets.
• Companies are encouraged to set targets for indirect emissions in the use phase (emissions
generated by customers or end-users) if these are significant; however, these targets need to go
beyond the target that covers two-thirds of Scope 3 emissions.
Target setting methods for reducing Scope 1,2 and 3 emissions
[Link]
[Link]
Herman Miller Case Discussion
• Context:
• HM decided to implement C2C design protocol in office chair, Mirra
• Protagonist:
• Drew Schramm, senior VP of SCM, along with his DfE team
• Decision question:
• Whether HM should replace PVC in the arm pad of the Mirra chair with TPU material?
• About Herman Miller:
• Michigan Star Furniture Company
• D J De Pree and sons- internationally acclaimed furniture design house
• Credibility & Excellence
• Culture: moral purpose. “things that matter”- better world, performance, design...
• Homogenous, value-driven, environmentally conscious, respect, attracts talent…
1
PVC Decision- Should HM stay with PVC or switch to TPU?
PVC TPU
• TPU too expensive-$6 per chair increase in • TPU cost is trivial-$6/chair in a $750 chair
cost • Consistent with their goals of zero footprint,
• Tooling requirements could delay the which is consistent with the values and
launch. Can expedite the fabrication of new company culture
tool, but still need time to calibrate and
• Use PR to their advantage by contrasting
optimize the parameters of a new or
with competitors
modified tool for TPU
• Use PR to pressure competitors to also
• PVC is the industry standard- Other replace PVC, thereby leveling the playing
competitors are not doing it. So, why HM? field.
• No infrastructure for recycling • They will have to do it sooner or later, so
• Sets a precedent for other products sooner the better and find a viable
alternative.
2
Who will take the decision?
• CEO?
• Timing: internet bubble burst; operating earning only. 0.4%. Every increase in cost had to be
heavily justified
• Operating income was low to talk about $6 increase in cost
• Implication on future product? Domino effect- 50% furniture products contain some PVC-
what about them?
• Fit with broader strategic initiative: C2C
Operationalizing C2C
PVC decision is part of broader strategic initiative. What is the notion behind C2C ?
Operationalizing C2C
• Crux of C2C was closed loop for materials (which implied waste equals food)- waste from one
became food for another
• No need for conservation- more was better
• Conventional environmental wisdom (cradle to grave)- conserve more, use less
Raw material End of Life Disposal
• Cradle to cradle- use as much as needed, just use the right material
Technical
Biological Waste=Food loop
loop
C2C Principles
• Redesigning industrial process: C2C thinking does not just focus on minimizing toxic
pollution and reducing natural resources waste. It goes one step further, demanding that
companies redesign industrial processes so that they don’t generate pollution and waste in
the first place.
• Eco-effectiveness vs. eco-efficiency: minimize pollution vs. recycle+upcycle
• Waste equals food
C2C to design
• Identify Biological and technical nutrients
• The Green-Yellow-Orange-Red List identification (material assessment) and action
• Disassembly ease
• Recyclability and recycled content
What is your assessment of how does Herman Miller translate C2C into practice?
• Organizational change: DfE team- Paul Murray (Director, Environmental Health and Safety),
Gabe Wing (Chemist) and Scott Charon (Supply chain manager), along with senior managers
from every function of the team. Involvement of the CEO at every level.
• Design: training of every designer; product development process changed so that the DfE
team could filter the output at each stage through C2C protocol and give feedback.
• Supply Chain: DfE created lot of anxiety among suppliers. However, HM was able to
persuade most. Collection of reliable data from suppliers. Resolution of hold up problem-
transition help to suppliers- mutually beneficial relationship.
• Mechanics: MBDC material screening process by DfE team- paid by HM
• Cost- Hard cost ($100K for IT engineering, $300K for materials screening, $350K for salaries
and benefits) + soft costs (disruption of design process, strained supplier relations, part
delays, substitute material, new suppliers)
• The overall effort required was significant
DfE Interaction with Development Process
Explore develop launch maintain
DfE
scorecard
Module Final
DfE “double
DfE prototypes product
scorecard check” DfE
kick- Replacement scorecard
off parts
DfE Team
Suppliers
What do HM employees think of C2C?
• C2C fit with HM culture:
• Appreciation for design
• Stewardship for environment
• HM attracted talent with similar values
• Homogeneous culture made it easier to implement C2C
• The strategy was in working out the mission statement and driving the process change
Mission statement “ We contribute to a better world by pursuing sustainability and
environmental wisdom. Environmental advocacy is part of our
heritage and a responsibility we gladly bear for future
generations.
Strategic Initiative Cradle to cradle design protocol
Specific process changes Training, design process changes, DfE scorecard
Supplier’s perspective
• Why were the suppliers resistant and need to be cajoled to compliance with C2C?
• Sharing of proprietary information with HM;
• Change product/process
• Termination of relationship
• What did it take for the arm-pad supplier to switch from PVC?
• Supplier’s effort (find alternatives, test alternatives, design and fabricate tooling, develop
manufacturing process) and risk (hold up) as a result of C2C protocol
• This effort could be exponentially higher if PVC had to be eliminated from all the products and if
C2C was to be applied to design of all products. This embedded knowledge of PVC helped
processes within the firm
• What would it take for HM to get rid of all PVC from all its products?
Capturing value
• What does HM gain from its strategic environmental initiative?
• Reputation/brand?
• Employee recruitment and retention?
• Anticipate impending legislation (first-mover advantage)?
• Should Herman Miller help its competitors implement C2C?
• Here the process itself can be a source of competitive advantage.
• Process capability is very difficult to transfer, even under best intentions.
• Therefore, HM can act with clean conscience and help its competitors build process
capability.
• Does C2C help the environment?
• Closing the loop?
