The world of greenhouse gas reporting just got a little more interesting. The Greenhouse Gas Protocol Initiative (a collaboration between the World Resources Institute and the World Business Council for Sustainable Development, and involving the participation of hundreds of companies around the world), released their draft Scope 3 Accounting and Reporting Protocol on November 5th for stakeholder review. The Scope 3 protocol takes the form of two documents – the Product Accounting & Reporting Standard and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The two sets of calculations from the two guidance documents are designed to work in tandem, as shown in this figure from the reports.
Under the GHG Protocol, emissions attributable to a company are divided into 3 scopes: Scope 1) direct emissions from sources it owns or controls (like factory smokestacks and company-owned cars); Scope 2) emissions attributable to the electricity, heat and cooling the company consumes; and Scope 3) everything else. Scope 3 includes both upstream activities like services and products purchased by the company; downstream activities such as the emissions from the consumer’s use and disposal of the company’s product; and related activities such as the leased building, investments, and even emissions from employees’ commuting and business travel. Not unsurprisingly, given the breadth of sources that can be included, Scope 3 emissions are the largest source of emissions for most companies and thus represent the largest opportunity for greenhouse gas reductions.
The previous GHG protocols, issued in 2004 and 2005, focused on Scopes 1 and 2, but highlighted the need for an additional protocol for Scope 3, which was “optional” for reporters. Although some took on the challenge, Scope 3 emissions are the hardest for companies to reliably measure.
The point of the protocol is to make such measurements more reliable. As the Corporate Value Chain report highlights, a comprehensive approach to corporate GHG emissions measurement, management and reporting that incorporates all 3 scopes of emissions would enable companies to focus on the most cost-effective or largest opportunities to reduce emissions within the full value chain, and lead to more sustainable decisions. The authors caution, however, that even with a Scope 3 standard, the protocols are not designed to support comparisons between companies’ emissions. They will aid, however, in simplifying and reducing the costs of taking on a Scope 3 inventory, and increasing consistency and transparency in GHG accounting and reporting.
The Product Standard report provides a generalized framework to support the company in quantifying and reporting the GHGs generated during a product’s life cycle (regardless of what the product might be). The goal of the standard is to assist companies in making informed choices about the products they manufacture, sell, purchase and use. Although the authors caution that the standard is not intended to support GHG accounting for the purposes of offsets (from reductions) or carbon neutrality, the protocol will aid in making reliable emissions-related information about a product available in the public domain — such as the New Zealand wine that reports its own carbon footprint on the bottle. Although primarily a sales gimmick at this point, as more information becomes available, consumers can make more informed and sustainable choices as well.
Comments on the draft protocol may be submitted through the GHG Protocol website here.