Step 1: Understand your current situation and develop a Greenhouse Gas inventory
An essential element of a Climate Transition Plan is a comprehensive inventory of your Greenhouse Gas (GHG) emissions. The Greenhouse Gas inventory provides the starting point of the transition plan as it describes the status quo that forms the baseline for target calculation and indicates which activities contribute to the highest emission categories.
To create a Greenhouse Gas inventory, companies can follow the guidance of the GHG Protocol offers a detailed methodology for calculation. Core components for creating a GHG inventory lie in identifying the scope of one's operations by setting organisational boundaries and understanding which steps in the value chain are related to these activities. Scope 1 covers direct emissions from sources that a company owns or controls, like company-owned vehicles or on-site fuel combustion. Scope 2 includes indirect emissions from the generation of purchased electricity, heating, or cooling used by the company. Scope 3 encompasses all other indirect emissions that occur throughout a company’s value chain, including those from suppliers, product use, business travel, and waste disposal. Data for scopes 1 and 2 is often available within a company's internal systems (e.g., CRM systems, HR systems, billing information from energy providers). Data for scope 3 is more complicated to gather, dependent on data availability from suppliers and supply chain partners, and often requires assumptions.
Overview of GHG Protocol scopes and emissions across the value chain. Source: Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
Data collection and emission factors
Data collection and emission factors
Source: Created by Grant Thornton Netherlands, based on the Technical Guidance for Calculating Scope 3 Emissions. Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard.
Emission factors transform business data such as dollars spent, kilograms of goods purchased or sold, or kilometres travelled into CO2 data. The table above is an overview of different methods based on emission factors.
The most accurate data is supplier-specific, using measured data from your value chain with tailored details for your specific product or service.
Activity-based emission factors estimate emissions based on a company or individual's physical activity, such as the number of kilometres travelled by vehicle or the amount of energy consumed. For example, if a company tracks the number of kilowatt-hours of electricity used, it can multiply that by the relevant emission factor for electricity generation to estimate emissions.
On the other hand, spend-based emission factors estimate emissions based on financial expenditures. This approach uses data on how much money is spent on specific goods or services, applying an emission factor that reflects the average carbon footprint of each dollar spent. This method is practical when more specific activity data is hard to obtain, allowing organisations to estimate emissions based on purchasing patterns.
Both approaches provide valuable tools for companies to calculate and reduce their overall carbon footprint, with activity-based factors offering more precision and spend-based factors serving as a practical alternative for indirect emissions. The most detailed approach is not always the most suitable. At Impact House, we help you select the correct calculation methods to provide the insight required to design and implement your Climate Transition Plan.