Do you know how significant your company’s carbon impact is? Do you know how to reduce your emissions? Governments and businesses must take immediate action in the next few years to decrease greenhouse gas emissions to zero. This is in conformity with the Paris Agreement, a historic worldwide agreement to reduce emissions of greenhouse gases in order to limit the global temperature rise to 1.5 degrees Celsius and avert the worst effects of climate change. Therefore, either governments or businesses must assess and control emissions from value chains, private and public sector activities, goods, and other regulations to enable the ensuing GHG reductions. Understanding your GHG footprint is the first step toward climate control. Here are the details.

What exactly is GHG accounting?

GHG accounting, often known as carbon calculation, is the process of determining the total greenhouse gas (GHG) emissions and removals produced directly and indirectly by company or organizational operations. The World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) developed GHG as an international standard for estimating and reporting corporate emissions by classifying GHG into Scope 1, 2, and 3 according to the source.

The GHG Protocol serves as a guide to help governments and businesses reach net zero by providing comprehensive and global standards for accounting, reporting, sector guidance, accounting tools, and training in managing and reducing emission levels based on reports that identify a climate change action agenda.

What are scopes 1, 2, and 3? 

The following greenhouse gas (GHG) emissions are categorized into three scopes by the GHG Protocol, which are the most widely used guidelines for carbon accounting: 

Scope 1: Direct Emissions 

These emissions are produced directly from facilities that your business owns or controls. Examples include emissions from the combustion of fuel used in vehicles, combustion owned or controlled by boilers, and emissions from the synthesis of chemicals used in manufacturing. 

Scope 2: Indirect emissions

These emissions are caused by the services you use to operate your company. Consider the amount of power, gas, steam, heating, and cooling used by the company as an example. 

Scope 3 – Other indirect emissions

These emissions result from activities that are not carried out directly by the company but whose sources are related to your company’s operations. Scope 3 emissions are also known as value chain emissions. These scope 3 emissions are not under the direct control of the business, but organizations can influence activities that can produce these emissions by involving many stakeholders and other businesses throughout the value chain. Upstream emissions and downstream emissions are also divided into 2 categories.

  • Upstream emissions

Upstream emissions that occur from pre-production to before processing, such as employee or business trips from the organization, Upstream emissions include 8 categories, namely purchased goods and services, capital goods, fuel, and energy. Upstream transportation and distribution, waste accumulated in operations, business travel, employee commuting, and upstream leased assets

  • Downstream emissions

These downstream emissions occur during post-production, or after the product leaves the company, such as distribution, product use, and product lifestyle. Downstream emissions include 7 categories, downstream transportation and distribution; the processing of sold products; use of sold products; end-of-life treatment of sold products; downstream leased assets; franchises; and investments.