Companies are preparing for forthcoming mandatory climate disclosure regulations in the U.S., Europe, and globally, set to take effect within the next two to three years. The task of accounting for greenhouse gas emissions may seem overwhelming, but sustainability executives at HP, Holcim, and Nestlé, all of whom have been reporting emissions for over a decade, have shared valuable insights on how to get started.
One key piece of advice is to seek outside assistance. Carbon consultants can significantly accelerate the accounting process, according to HP’s Chief Sustainability Officer, James McCall. For smaller-budget companies, smaller consultants are usually more affordable. Nonprofits like the World Wildlife Fund, CDP, and the Environmental Defense Fund also offer free resources and low-cost expert assistance.
Additionally, companies should prioritize building their in-house carbon expertise over time. Graduates and postgraduates with backgrounds in environmental science are crucial since science cannot be learned on the job, as per Nestlé’s Global Head of Climate and Sustainable Sourcing, Benjamin Ware. Alternatively, Holcim has trained its staff to expand their team due to difficulties in hiring individuals with the right skills, says Chief Sustainability and Innovation Officer Magali Anderson.
Automation plays a crucial role in streamlining data gathering. HP, for example, uses Schneider Electric to collect monthly energy invoices for natural gas and electricity. By automating data collection, companies can focus more on energy improvement and emissions reduction, rather than being overwhelmed by data collection.
To ensure accurate emissions calculations, businesses should follow established standards. The GHG Protocol is a leading standard that outlines emissions accounting for companies in different sectors. It defines the components to be included in various emission figures and provides guidelines for estimation approaches. Companies should also utilize online calculators or software based on the GHG Protocol to facilitate accurate emission calculations.
When starting emissions accounting, companies should begin by quantifying their direct emissions from operations and energy purchases (Scope 1 and Scope 2 emissions). These can be measured directly or estimated through calculations based on standardized emissions factors. The goal is to understand what emissions are material and meaningful for the business, even if the data may not be perfect initially.
Other departments within a company, such as office building managers, engineers, and finance teams, can provide valuable insights and data for emissions accounting. It’s important to communicate the significance of sustainability for the company’s bottom line, as HP does with its emphasis on customers’ desire for environmentally friendly options. Sharing emissions data can also drive positive outcomes, as seen with Nestlé’s increase in sustainability-linked sales.
Once companies have a handle on their direct emissions, they can turn their attention to Scope 3 emissions, which are generated throughout the supply chain and product use. These emissions often make up the majority of a company’s carbon footprint. To accurately account for Scope 3 emissions, companies can conduct life-cycle assessments specific to their industry. HP uses software called GaBi, which provides life-cycle emissions estimates for various products and processes. Collaborating with suppliers and customers can also help improve Scope 3 accounting and reductions.
Publishing early emissions data internally for initial error identification is recommended before publicly reporting. It’s crucial to maintain scientific rigor and establish a reputation for accuracy and thoroughness. As regulations may eventually require auditing of emissions data, it’s wise to become comfortable with carbon accounting before involving auditors. Building an audit trail of data and metrics development is important to demonstrate reasonable efforts and estimates.
While services like Schneider Electric can help with eventual audits, it’s advised to bring in auditors only when confident in the data and with sufficient in-house expertise.
In summary, preparing for mandatory climate disclosure rules involves seeking outside help, building in-house carbon expertise, automating data gathering, following established standards, starting with direct emissions accounting, collaborating with suppliers, and ensuring data accuracy before public reporting and audits. These steps will enable companies to navigate the complex world of emissions accounting and meet regulatory requirements effectively.
Contact: Dieter Holger at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. HTML tags have been retained.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.