Corporate GHG Accounting: What it is, How it’s Done, and How We Help
Beyond the Paris Agreement under the UN Framework Convention on Climate Change (UNFCCC), in which 196 states and the European Union have agreed to an ambitious set of climate-change targets within, several initiatives to limit global temperature exist. The Greenhouse Gas Protocol, for instance, arose from a recognition by the World Resources Institute and the World Business Council for Sustainable Development (WBCSD) that private industry lacked an international standard for GHG emissions accounting. It published the first edition of its Corporate Standard in 2001, only four years after the Kyoto Protocol was agreed. Since then, GHG Protocol, as it is commonly known, has become the world’s most widely used standard for identifying and reporting GHG emissions.
The GHG Protocol is more than an effort to increase corporate environmental responsibility and fulfill an important mandate of their environmental, social, and governance, or ESG, efforts. It also helps companies achieve net-zero targets and establish sustainable financing. In the process, it represents an important way for companies to provide signals to stockholders and other stakeholders who value sustainability when making investment decisions. In short, the GHG Protocol is good business.
Accounting for GHG emissions is also important in the context of the EU’s Sustainable Finance Disclosure Regulation (SFDR), which comes fully into force in early 2022. This regulation requires financial advisors and other market participants to disclose the sustainability measures of any investment vehicle. It complements the EU Taxonomy Regulation (EUTR) introduced in 2020, which requires reporting regarding six related objectives: climate change mitigation, climate resilience, sustainable water use, pollution prevention and disposal, restoration of regional ecosystems, and more circular economy in which resources are more fully reused.
Measuring your climate change mitigation contribution
To help investors incorporate climate change considerations into their financial decisions, ratings have started to emerge. The Carbon Disposal Project (CDP) assigns companies, cities, and municipal systems on an A to F scale.
RobecoSAM is a particularly well-established scoring framework, with a 25-year history that measures the impact of investment portfolios on GHG emissions, water use, energy consumption, and waste management. Its analysis can be reported as impact per invested dollar, allowing investors to weigh their portfolios as they choose and to chart their progress over time.
The Benefits of GHG accounting to Investors
As we transition to a low-carbon economy, investors are increasingly keen on sectors that exhibit resilience to climate change and on companies that are taking measurable steps to remain both competitive and environmentally responsible. Companies that apply sound GHG policies are especially valuable to such investors since their embrace of environmentally sound practices is supported by an acknowledgment of their impact on society and an appreciation of transparency and good corporate governance. These firms are likeliest to take new regulations in stride, invest in technologies and processes that reduce GHG emissions, and pursue opportunities made available through carbon markets and other means of rewarding sound climate change policies.
Your Company’s GHG accounting Journey, and How Perspectives Helps
The first step toward improving any firm’s climate footprint is to measure its GHG emissions. Once we establish a company’s GHG baseline, we develop a strategy that identifies opportunities to reduce GHG emissions and achieve scientifically sound target levels. Most companies go further, to carbon-neutral or net-zero standing, by offsetting their minimally necessary GHG emissions.
Perspectives brings more than 20 years of experience to this process, helping businesses understand where they are, make a plan to achieve their GHG reduction goals, and confirm their success against the GHG Protocol’s three-score rubric. We help clients identify opportunities to claim emission credits (and which specific credits they should claim), and how, when, and where to trade them. Together, we can make your business GHG neutral, establishing it both as a good corporate citizen and as an enterprise worth investing in for the long haul.