Floods, fires, droughts: climate change is no longer a distant concern. The summer of 2021 made the climate crisis real, tangible and a pervasive physical threat. Even without reading the United Nations IPCC’s special climate report published in early August, which warned humanity of the dire consequences of unreduced carbon emissions in the Earth’s atmosphere, business leaders have taken note. Across all sectors, among publicly traded companies and within private organizations, sustainability initiatives aimed at supporting climate change mitigation are increasingly a priority. The most incisive sustainable development tool available to a company is a carbon inventory.

A carbon inventory (also known as a corporate carbon footprint) is a measure of an organization’s greenhouse gas emissions (commonly referred to as “carbon”) that contribute to climate change. A carbon inventory takes into account both “direct” emissions from physical assets owned (buildings, vehicles, truck fleets, private jets) and “indirect” emissions resulting from daily operational activities such as electrification of warehouses, heating and cooling. air conditioning in the offices, the energy required to run the plant’s machinery and the fuel used to transport the finished products to market.

In the dark world of carbon accounting, a company’s direct emissions are referred to as Scope 1 emissions. Indirect emissions fall into two categories: Scope 2 (electricity consumption) and Scope 3 (channel emissions. valuable). Scope 2’s electricity emissions are simple to calculate and easy to identify. A business need only look at its utility bills for a calendar year. Scope 3 emissions include 15 ‘categories’ or types of activities that may occur within a company’s supply chain, both upstream (for example, the sourcing and shipping of materials. and equipment) and down (for example, bringing products and services to market and disposing of products) an organizational value chain.

The value of completing a carbon inventory is twofold. First, it calculates the total amount of carbon a business is responsible for emitting into the atmosphere. Second, it allows companies to see where within their operations there is “carbon intensity” or which activities within their operations require the most fossil fuel consumption. The first data point allows a company to set a benchmark on its carbon emissions that sets a trend line, in order to set carbon reduction targets to mitigate organizational contributions to climate change over time.

The second set of values ​​provides strategic advice on how to reduce and move away from fossil fuel consumption at specific points in a company’s supply chain. For a carbon inventory to be useful, meaningful and impactful, a company must perform full carbon accounting and calculate its Scope 1, 2 and all relevant Scope 3 category emissions.

Currently in the United States, this commitment remains far from sufficient. Morgan Stanley Corporate International (MSCI) acknowledges that SOE reports on Scope 3 emissions are sparse and incomplete. Only 18% of MSCI constituents even report their Scope 3 emissions and those who do, typically report on two main categories: business travel and purchases of goods and services. Software provider Greenstone Plus surveyed some 300 companies this year about Scope 3 emissions and found that 38% of companies report limited Scope 3 emissions (for example, business travel only), and nearly 24 % said they currently do not report any Scope 3 shows, but are “Consider reporting in this area in the future”.

Most companies that engage in carbon inventories each year focus on calculating and reporting Scope 1 and 2 emissions. When you see companies declaring and meeting carbon neutrality goals, the point is that these objectives were achieved by sourcing 100% renewable energy and purchasing carbon offsets for their Scope 1 and 2 emissions only. These efforts are admirable but insufficient. Eighty-five to 90% of most companies’ emissions go into Scope 3. This is true whether you are a product manufacturer, service company, or one of the many ubiquitous and proliferating digital markets. Scope 3 is where organizational footprints remain heavy on emissions and where digging into the details of a company’s business model can uncover opportunities to dramatically reduce environmental impact.

Here are four steps you can take to complete a carbon inventory worthy of a business:

MEASURE

Don’t deny your Scope 3 carbon emissions.

If you rent offices, factories, or warehouses, the carbon emissions associated with powering, heating and cooling those spaces fall into Scope 3. Service companies have almost always worked from home. during the pandemic. Energy consumption from personal electronics, home offices and distributed wifi networks enters Scope 3. Digital markets and their growth during the pandemic are effectively Scope 3 entities. warehouse, often have duplicate upstream and downstream transportation and distribution footprints, are cloud-based and require server rentals, and require millions, if not billions of customer and transaction data to be stored in completely safe. Many digital marketplaces are embarking on custodial e-commerce models for their buyers and sellers; authenticate digital transactions and secure ownership with non-fungible tokens. NFTs are based on blockchain technologies which by their very nature are inefficient and energy intensive. These aspects of digital entities and the market “products” they offer are all Scope 3 broadcasts.

MITIGATE

Companies should first pursue strategies to reduce carbon emissions within their value chain. Use the mnemonic Obvious to remember three types of mitigation strategies:

  1. Optimize: energy efficiency, buildings used, server processing, number of business trips made, transport systems and engagement with partners and suppliers in the value chain.
  2. Invest: in high-performance equipment, streamlined logistics and renewable energy systems.
  3. Substitute: materials, processes and behaviors that support the reduction of environmental impact, such as sourcing products containing recycled content and highly recyclable, encouraging the use of electric vehicles and public transport, and eliminating and reducing the number of chemicals used in manufacturing.

COMPENSATE FOR

Three compensation levers are available to companies to reduce carbon emissions, fossil fuels and water consumption to zero:

  • Carbon offsets that reduce one metric ton of CO2e in the atmosphere per certificate
  • Renewable Energy Certificates (CERs) provide “clean” renewable energy to the grid per megawatt hour (MWh) of electricity produced
  • Water Restoration Certificates (WRCs) represent 1,000 gallons of restored river or stream water

DISCLOSE

Companies use various means to report on their positive sustainability initiatives, including the publication of an impact report, the disclosure of priority environmental, social and governance (ESG) concerns to the financial markets, the publication of ” a press release and the development of a sustainable development roadmap that is shared via social media and on their public websites. Your business stakeholders care, watch and listen, and are keen to know what the businesses they seek to support are doing to mitigate the climate crisis.

A comprehensive carbon inventory including Scope 3 emissions is the essential means by which companies report on their environmental impact and their contribution to the climate crisis. No company can reasonably claim that it is making significant inroads towards the goals of the Paris Climate Agreement if it avoids calculating its value chain emissions. With (Scopes) 1-2-3: associate the goal with the action thanks to the measure.


Kate Gaertner is the founder and CEO of TripleWin review, a consultancy firm in the field of sustainable development. She is the author of the forthcoming book Planting a seed: three simple steps for a sustainable lifestyle.


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