Reporting greenhouse gas (GHG) emission reductions and offsets.
Updated: Nov 22, 2021
You’ve set a climate change target, perhaps even a science-based one, and now you want to know how to report your company’s progress. In line with global best practice, the GHG Protocol and reflective of the scoring in the CDP Climate Change assessment, there are three steps your company should follow:
1. Capture energy efficiency improvements.
Emission reductions linked to energy efficiency improvements will intrinsically be captured if your company is following the GHG Protocol Corporate Accounting and Reporting Standard (which 9 out of 10 companies reporting to CDP do). Put simply, using this method, energy used multiplied by the relevant conversion factor equals greenhouse gas emissions. It therefore follows that reducing your company’s energy use will reduce your greenhouse gas emissions and help you to achieve your target.
2. Utilise green/renewable electricity sources.
In the UK (and some other countries), electricity suppliers inform customers of the sources of their energy supply i.e. the proportion which comes from coal/oil/wind/solar/nuclear etc. Differentiating energy sources like this allows companies to select tariffs with a greater proportion of, or fully from, zero carbon sources, thus lowering GHG emissions.
Crucial to capturing the impact of this choice is the method of reporting Scope 2 emissions (i.e. emissions from electricity consumption) - location-based or market-based. The former multiplies your electricity consumption (kWh) by generic conversion factors reflective of the whole electricity market in the relevant geographic area (e.g. the UK). The latter method allows you to weight your electricity consumption by energy source, and then apply the relevant source-based conversion factor. For renewable energy sources this will be zero. Obviously, the market-based method is more complex to compute but it will reflect more accurately your company’s emissions and, when low carbon tariffs are chosen it will help you to meet your climate change target.
3. Offset or removal of greenhouse gas emissions.
After all practicable emission reduction activities have taken place, the only way to achieve carbon neutrality or net zero is to offset the residual emissions by purchasing carbon credits, preferably from recognised schemes. For an explanation of the difference between carbon neutral and net zero read our blog here.
Current best practice is to measure and report any GHG offsets separately from your corporate emissions figures and, in accordance with the Project Accounting method. For companies submitting to CDP Climate Change, this this means reporting offsets in question 11.2 and 11.2a rather than in sections C6 and C7 which cover Scope 1 and 2 emissions. Whilst the reporting of offset emissions should be distinct and separate, they can still of course be combined with corporate emission values for tracking progress against climate change targets.
If you need some advice on your CDP Climate Change submission, or assistance with reporting your company’s greenhouse gas emissions, then please contact Rawstone Consulting here.