Understanding GHG Accounting: Key Steps to Track and Reduce Your Emissions

Sustainable Investment Group (SIG)

Greenhouse gases are shaping the future—how businesses respond will define theirs.

As organizations become more aware of their environmental impact, managing greenhouse gas (GHG) emissions has never been more crucial. In today’s business landscape, balancing operational goals with sustainability is essential, and Greenhouse Gas (GHG) Accounting plays a pivotal role in this effort. By measuring and managing emissions effectively, organizations can set realistic reduction targets, make informed decisions, and contribute to a more sustainable future.

What is GHG Accounting?

Greenhouse Gas (GHG) Accounting is the process of measuring, quantifying, and reporting the greenhouse gas emissions associated with a facility, organization, or other entity. By adhering to established standards, GHG Accounting ensures that emissions are accurately reported, allowing organizations to track their environmental impact and take actionable steps toward sustainability.

Two key standards provide the framework for GHG Accounting:

GHG Protocol: The most widely recognized standard, offering guidelines for consistent and transparent GHG emissions reporting.

The Climate Registry (TCR) General Reporting Protocol: Another trusted standard that ensures accuracy and reliability in GHG reporting.

Why is GHG Accounting Important?

Greenhouse gases significantly contribute to global warming by trapping heat in Earth’s atmosphere, leading to climate change and impacting quality of life. GHG Accounting is essential because it:

Identifies Emission Sources: Helps organizations pinpoint where GHG emissions are coming from.

Supports Decision-Making: Provides critical data for capital planning and strategy development.

Measures Progress: Allows organizations to track progress toward GHG emissions reduction targets.

Enhances Stakeholder Communication: Offers valuable insights that can be shared with investors, customers, and other stakeholders.

Mitigates Risks: Helps organizations reduce potential liabilities and comply with regulatory requirements.

What Are the Different Levels of GHG Accounting?

GHG Accounting can be conducted at various levels, depending on the scope and goals of the analysis:

Entity-Level GHG Accounting: Assesses the annual greenhouse gas emissions of an entire organization. This approach is useful for organizations looking to understand their overall environmental impact and develop strategies to reduce GHG emissions across all operations.

Project-Level GHG Accounting: Focuses on specific projects, evaluating the changes in GHG emissions resulting from mitigation efforts like energy efficiency projects or renewable energy installations.

Facility-Level GHG Accounting: Evaluates and attributes responsibility for GHG emissions produced by specific facilities. This level of accounting is crucial for organizations that need to monitor and manage emissions at individual sites.

The GHG Inventory Process: Plan, Develop, Manage

Regardless of the specific program or standard being followed, creating a GHG inventory involves three main stages:

Plan:

Assign Resources: Secure management support, establish a team, and prepare a budget.

Design GHG Inventory: Define inventory boundaries, determine GHG emission sources, and account for leased assets.

Develop:

Collect Data: Identify key contacts and ensure all relevant GHG emissions sources are captured.

Calculate Emissions: Use collected data to identify emissions factors, apply calculation equations, and conduct quality control checks.

Manage:

Set GHG Reduction Targets: Review calculated emissions against organizational objectives and define specific reduction targets.

Reduce Emissions: Implement actions and strategies to lower emissions, such as operational changes or efficiency improvements.

Report GHG Inventory Results: Finally, report the results of your GHG inventory as required, whether for internal reporting, sharing with stakeholders, or meeting regulatory requirements.

Defining Boundaries: Organizational and Operational

When defining boundaries, it’s essential to consider both organizational and operational boundaries. These boundaries ensure your GHG inventory is accurate and comprehensive.

Organizational Boundaries

Organizational boundaries determine which assets and operations are included in your GHG inventory. Two approaches guide this process:

Equity Share Approach: Accounts for emissions based on the equity share a company holds in an operation. For instance, if a company owns 60% of a joint venture, it accounts for 60% of that venture’s emissions.

Control Approach: Accounts for 100% of the emissions from operations under a company’s control. Control can be financial (e.g., majority ownership) or operational (e.g., decision-making authority).

Choosing the right approach is crucial, especially when multiple entities share control over an asset, to avoid discrepancies in emissions reporting.

Operational Boundaries

Operational boundaries define which GHG emission sources are included in your inventory. They are categorized into three scopes:

Scope 1: Direct GHG emissions from owned or controlled sources, such as fuel combustion on-site or emissions from company vehicles.

Scope 2: Indirect GHG emissions from purchased electricity, steam, heating, and cooling. These emissions occur at the power plant but are attributed to the entity’s energy consumption.

Scope 3: Indirect GHG emissions across the entire value chain, including business travel, employee commuting, and waste management. While Scope 3 emissions are optional to report, they often represent a significant portion of an organization’s carbon footprint.

Carefully defining these boundaries helps avoid common pitfalls like double counting or underreporting and supports more effective emissions management.

The Power of GHG Accounting

Greenhouse Gas Accounting is a crucial process for understanding and managing an entity’s impact on global warming. When applied effectively, it serves as a powerful tool for reducing GHG emissions, setting goals, informing stakeholders, and mitigating potential risks.

Our experienced ESG team is here to guide you through the GHG Accounting process, helping you track your emissions, set actionable reduction targets, and meet your sustainability goals. Ready to take the next step in your sustainability journey?

Contact our Director of ESG, Amy D’Angelo at amyd@sigearth.com to learn how our team of experts can help you track and mitigate your GHG emissions.

Resources:

https://asuce.instructure.com/courses/4635

Amanda Howard, ESG Manager at Sustainable Investment Group (SIG), has been with the team since 2021, playing a vital role in leading ESG surveys and frameworks, including GRESB, CDP, GRI, and SASB. Amanda’s expertise extends to managing over 2.5 million square feet of sustainable building projects, achieving certifications like LEED, Fitwel, and WELL for her clients. Drawing on her experience in both green building and ESG consulting, Amanda offers comprehensive project management support at both the property and corporate levels.