Tackling climate change starts with understanding our impact on the planet. For organisations, this means measuring and managing their greenhouse gas (GHG) emissions. GHG Accounting has come to the forefront due to the mandatory requirement to include it in Sustainability Reporting. However, to many of us terms like “GHG Protocol” or “Scopes 1, 2, and 3” sound unfamiliar, this quick overview will help get you started on your GHG accounting journey.
What is GHG Accounting?
GHG accounting tracks emissions that contribute to global warming, such as carbon dioxide (CO₂) and methane (CH₄), contributed both directly and indirectly by an organisation throughout its value chain. It works in a similar way to your financial reporting, but rather than tracking money it is tracking CO₂ equivalents. By identifying and measuring emissions, businesses can reduce their environmental impact and operate more sustainably.
The GHG Protocol and Emission Scopes
The
GHG Protocol is the global standard for measuring and managing emissions. It divides emissions into three categories or "scopes":
- Scope 1: Direct emissions from sources an organisation owns or controls, like company vehicles or on-site fuel combustion.
- Scope 2: Indirect emissions from purchased electricity, heating, or cooling. Switching to renewable energy can reduce these significantly.
- Scope 3: Other indirect emissions, like those from supply chains, employee travel, and product use. This category often makes up the largest portion of a company’s carbon footprint.
How Are Emissions Calculated?
GHG emissions are typically calculated using this formula:
Activity Data × Emission Factor = Emissions
- Activity Data refers to measurable inputs, such as the number of kilometres driven, kilowatt-hours of electricity used, or tonnes of raw materials purchased.
- Emission Factors are standardised values that indicate the amount of GHG emissions produced per unit of activity. For example, burning one litre of diesel fuel emits about 2.68 kilograms of CO₂.
This method provides a clear way to quantify emissions and identify reduction opportunities.
Why Does It Matter?
Not only is it necessary for mandatory reporting, Understanding emissions isn’t just about meeting regulations or investor expectations—it also helps organisations save money, improve efficiency, and build credibility. Customers and other stakeholders are starting to demand this information so they can make more environmentally friendly choices, so engaging in this space provides great business opportunities. Creating your GHG inventory helps you identify the main sources of emissions then your organisations can start taking practical steps toward a lower carbon business model.
Learn More
For more information, please view our introductory webinar, or
contact your local Moore Australia advisor for more information on how we can assist you in implementing a GHG Accounting system.