Sustainability Resources

Greenhouse Gas (GHG) emissions inventories involve identifying material sources of emissions in an organization (such as electricity use and fuel consumption), gathering activity data for those sources, and quantifying the resulting emissions. These can stem from operational activities and, optionally, value chain activities.

Emissions are grouped into three categories, called scopes. 

Scope 1 emissions refer to direct emissions attributable to fuel burned in buildings or equipment owned or operated by the reporting company. 

In the form of mobile combustion, this can include emissions produced by a company owned vehicle with a gasoline-powered internal combustion engine. In the form of stationary combustion, this could be the emissions produced by burning natural gas in a water heater to provide hot water to a company-owned building.

Scope 2 emissions result from indirect energy consumption due primarily to purchased electricity (but also to purchased steam or cooling).

For example, the emissions associated with the production of purchased electricity required to light an office space. That electricity was produced off-site by a utility provider that may have burned fossil fuels, such as coal or natural gas, to power a generator that created that electricity.

Scope 3 emissions include any indirect emissions not included in scopes 1 and 2 but that may be part of the reporting company’s value chain.

Examples of Scope 3 emissions include emissions associated with the production, transportation and distribution of capital goods purchased by the reporting organization. If a baker makes cookies, then the emissions associated with the flour they purchase would be included in Scope 3 along with the emissions associated with transporting the cookies to the consumer. Scope 3 also includes emissions associated with employee commuting that is not done in a company-owned vehicle, business travel, and other upstream and downstream activities in a company’s value chain.

For many companies, the majority of emissions occur upstream or downstream of the company’s own operations. Quantifying these emissions not only deepens your understanding of your company’s footprint, but it can also present meaningful opportunities for reduction and enhance brand reputation by enabling you to share meaningful, data-backed stories. Moreover, Reporting scope 3 emissions is a requirement when setting Science-Based Targets if a company’s relevant and mandatory scope 3 emissions are 40% or more of total scope 1, 2, and 3 emissions.

The GHG Protocol asks reporters to calculate electricity emissions in two ways: once using grid-average emissions factors that reflect delivered power, called the location-based method, and once using emissions factors that reflect contractual instruments, called the market-based method. Scope 5’s automatic dual-reporting features eliminate the need to manually recalculate emissions and make it easy to compare emissions totals between the two methods in charts and reports. Scope 5 also publishes a library of supplier-specific emissions factors suitable for market-based reporting and offers expertise in finding and qualifying emissions factors from any other unique utility not represented in the standard offering.

Science-Based Targets provide companies with a framework for setting GHG emissions reduction goals that are in alignment with limiting global warming below 2 degrees celsius. Companies who set targets enjoy increased innovation, better preparedness for potential future regulations, and improved brand reputation. Scope 5 offers advanced target setting functionality that allows you to define any kind of target and compare progress across various groups in your organization. Scope 5 also offers project tracking and forecasting features that make it easy to visualize whether you’re on track to meet your goals.

Committing publicly to targets is a bold move that establishes leadership but also entails reputational risk. Scope 5’s software tools (optionally complemented by our consulting services) help you look at past and present performance to decide what targets you can realistically achieve. Our target monitoring and forecasting tools help you identify leaders and laggards within your organization to be sure you remain on track.

Internal carbon pricing refers to an organization assigning a price to carbon emissions generated by their activities. Internal carbon pricing helps to mitigate the impact of greenhouse gas emissions produced from certain technologies or processes an organization may be a part of by integrating the impacts of climate change into the economic calculus of an organization. There are two types of internal carbon pricing called shadow pricing and an internal carbon fee:

Shadow pricing assigns a hypothetical cost to carbon and other emissions. This “price” is used to inform investment strategies with the intention of incentivizing low-carbon choices by bringing awareness of the impacts of climate change to CFO’s and the like.

An internal carbon fee is a voluntarily imposed fee on an organization’s activities that produce emissions. The fee is real and the money collected from the fee is often used to fund green projects to support a transition away from fossil fuels.

Corporate carbon pricing is one of the most effective ways of reducing carbon emissions. Such fees internalize the otherwise externalized costs of emitting carbon and other emissions driving behavioral changes. Variations on carbon pricing have been widely praised in the sustainability world, but a successful carbon pricing program requires high quality, ubiquitously available and fine grain emissions tracking. This is where Scope 5 excels.

In the early days of sustainability, companies were satisfied with an emissions inventory that generated two numbers: their prior-year, company-wide scope 1, and scope 2 emissions. While those numbers satisfied minimal expectations from reporting agencies, they didn’t provide much of a basis for gaining insight and driving decisions. 

Today, more and more stakeholders are realizing the need for both temporal and spatial granularity. Temporal granularity looks at how emissions change within the year and in real-time enabling you to understand seasonal fluctuations and to get ahead of opportunities rather than always looking in the rear-view mirror. Spatial granularity helps you quantify the emissions generated by specific parts of your organization and specific activities so that you can understand which are helping you or hindering you from meeting your sustainability goals.

The CDP (formerly the Carbon Disclosure Project), the Global Reporting Initiative (GRI), and the Dow Jones Sustainability Index (DJSI) are three of the most popular and vetted frameworks that organizations can report to in pursuing corporate transparency, accountability, and sustainability. Other notable examples of ESG reporting frameworks include the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC).

Each reporting framework asks for similar information with slight variations in how that information must be presented. Every year, a list of reporting institutions with high-achievers highlighted is published by each of these reporting frameworks.

With this in mind, generating reports in conformance with CDP, GRI, DJSI, or another reporting framework can provide brand recognition as customers, investors, and stakeholders look for leaders in corporate sustainability and social responsibility. Third-party certification and validation further supports brand recognition and can also serve as a benchmark for tracking progress over time. Finally, these frameworks provide a useful tool for communicating with and influencing stakeholders within your organization.

Scope 5 can help you streamline reporting by simplifying the data collection process and allowing you to easily normalize, analyze and visualize the information as per each reporting framework’s requests.