Normative’s Carbon Accounting Engine uses Greenhouse Gas (GHG) Protocol to estimate your business’s total carbon footprint.
In this article, we cover:
What contributes to carbon footprint
Every business activity emits greenhouse gases which contribute to global warming. Whether it’s the electricity supply for your office building, the fuel your employees use to drive your vans, the laptops purchased, or the servers that store your data.
What constitutes carbon footprint
Carbon footprint is an estimate of an activity’s climate impact. It includes emissions from the greenhouse gases
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Carbon Dioxide (CO2),
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Methane (CH4),
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Nitrous Oxide (N2O),
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Hydrofluorocarbons (HFCs),
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Perfluorocarbons (PFCs), and
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Sulfur hexafluoride (SF6).
Carbon dioxide is the reference gas used to express the global warming potential for the other greenhouse gases. Scientists convert other greenhouse gases to the equivalent amount of carbon dioxide (CO2) that would create the same amount of global warming.
The carbon footprint of all activities is expressed in terms of CO2e.
Classifying activities by scopes
The GHG protocol classifies activities producing greenhouse gases into three scopes
Scope 1
These are direct emissions from the combustion of fuel in assets that a company operates – for example, fuel emissions from a company-owned car or a diesel generator.
Scope 2
These are indirect emissions from the generation of energy purchased from a utility provider, such as heating, cooling, steam, and electricity.
Scope 3
Scope 3 emissions include all indirect GHG emissions that do not come under Scope 1 & 2. The upstream emissions are from a company’s suppliers, and the downstream emissions are from a company’s customers. GHG protocol has further divided the scope 3 emissions into 15 categories.
Example: Category 1 - Purchased Goods and Services Emissions – emissions from the production of a laptop purchased by the reporting company.
Calculation methods
Emission factors (EF) indicate how much greenhouse gases are emitted for each activity. Normative's database consists of carbon data from government databases, academic studies, company reports, and regulatory disclosures.
Spend-based method
This method uses the cost of the purchased goods and services and multiplies them by the activity-specific EFs to estimate the corresponding GHG emissions.
∑ (cost of purchased good or service (€) × EF of purchased good or service per unit cost (kg CO2e/€))
For a furniture purchase from IKEA of € 1000, the corresponding GHG emissions would be: € 1000 * 0.75 kg CO2e/€ = 750 kg CO2e
Average data method
This method uses the quantity of the goods or services purchased and multiplies them by activity-specific EFs to estimate the corresponding GHG emissions.
∑ (quantity of purchased good or service (€) × EF of purchased good or service per unit cost (kg CO2e/€))
Supplier-specific method
The supplier-specific method is most accurate since it uses the product data from the purchased supplier. When supplier-specific GHG inventory data are available, Normative uses this approach. This data can come from the supplier who has conducted a reliable upstream product GHG inventory or internal Lifecycle Assessment (LCA) report.
∑ (quantities of good purchased (e.g., kg) × supplier-specific product EF of purchased good or service (e.g., kg CO2 e/kg))
Hybrid method
The hybrid method uses a combination of supplier-specific EFs and industry average EFs to estimate the overall GHG emissions. GHG protocol recommends that businesses calculate activities that produce the most emissions with the highest specificity.
Let’s take the example of company A which has 100 different suppliers in the reporting year, where ten of these suppliers account for 85 percent of the purchased goods in quantity. In that case, the company may calculate emissions associated with the goods from these ten suppliers using primary data collected from the suppliers and secondary data for the remainder.
Therefore, Normative uses the hybrid method that ensures that you spend the time collecting supplier-specific data only for the suppliers who are your highest emitters. Normative then uses the spend-based or average data method to calculate the remaining emissions.
The carbon management and emissions reduction domain are constantly evolving and maturing; as a result, Normative's periodically updates the methodology to be completely aligned with the GHG protocol.