Why mid-market companies need a reliable inventory of their Greenhouse Gas Emissions

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Mid-market companies benefit from an overarching ESG program that includes calculating their greenhouse gas emissions.

It’s no longer an issue only for the world’s largest brands: investors, regulators, employees, and consumers are becoming increasingly concerned about the environmental, social, and governance (ESG) performance of mid-market companies. A particular focus is on climate impact, as greenhouse gas (GHG) emissions have increased across major sectors globally since 2010.

With growing consensus and pressure for businesses to act, measuring GHG emissions is becoming the standard for every company to properly assess its own climate risks and opportunities. This all starts with calculating GHG emissions, developing plans to manage and reduce GHG emissions, and reporting on GHG emissions as a part of an overarching ESG program.

What are greenhouse gas emissions?

The enhanced greenhouse effect refers to those human activities that add to the warming of the atmosphere through the emissions of certain “greenhouse” gases that increase the atmosphere’s retention of the heat energy of the sun. In the case of businesses, these emissions typically come from the full operational lifecycle of production, packaging, transportation, use, and end-of-life of a company’s products or services. They include carbon dioxide — the gas most emitted by human activities — and others, including methane, nitrous oxide, and fluorinated gases, which trap heat in the atmosphere, altering natural climate cycles. 

Types of greenhouse gas emissions

When measuring greenhouse gas emissions for your company, you can categorize emitting activities around Scope 1, Scope 2, and Scope 3 emissions for measurement and reporting purposes:

Scope 1  Direct greenhouse gas emissions that occur from on-site and mobile (e.g., a truck) sources that are controlled or owned by an organization.
Scope 2Indirect greenhouse gas emissions associated with the purchase of electricity and other power.
Scope 3The result of activities from sources that are not owned or controlled by the reporting organization, but from upstream or downstream of its value chain.

The figure below provides an overview of the three scopes as defined by the GHG Protocol:

Each scope of GHG emissions is comprised of categories intended to reflect a business activity that produces emissions. While some categories are relevant to most businesses, like purchased electricity, others may be specific to the company or their industry. For example, Category 14 within Scope 3 Emissions quantifies emissions associated with franchises.

This category would not be relevant to a company that is service or software focused, like Good.Lab. But it is not straight-forward for product companies, either. Products that indirectly consume energy from their use (think washing a pair of jeans) are not required to report on this category of emissions, though they may feel compelled to due to external pressures or for purposes of consumer transparency.

How to calculate greenhouse gas emissions 

For most mid-market companies and larger enterprises, measuring GHG emissions is easier with carbon footprint software. This is because a software tool enables you to track GHG emissions over time and houses all the emission sources and calculations in one place. Put simply, these are complex calculations that require close examination of both direct and indirect greenhouse gas emissions across your company’s supply chain. With GHG emissions software, however, there are just four simple steps when it comes to measuring your GHG emissions:

1. Decide which greenhouse gas emissions to measure: 

Good.Lab’s GHG Emissions Calculator is designed to meet where you are by mapping the best possible calculation method to your emissions activities. We help you determine which categories require direct data and which areas can be estimated using industry best practices. 

2. Collect your greenhouse gas emissions data:

It can be challenging to collect all the required activity data to produce a comprehensive estimate. For example, your HR team may have business travel records; utility bills may reside with local operations teams. To calculate Scope 3 emissions, you’ll need data from your supply chain partners on their emissions, plus estimates for how your customers use and dispose of your products at end-of-life.

3. Calculate your greenhouse gas emissions footprint:

Once the activity data is input to the GHG Emissions Calculator it is multiplied by the specific emissions factor to calculate the GHG emissions associated with each individual activity. Good.Lab’s GHG Emissions Calculator solves for the research problem of navigating emissions factors by using industry standards (e.g., EPA emissions factors) in areas where your data may be limited to still produce the best possible estimate.

How to conduct a GHG Emissions calculation based on Activity-level data.

4. Visualize your greenhouse gas emissions inventory:

Your results are displayed in Good.Lab’s GHG Emissions Calculator in a visual manner, showing the totals across scope, category, and subcategory. You can view data for multiple years and easily export it for reporting into common frameworks, such as SASB, GRI, CDP, TCFD and pending ISSB standards. Mid-market companies may also use their reports to satisfy supply chain partners request for emissions data as part of their own Scope 3 GHG emissions calculations efforts.

How to verify your greenhouse gas emissions inventory

Sharing misleading or unsubstantiated claims as part of your company’s ESG profile is extremely risky today with increased regulatory scrutiny on climate metrics. Conveying your ESG story in way that builds trust with different partners is keyGood.Lab’s GHG Emissions Calculator produces an audit-ready emissions report that you can share confidently with your investors, customers, suppliers and for any regulatory and reporting purposes.

What are ways to reduce your greenhouse gas emissions

Beyond the stakeholder pressure to calculate your GHG emissions, transitioning to lower-carbon operations creates value and prepares your company for the long-term and a low-carbon future. Being able to identify the biggest emission sources in your company helps to reduce your company’s carbon footprint and be part of climate change solution.

Depending on your business sector, once ESG and climate targets are set, your company’s action plan might include switching to sustainable suppliers or helping your suppliers become more energy efficient, adopting renewable energy sources, or switching to hybrid or fully electric fleet vehicles, for example.

Our consultants can work alongside your team to set aggressive but achievable ESG targets, or align you to science-based targets that specify how much and how quickly your company will need to reduce its GHG emissions.

How Good.Lab helps mid-market companies measure, manage, and reduce greenhouse gas emissions

Mid-market companies boost profitability by building an ESG strategy that includes calculating GHG emissions along with a roadmap to reduce them. After calculating your greenhouse gas emissions baseline, our team of ESG experts can help you to identify opportunities to reduce your carbon footprint. Good.Lab’s GHG Emissions Calculator enables your company to set relevant ESG targets and develop strategies to reduce your emissions.

Our ESG Performance Management Platform helps mid-market companies to identify, track, and measures and ultimately improve their ESG initiatives. Get in touch to uncover how our ESG solutions can help your company take the next step in its ESG journey.

Disclaimer: Good.Lab does not provide tax, legal, or accounting advice through this website. Our goal is to provide timely, research-informed material prepared by subject-matter experts and is for informational purposes only. All external references are linked directly in the text to trusted third-party sources.

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