Article
Greenhouse gas emissions 101: GHG reporting basics
Sept. 18, 2023
Human activity has contributed to the dramatic increase in atmospheric carbon, a driving force of climate change. The industrial age has brought significant technological advances and efficiencies, but also increased reliance on greenhouse gas (GHG) emitting resources. Thus, businesses and industries are facing the new reality of managing growth while understanding and mitigating GHG emissions created by their core activities.
While the need for action is clear, defining those actions can be a significant challenge across various industries. This includes middle market organizations, who are now facing regulatory impacts and the need for increased transparency on climate-related matters.
When getting started, it’s critical to have a fundamental understanding of GHG reporting and how it affects your organization. Let’s break it down.
Define GHG reporting objectives and goals
When faced with a challenge, the first step is to understand the basic premise before plotting a course of action. First, companies must define their purpose, goals and objectives for GHG emission reporting. A thoughtful evaluation of how the reporting will be utilized requires consideration of future developments and forthcoming regulatory requirements. Additionally, companies need to understand the organizational and operational boundaries, including what is meant by scope 1, 2 and 3 reporting.
Many sectors accept the GHG protocol as the best practice methodology for GHG inventory. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG protocol provides standards, tools and resources to align GHG accounting across five main principles: relevance, completeness, consistency, transparency and accuracy.
Establish organizational and operational boundaries for emissions reporting
Once the goals and objectives of this information have been evaluated, then organizational boundaries need to be identified. The GHG protocol guides companies to assess this boundary based on their organizational structure and financial and operational control considerations. This includes ownership structures such as joint ventures, split ownership or oversight.
