According to a BCG study, companies say they are struggling to cut their emissions in line with targets. Their inability to measure their carbon emissions appropriately is the leading roadblock. In a survey of 1,290 organizations, BCG found that:
85% of the organizations are concerned about reducing their emissions,
But only 9% are able to measure their emissions comprehensively
Respondents also estimate a 30-40% error in their emission measurement
In this section, we talk about how companies track their emissions.
Measuring emissions in organizations
Carbon emissions are classified into three categories or scopes:
Scope 1 emissions: those produced by the organizations’ own facilities and vehicles and thus under its direct control
Scope 2 emissions: Emissions associated with purchasing electricity
Scope 3 emissions: upstream and downstream emissions, including those generated by suppliers and distributors, by employees’ business travel, and by the usage of products sold
Typically for any organization, Scope 3 emissions can range from 65-95% of their total carbon emissions footprint and make up the bulk of the overall emissions.
The graphic below highlights the various sources of emissions and how they are classified.
Why is measuring emissions difficult?
While measuring Scope 1 and Scope 2 emissions is easy (since you can easily monitor your own direct emissions), measuring Scope 3 emissions is very difficult. According to an HBR study, measuring carbon emissions is difficult primarily due to three reasons:
Lack of mandates and auditing standards,
Opaque supply chains, and
Complex and unique business processes
To illustrate this, we look at one example from Timberland below and just how complicated is measuring carbon emissions of one product line.
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