Scope 1, 2 and 3 emissions, Science based targets and measuring carbon emissions in organizations
Updated: May 26, 2022
Today’s edition is the second part of our three part series on tracking carbon emissions. In part 1 we discussed how to track emission at an Earth level (from Space! - check out the edition here), in Part 2 we discuss how to track emissions at an organizational level and in Part 3 (stay tuned for that) we will look at how to track emissions at an individual level.
What to expect today:
Measuring carbon emissions in organizations
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
How do organizations measure emissions?
As a quick summary, 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. (Check out our earlier edition on Scope 1,2 and 3 emissions here and we break down McDonald’s emissions here)
Why is measuring carbon 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 and just how complicated is measuring carbon emissions of one product line.
Science Based Targets initiative
Once organizations know what needs to be measured through their Scope 1,2, and 3 emissions, they need to figure out at the end of the day, are these emissions in line with global targets of keeping the temperature rise below 1.5C before the end of the decade. This is where the Science Based Targets initiative (SBTi) comes in. The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). The initiative is set up to drive ambitious climate action in the private sector by enabling companies to set science-based emissions reduction targets.
What are science based targets?
Science-based targets provide a clearly-defined pathway for companies to reduce greenhouse gas (GHG) emissions, helping prevent the worst impacts of climate change and future-proof business growth. Targets are considered ‘science-based’ if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C.
For anyone curious about the actual framework, feel free to check out this link.
Plan A - a startup to help monitor emissions
Plan A is a GreenTech startup based out of Berlin, Germany, that has developed a carbon quantification platform to measure, monitor, and reduce environmental footprint. The startup has raised $15mn in funding so far from the likes of Softbank and others. Some estimates put the market for emission management solutions at between $10 billion and $26 billion in the next five years and startups like Plan A are well poised to take advantage of the increased awareness and shifting regulatory environment (EU has made carbon reporting mandatory).
How does Plan A’s platform work?
Plan A builds science-based digital tools that assist companies with implementing automated carbon accounting, decarbonizing their businesses, as well as, more recently, managing ESG standards and reporting progress. The company’s SaaS platform uses machine learning to first collect, process, and analyze carbon emissions and ESG data (you can enter data manually or connect it to your existing systems). Then, it assists companies with personalized reduction and improvement plans, as well as reporting needs in accordance with frameworks such as the Corporate Standard of the Greenhouse Gas Protocol.
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