Do you know how carbon is counted ?
Six years ago when I took on the role as Head of Go Green at DHL eCommerce, the first thing I needed to know was where the company stood in its carbon footprint trail. The first and foremost question was:
“How much carbon was being produced and emitted into the atmosphere by DHL?”
This began for me a quick education in carbon accounting and I want to share what I’ve learned with you – question was how is it done?
This is not a simple question to answer. Whilst people spend years learning the art of counting money, and businesses grapple on how to account for their revenues and expenses, counting carbon is a relatively new concept. The processes and systems for dealing with carbon numbers are relatively new.
Identifying sources of Carbon emissions
The current practice on how to measure greenhouse gases, is to organize things into three buckets. These buckets are referred to as “Scopes” in the trade.
These are classified into sources of emissions as Scope 1, Scope 2 and Scope 3.
Scope 1 emissions - are those directly produced by you, with questions like:
Does your equipment burn fossil fuels?
Does your business activity directly release greenhouse gases into the atmosphere? If you answer “yes” to these questions, then you have to tally these Scope 1 emissions in your carbon calculation.
Scope 2 emissions - are generated by other companies that supply you power.
These are considered “indirect” greenhouse gas sources.
Does your utility company use oil to generate the electricity used to run your office? If so, the greenhouse gases released from burning that oil would be your Scope 2 emissions.
Scope 3 emissions - are the amount of carbon emitted by vendors and suppliers in your value chain (another indirect source).
Do you transport your products to your customers on the other side of the world in a container ship?
Well, how much carbon did the ship emit in the course of the move?
If you purchased trucks for your shipping fleet, how much carbon was emitted in making those vehicles?
Business travel is also in this scope. The carbon footprint for attending a meeting on the other side of the globe would show up here.
All of these emissions would tally int your Scope 3 emissions
Calculating and Reporting Carbon Emissions
- Having identified the scopes, 1,2 & 3 – how is the calculation done ?
At this point, you are basically just adding up the carbon that was emitted in scopes 1, 2 and 3. Generally this is displayed in tons of carbon. Many companies will measure more than just carbon dioxide. They will list the emissions in tons as well and include carbon dioxide, methane, nitrous oxide, and other flourinated gasses. These would be listed as “Green House Gasses” or “GHG” for short. For many industries like farming or mining the GHG is far more relevant than simply counting carbon dioxide.
Reporting your emissions is nearly always done based on whether or not the company is making progress in cutting emissions or not. In order to do that they will always report emissions as a percentage improvement verses a baseline. This is where things get a bit tricky. If you are a growing company getting more and more business every year, then it would be unfair to simply compare one year of emissions verses another year, because even if you made improvements with cutting carbon from your processes you could still emit more based on that fact that you have doubled your business. In the transport industry one would then simply calculate the tons of carbon emitted per kilogram shipped. This is one possibility, but there are others. Companies essentially need to report what is fair and reflective of their processes.
Understanding the Impact
Breaking down the sources of carbon and counting the emissions using these three scopes helps organizations become more aware of the impact of their activities in carbon output. This awareness is crucial to help them focus on areas for corrective actions in a structured and controlled manner and without being overwhelmed.
This is the standard method most companies use today.
Challenges
That said, only some companies are able to calculate their Scope 3 emissions. This is due to a lack of information from logistics service providers, carriers and even vendors.
If companies were bound by a more regulated procedure, that required them to count their emissions, with a degree of accuracy and then share them with their stakeholders, it would be much easier to determine scope 3 emission.
Instead, what often happens today, is for companies to try and calculate their Scope 3 emissions based on what information they have on their vendors’ operations. We did that a lot at DHL.
Despite the hurdle, don’t be hobbled into inaction. You can start by calculating your Scope 1 and Scope 2 emissions, which will already give you a better understanding your carbon footprint and how to adjust and improve. You can’t manage what you can’t measure. So start measuring!
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