Holistic CO2e reporting

With the proposed amendment of the CSR Directive (Corporate Sustainability Reporting Directive), several thousand companies in Germany will in future be obliged to include a sustainability report in their management report. The planned changes already affect the 2023 reporting period, so it is important to establish a sustainable CO2 measurement and reduction strategy in the company today. However, many manufacturing companies face the challenge of carrying out holistic CO2 reporting for the first time and the question of how best to implement it in the long term.

Climate accounting of companies and products

In order to start CO2 reporting properly, it is important to know the difference between a Corporate Carbon Footprint (CCF) and a Product Carbon Footprint (PCF). The CCF refers to the climate accounting of the entire company. This means that all CO2e emissions are considered that are directly and indirectly caused by the company's activities. In addition, there is also the possibility of calculating a PCF. In this case, all CO2 emissions are summarized that arise on the basis of the entire life cycle of a product.

How to report according to the rules?  

Carbon footprints are carried out on the basis of certain standards. Each company can decide which standard should be used for reporting. The standards help to define system boundaries and give indications of which contents are relevant for carbon footprint accounting. In Germany, in particular, the ISO standards or the GHG Protocol are often used to calculate the CCF. Internationally, however, the GHG Protocol is currently more popular due to its clear separation into scopes.

Approach to CO2 reporting within the framework of the GHG Protocol

The advantage of reporting according to the GHG Protocol is the division of the CCF into three different and complex scopes.

Scope 1 (direct emissions)

The Scope 1 analysis includes all possible direct emissions from own or controlled sources. These typically include combustion engines, such as generators, vehicles, furnaces, as well as chemical substances, such as losses of coolants or natural processes such as fertilizers and animals. The analysis is carried out on the basis of consumption volumes. In doing so, the analysis is converted into CO2 equivalents based on company values collected through measurement data, consumption values, recognized average values, financial data or scientific sources.

Scope 2 (indirect emissions)

Scope 2 emissions are indirect emissions from the generation of purchased energy. This includes the uptake of all purchased energy (typically electricity, heat, steam or pressure). The analysis of the consumption quantity is carried out using consumption values, measurement or financial data. The analysis of emission levels is carried out using the supplier's energy types or composition of energy types, recognized standard data or other, scientific sources. Basically, every company can access the CO2e data of the electricity mix for the country, but there are of course regional differences. Here, municipal utilities often have their own CO2e emission values.

Scope 3 (indirect emissions)

Scope 3 emissions are all indirect emissions (not included in Scope 2) that arise in the value chain of the reporting company, including upstream and downstream emissions. In addition to emissions from employee travel and waste management, the upstream supply chain plays a major role, as do product use emissions, transport and logistics.

Scope 3 emissions are the largest source of emissions for a company in most sectors, and often account for several times more than Scope 1 and 2 emissions. According to the Global Supply Chain Report 2018 (link below), about 40% of global GHG emissions from companies are caused or influenced by their purchases (i.e. goods and services bought) and the products they sell (i.e. the use of the products sold).

For many companies, the majority of greenhouse gas emissions and cost reduction opportunities lie outside their own operations. Therefore, Scope 3 emissions measurement brings many benefits, such as: Assessing emissions hotspots in the supply chain, identifying suppliers that are leaders or laggards in terms of sustainability performance, identifying opportunities for material efficiency and cost reduction in the supply chain.

Product Life Cycle Emissions - Product Life Cycle Emission

Product life cycle emissions are all emissions associated with the production and use of a given product, from cradle to grave, including emissions from raw materials, manufacturing, transport, storage, sale, use and disposal. The PCF is a cross-section of all scopes related to a specific product. However, Scope 3 and PCF in particular overlap. Therefore, the question is obvious - what is the difference?

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What is the difference between measuring Scope 3 emissions and measuring a PCF?

Both standards take a value chain or life cycle approach to GHG accounting. The Scope 3 Corporate Vale Chain Standard allows a company to identify the greatest opportunities for reducing GHG emissions throughout the company's value chain. The Product Standard, on the other hand, allows a company to identify individual products with the greatest reduction potential.

The Corporate Value Chain (Scope 3) standard helps companies identify opportunities to reduce GHG emissions, track performance and engage suppliers at the corporate level from a top-down perspective, while the PCF standard helps a company achieve the same goals at the product level from a bottom-up perspective.

While each standard can be implemented independently, together they provide a comprehensive approach to measuring and managing greenhouse gas emissions in the value chain. worldwatchers therefore offers solutions at this interface. With the API integration to worldwatchers Product Footprint Engine, you get accurate CO2 data and the possibility to efficiently perform your Scope 3 but also PCF analyses.

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Sources:

PricewaterhouseCoopers GmbH (2021, 21 April). CSR Directive: A new era in sustainability reporting begins today. Press release. https://www.pwc.de/de/pressemitteilungen/2021/csr-richtlinie-heute-beginnt-eine-neue-aera-in-der-nachhaltigkeitsberichterstattung.html

World Resources Institute and World Business Council for Sustainable Development (2011). Greenhouse Gas Protocol. ISBN 978-1-56973-772-9. https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf

CDP (2017). Global Supply Chain Report 2017/ 2018. https://www. cdp.net/en/research/global-reports/global-supply-chain-report-2018