Scientists have repeatedly warned that reducing the level of greenhouse gases in the atmosphere is crucial to prevent further global temperature rise and mitigate the impacts of climate change.
Consumers are becoming increasingly sensitive to issues related to the protection of the environment. Consequently, customers have increased expectations that businesses will adopt systems that allow them to cut emissions, following a general drive towards decarbonisation.
Large companies are required to disclose greenhouse gas emissions data. They must also show how they address environmental issues and are proactive in mitigating environmental risks.
The GHG Protocol
The Greenhouse Gas Protocol is the world’s most widely used greenhouse gas accounting standard. The GHG Protocol provide guidelines for businesses to measure and manage gas emissions.
Many countries require companies to set corporate targets for cutting gas emissions and to provide GHG emissions reporting.
In 2016, 92% of the Fortune 500 companies used the GHG Protocol.
The GHG Protocol distinguishes three scopes (types) of emissions. These are the different kinds of emissions that a company creates in its operations and on its suppliers and customers.
Essentially, scope 1 is direct emissions that a company owns and that it can control, whereas scope 2 and 3 are indirect emissions, which are the consequence of the activities of the company but are generated by sources which are not controlled by the company.
Decarbonisation in the supply chain
The supply chain is responsible for around 75% of corporate emissions. Businesses are under increased pressure from regulators and consumers to take action and tackle emissions. Manufacturing businesses that use a large number of suppliers could set up a shared plan to cut emissions.
The first step is to collect the relevant data. However, many suppliers lack the capability to report emissions data. Many suppliers lack the expertise to implement effective carbon reduction strategies.
One way to resolve this problem could be to engage suppliers in a common program to cut emissions.
Collect data on emissions sources
To measure the emissions, companies need to collect data for each of GHGs:
- Fuel consumption: measure the quantity of fuels used for operations.
- Electricity usage: record how much electricity is consumed, typically from utility bills.
- Waste and water usage: monitor waste generation and water consumption.
- Transportation and logistics: track miles travelled, fuel consumption, and transportation methods for goods.
Key takeaway
Use carbon management software
Collecting data can be a complex operation. Many companies opt for carbon management or sustainability software to streamline data collection, analysis, and reporting. These platforms can help track emissions, calculate footprints, and assist with compliance and reporting requirements.
Conclusion
For a business the challenge of cutting emissions does not stop with the corporate activities of the business itself. There is an increased expectation by consumers that a business will go beyond what it can do in cutting emissions and that it will implement global strategies to cut emissions also in its supply chain.
A global plan with all the suppliers is therefore essential to implement an effective strategy for cutting emissions.
The first step is the collection of emissions data and then the various parties can work together to implement an effective plan to achieve the common goal of cutting emissions.
Elisabetta Scanferla, Solicitor, LA Marine
LA Marine is the specialist marine law team at Lester Aldridge, offering expert legal advice to the shipping, logistics, superyacht & leisure marine sectors.