GHG Emissions: reduction and reporting as an opportunity for companies

GHG emissions or greenhouse gas emissions are one of the main environmental concerns of our time. As society becomes increasingly more aware of the negative impacts of climate change, companies have a key role to play in the reduction of GHG emissions. 

This article explores how companies can address GHG emissions, from measurement and reporting, to reduction and sustainable innovation. 

Find out how reducing your GHG emissions can have a positive impact on the environment, at the same time as offering new business opportunities and improving relationships with your stakeholders.

What are GHG emissions and why are they important for companies?

Greenhouse gas emissions (GHG) are those that, when released into the atmosphere, contribute to the greenhouse effect, and consequently to both global warming and climate change. 

GHGs retain heat in the atmosphere and increase the overall temperature of the planet, which ultimately leads to multiple consequences. 

Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and fluorinated gases (HFC, PFC and SF6) are among the main greenhouse gases.

Human activity is the main source of GHG emissions. The burning of fossil fuels to generate energy and the use of motor vehicles are the main causes of CO2 emissions. Livestock and crops also emit large amounts of methane and nitrous oxide.

Companies are increasingly more aware of the impact of their GHG emissions and are trying to reduce them, not only in order to comply with environmental regulations, but also to take advantage of the opportunities this entails.

GHG emissions: types and scope

GHG emissions can be classified into two types: direct and indirect emissions. 

  • Direct GHG emissions are those that are released directly by a company or entity, such as emissions produced by a fleet of vehicles or gases emitted as a result of industrial processes.
  • Indirect GHG emissions, on the other hand, are those emissions that are released by other entities, but are related to the company’s activities, such as emissions associated with the generation of electricity that a company purchases from an external supplier.

In order for a company to measure its carbon footprint, it should take into consideration these two types of emissions and their scope. Here we can highlight 3 types of scope:

  • Scope 1 refers to direct emissions generated by the company, such as the use of fossil fuels in its facilities or vessels. These emissions can be controlled by the company.
  • Scope 2 refers to indirect emissions associated with the generation of energy used by the company. For example, if a company purchases electricity from the power grid, the emissions that are associated with the production of that electricity are considered to be Scope 2 indirect emissions.
  • Scope 3 refers to indirect emissions associated with the supply chain and other aspects related to the company’s business, such as the transportation of products, waste management, or the use of products sold. These emissions can represent a significant part of the company’s carbon footprint, and should therefore be considered when addressing GHG emissions.

In order to determine the total company emissions, we must measure those from each scope. How can we measure GHG emissions? 

How are GHG emissions measured?

There are different methods and protocols for measuring GHG emissions, but one of the most widely accepted and used is the Greenhouse Gas Protocol (GHG Protocol).

The GHG Protocol is a global initiative led by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). The protocol establishes both standards and guidelines for the measurement, reporting and management of GHG emissions, and is employed by companies, governments and organisations around the world.

In order to measure GHG emissions, companies should undertake an emissions inventory. This process implies collecting data regarding the different sources of GHG emissions and calculating the amount of gases emitted in terms of carbon dioxide equivalent (CO2e). This is due to the fact that different greenhouse gases have different levels of warming potential.

In order to undertake a GHG emission inventory, companies should consider both direct and indirect emissions, as mentioned previously. The inventory should include all relevant sources of emissions, which may require collaboration with suppliers and other business partners.

Upon completion of the emissions inventory, companies can then use the data to establish emissions reduction targets and develop strategies to address them. They can also use the data as a means by which to report on their sustainability performance and comply with both environmental and sustainability reporting requirements.

Companies that go beyond simple compliance are often in pursuit of Net Zero or zero net emissions. 

The impact of GHG emissions on companies

Greenhouse gas emissions (GHG) can have a significant impact on companies in several ways, as we explore in depth below:

Climate change and business risks

GHG emissions contribute to climate change, which can also have significant negative impacts on companies. For example, rising sea levels can affect coastal infrastructure and logistics. Extreme weather conditions can disrupt business operations. 

Additionally, changes in weather patterns can impact the supply and demand for products and services, which can have negative economic impacts.

Regulatory compliance and environmental policies

GHG emissions are regulated both nationally and internationally, and companies that fail to comply with these regulations may face financial and legal penalties. 

Additionally, non-compliance may lead to negative impacts on reputation and stakeholder relations.

Reputation and social responsibility

Companies that do not adequately address their GHG emissions may face criticism from their stakeholders, such as clients, investors and employees. 

This can have a negative impact on the company’s reputation, in addition to its ability to attract and retain both talent and clients. 

On the other hand, companies that correctly address their GHG emissions can enhance their reputation and ability to compete in an increasingly sustainability-oriented market.

Opportunities for companies to reduce GHG emissions

Although reducing greenhouse gas emissions (GHG) can pose a challenge for companies, it can also offer significant opportunities in terms of sustainable innovation and business growth.

Below, we look at some of the main opportunities that can arise from reducing GHG emissions.

Energy efficiency and cost reduction

Reducing GHG emissions often implies greater energy efficiency, which can help companies reduce costs and improve their profitability. 

This can include adopting more efficient technologies, improving operational processes and reducing energy waste.

Sustainable innovations and new market opportunities

Reducing GHG emissions can stimulate sustainable innovation and lead to new market opportunities. 

Companies that develop innovative solutions to address emissions can create new, sustainable products and services, in addition to attracting consumers and clients that value sustainability.

In addition to reducing GHG emissions, this can help companies comply with environmental regulations and access markets with stricter environmental requirements.

How to reduce GHG emissions in companies

Reducing greenhouse gas emissions (GHG) is a key step in addressing the negative impacts of climate change and taking advantage of the opportunities that sustainability can offer. 

These are some strategies and practices that companies can employ to reduce their GHG emissions.

  1. Improve energy efficiency: Improving energy efficiency can be an effective way of reducing GHG emissions. Companies can use more efficient technologies, improve operational processes and reduce energy waste in order to reduce their GHG emissions.
  1. Switch to renewable energy sources: The transition to renewable energy sources, such as solar and wind energy, can help companies reduce their emissions. This can include the installation of solar panels or wind turbines in the workplace, or the purchase of renewable energy from external suppliers.
  2. Reduce the use of fossil fuels: Organisations can reduce their emissions by reducing the use of fossil fuels, such as petrol and diesel. Alternative transportation options or the use of electric vehicles for the company’s fleet should be considered.
  1. Adopt sustainable practices in the supply chain: Companies can work together with their suppliers to reduce emissions in the supply chain. Occasionally, this may involve switching suppliers or promoting sustainable practices in the supply chain.
  1. Implement a circular economy: Including the reuse of materials or the adoption of sustainable design practices brings us closer to the circular economy, which will help companies reduce their GHG emissions.

These are just some of the strategies and practices that companies can adopt in order to reduce their GHG emissions. 

How to report GHG emissions in companies

Greenhouse gas emissions (GHG) reporting establishes the amount of GHG emissions a company has produced during a specific period. 

The report is important as it enables companies to monitor their progress toward reducing GHG emissions and communicate their efforts to stakeholders.

How to prepare a GHG emissions report and what information it should include

Preparing a GHG emissions report can seem overwhelming, but there are tools and frameworks available to help. Here are the basic steps that companies can take in order to prepare a GHG emissions report:

  • Identify the GHG emissions: The company should both identify and measure their direct and indirect emissions in order to report them accurately.
  • Define the scope: The GHG emissions report must specify the scope of the report, including the activities and emissions they imply.
  • Use a recognised framework: There are several recognised frameworks available to help companies prepare their GHG emissions report, such as the Greenhouse Gas Protocol (GHG Protocol) and the ISO 14064 regulation.
  • Report data in a clear and concise manner: The company should report its GHG emissions data in a clear and concise way to ensure that it is understandable for stakeholders.
  • Include information regarding emission reduction efforts: The report should include information on the company’s efforts to reduce its emissions, such as implementing sustainable practices and transitioning to renewable energy sources.

We recommend that you use tools that enable you to collect and manage data in a way that is both simple and secure. 

If you want to find out how APLANET software works and how it can help, you can request more information here.

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