Brief Overview Of The Corporate Value Chain Standard And Indirect Emissions
There has been an important shift in the corporate mindset that, even when viewed through an economic lens there are incentives to pursue emissions reductions. It is increasingly recognised that to continue being profitable, companies must address climate change.
In short, companies see this as necessary in order to reduce risk, save money and create new business opportunities.
Direct emissions
The incorporation of emissions reductions into business strategies is not exactly novel; companies have been targeting emissions for some years now. However, the focus of corporate sustainability efforts has traditionally been on direct emissions such as vehicular fuel and office space energy usage. `Direct’ emissions can thus be classified as those from a source either owned or leased by the company. These connections can be easily identified and fairly easily addressed. Significant advancements in energy efficiency have been achieved through such efforts. Whilst this is commendable, 80% of the corporate worlds’ environmental impact comes from indirect emissions.
Here some thoughts on how companies can reduce their carbon footprint from their indirect emissions, using the Corporate Value Chain Standard. (image: worradmu)
Reducing indirect emissions
In recognition of this shortfall, companies are increasingly incorporating indirect emissions into their reduction schemes. `Indirect’ emissions are those which occur outside the entities’ organisational boundaries but are nevertheless incurred through its’ activities. By expanding emissions targets, companies are attempting to assess the impacts of the entire supply chain. This `cradle to grave’ approach looks at inputs, outputs, transportation and production, company investments, use of the product and end of life disposal. The overall aim being to assess both upstream and downstream activities and their environmental externalities.
Quantifying and planning
The Greenhouse Gas Protocol is the most widely accepted and used tool for quantifying, and managing GhGs. It has recently developed the `Corporate Value Chain Standard’, to incorporate the measurement of indirect emissions. It recommends the following steps for businesses wishing to address indirect emissions:
- plan realistically in relation to business goals
- calculate the levels of current emissions
- outline emissions to a reporting party
- set reduction targets
To conclude
It is encouraging that companies are leading the charge in committing to further emissions reductions. The incorporation of indirect emissions into planning is helping to create a broader understanding of the full supply chain. There are many opportunities for improvements in environmental and economic efficiency that until recently, have been missed by the corporate world.
About the Author Acacia Smith
Acacia Smith is a New Zealander now based in London. She holds a bachelor degree and postgraduate diploma from Victoria University of Wellington. She has worked for the Council for International Development (CID) and more recently in Bolivia for CIWY, a network of private parks for the rehabilitation and conservation of Amazonian fauna. Acacia is passionate about sustainability and the role businesses can play in promoting a better, more sustainable future.