One, two, three… and GHG emissions will be accurately calculated!… And reduced!!! A closer look at the integration of the three scopes on the Decarbo’Solution® platform.
For some, compliance with regulations; for others, fulfilling the collective commitment essential to a large-scale energy transition; and for still others, the desire to ensure the long-term viability and growth of their business—all of these factors require companies to conduct a greenhouse gas (GHG) inventory.
The new decree of July 1, 2022, which mandates Scope 3 reporting and a reduction action plan, and the 2022 Finance Act—which requires most companies with more than 50 employees to also conduct a GHG inventory, albeit a simplified one initially—confirm the growing regulatory pressure.
The expansion of carbon quotas to include real estate and transportation in 2021, along with the announcement of a carbon tax on imports in 2022, is making every business owner aware that a “carbon tax base” is coming very soon—one that can only be mitigated by reducing their own GHG emissions.
A tool for identifying, measuring, and reducing one’s carbon footprint, a GHG inventory is the first essential step in developing and managing a low-carbon trajectory.
From small businesses to large corporations, every company will find nothing but economic and commercial benefits by adopting its GHG balance sheet as a complementary management and steering tool.
A comprehensive GHG assessment is…
A serious goal of reducing greenhouse gas emissions requires three steps
- Accurately identify and measure your GHG emissions: conduct a comprehensive GHG assessment;
- Identify the most significant categories and suppliers in your GHG inventory;
- Develop and implement an action plan to reduce emissions by involving the company’s team, suppliers, and service providers.
A GHG inventory provides a comprehensive assessment of the amount of greenhouse gases emitted by an organization, in accordance with an official methodology (ISO, GHG Protocol, or the Bilan Carbone method).
A comprehensive assessment requires consideration of the three regulatory emission scopes:
- Scope 1: Direct Emissions
- Scope 2: Indirect emissions related to energy
- Scope 3: Other significant indirect emissions resulting from the legal entity’s operations and activities, as well as, where applicable, from the use of the goods and services it produces
Until recently still optional, Scope 3 has become mandatory for affected companies, pursuant to Decree No. 2022-982 of July 1, 2022.
This expansion represents a major step forward in a company’s energy transition, since Scope 3 emissions account for 50 to 80 percent of an organization’s total emissions. Starting today, we must take all GHG emissions into account and work to reduce them.
Accounting for Direct Emissions
The accounting of Scope 1 emissions corresponds to so-called direct emissions. These are emissions generated directly by the organization. They include emissions from sources owned or controlled by the organization.
The French Environment and Energy Management Agency (ADEME) specifies these emissions as those resulting from “combustion in stationary and mobile sources, non-combustion industrial processes, emissions from ruminants, biogas from sanitary landfills, refrigerant leaks, nitrogen fertilization, biomass, etc.”
According to this definition, this means taking into account the fuel used by company-owned service vehicles, refrigerant leaks from air conditioning systems, and gas-fired heating.
Scope 1 reporting is mandatory when preparing financial statements for private-sector legal entities with more than 500 employees, local governments with more than 50,000 residents, public institutions with more than 250 staff members, federal government agencies, and all companies with more than 50 employees that have received “COVID” assistance.
Collection of Indirect Energy-Related Emissions
Scope 2 involves the collection of indirect energy-related emissions. This is easy to understand and is generally the most obvious scope for companies. It involves accounting for emissions generated by the production of electricity, steam, heat, or cooling that the company has consumed.
To report it correctly in a GHG balance sheet, simply refer to the utility bills for the various energy sources the organization uses.
The regulations governing Scope 1 also apply to Scope 2, thereby making it mandatory for companies required to prepare a GHG inventory.
Scope 3: the broadest and most important!
The final scope covers all other indirect emissions. This is a very broad scope, accounting for up to 80% of an organization’s emissions.
Since these emissions—which generally account for the largest share of total emissions—include those related to production, the transportation of materials and products, travel, and waste generated by the organization, as well as those from buildings owned or managed by the organization, this is a critical factor in setting reduction targets.
His commitment was eagerly awaited by all those who wanted to see a significant increase in GHG emission reduction targets.
How does the Decarbo’Solution® platform bring these three scopes together?
Since the subject matter can be difficult to grasp within this strict regulatory framework, Decarbo’Solution® chose to offer users of its platform a logical and educational pathway by reorganizing these emissions into seven clearer categories:
- Travel
- Incoming Materials
- Incoming Services
- Energy
- Refrigerants
- Water Consumption
- Waste
The calculations performed for each of these categories are then reallocated according to the three regulatory scopes. To learn more about the Decarbo’Solution® educational approach, see the document “Decarbo’Solution®: A Pioneer in 100% Digital Carbon Footprint Assessments Since 2012.”
What about Scope 4? Check out our guide.
Identify, then calculate, then simplify!
Identifying and calculating the carbon footprint of emissions makes it possible to determine the main sources of emissions and thus best target the organization’s environmental impacts that need to be reduced.
The next step is to develop a comprehensive action plan for reduction that aligns with these priorities.
Not only will the actions of organizations pursuing a low-carbon path benefit the company and the community, but they will also contribute to the organization’s development and sustainability.
A company that adopts a low-carbon strategy sends a positive message not only to its customers but also to its employees, shareholders, and partners, who will want to be part of this environmentally responsible transformation. In fact, a low-carbon strategy can only succeed when all parts of an organization are fully engaged.
Decarbo’Solution® supports all its clients and users in implementing their emission reduction action plans and low-carbon strategies. A Decarbo’Solution® Guide is available at this link for anyone who wants to better understand GHG assessments and how they positively impact business performance.
Don’t hesitate—get your company involved! Decarbo’Solution® is a 100% guided and compliant online platform that will help you develop a comprehensive assessment and low-carbon strategy for your company.
To learn more, check out our guide to indirect emissions.