GHG Reporting Practices Of Most Industries Overlook 75% Of Emissions

Researchers at Carnegie Mellon University are urging companies to broaden their carbon footprint calculations with a new method that estimates the amount of GHG emissions across all tiers of the entire supply chain for all industries.

Carbon footprints are typically reported in “tiers.” Tier one includes emissions by the company’s own activities. Tier two expands to include emissions from electricity and steam purchased by the company. Tier three includes all other emissions from the company’s entire supply chain of goods and services.

Companies usually opt to report only their tier one or tier two GHG emissions, but Carnegie Mellon researchers H. Scott Matthews, Chris T. Hendrickson, and Christopher L. Weber say two-thirds of U.S. industries would overlook 75 percent of GHG emissions if they continue to neglect reporting on tier three emissions.

“By far, most companies are pursuing very limited footprints — toe prints really— instead of comprehensive ones,” said Matthews in a statement.

The average industry has only 14 percent of its total greenhouse gas emissions in tier one and 12 percent in tier two for a total of 26 percent.

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Comments

The methodology used for calculating a company’s carbon footprint depends on what they are trying to measure. The Greenhouse Gas Protocol developed by the World Resources Institute and World Business Council on Sustainable Development is the standard for calculating a corporate footprint. Many companies chose to calculate Scope 1 and 2 emissions because these are the only emissions that can be accurately calculated or will be subject to any regulation, and the scope 3 emissions are someone else’s scope 1 or 2 emissions. A company wouldn’t construct an income statement using the income and expenditures of its buyers and suppliers. Why should it do this in carbon accounting?

Estimating the financial and greenhouse gas positions of buyers and suppliers is useful in understanding a firm’s exposure to the market and potential regulations. However, estimates have inherent inaccuracies. Companies which want to account for these scope 3 emissions should request that their buyers and suppliers conduct greenhouse gas inventories. Companies wishing to calculate the GHG generated over a product’s lifecycle should use the Supply Chain protocol at http://www.ghgprotocol.org

I found the Carnegie Mellon press release to be misguided and self-serving.

Juan August 20th, 2008

I would have to agree with Juan’s comments. This press release from Carnegie is only making a “The Sky is Blue” statement. Not only would a companies buyers and suppliers have to report their Scope 1 and 2 emissions, but carve out the percentage of emissions for each customer. At which point, those emissions would become Scope 3.

David August 22nd, 2008

This article incorrectly refers to the GHG Protocol’s “Tiers.” What the writer is actually referring to is Scope 1, 2, & 3. The Tiers, on the other hand, indicate the data quality. Higher Tiers mean more exact activity data is being used, lower Tiers mean that less accurate data is available.

Pablo November 21st, 2008