More and more companies are getting on board with the importance of playing a role in mitigating climate change. A key first step is reporting on climate emissions, but there’s a lot to learn before you get started. A good place to begin is the ABCs of GHGs.
Yes—climate action has its own vocabulary, and it can be intimidating for newcomers. This cheat sheet will help you understand the biggest terms in climate action and help ease you into this complicated world.
First, let's start with the concept of greenhouse gas (GHG) emissions. These are gasses such as carbon dioxide, methane and nitrous oxide that trap heat in the atmosphere and contribute to global warming. Businesses are the largest source of GHG emissions, so holding them accountable is crucial in order to meet global climate goals.
Speaking of climate goals, there’s the looming 2030 deadline established by the United Nations Framework Convention on Climate Change (UNFCCC). This is the Paris Agreement pledge agreed to by nearly 200 countries. Per the UNFCCC, gas emissions must be halved by 2030, and all emissions must reach net zero by 2050. Hitting this deadline is critical to ensuring that the global temperatures only rise by 1.5 degrees Celsius by the end of the century.
An important responsibility for business is accurate reporting on emissions, to create sustainability reports, adhere to SEC disclosures, and ensure your company is responsive to employee, customer and investor demand for carbon neutrality. The GHG Protocols outline a standardized framework for measuring and managing GHG emissions.
From here, the Environmental Protection Agency (EPA) has three defined scopes for measuring your emissions: Direct emissions, also known as Scope 1, and indirect emissions, known as Scope 2 and 3. Scope 1 is the corporate standard and includes GHG emissions that occur from sources controlled or owned by an organization, like fleet vehicles and facilities. Scope 2 are indirect emissions from the products and projects that a company undertakes. Scope 3 are indirect from sources not captured under Scope 2 and include capturing emissions from the upstream and downstream supply chain including product use and consumption by customers. When the term net zero is brought up, it means an emission level of zero for Scope 1, 2 and 3 emissions.
So who is deciding all of this?
There are a few acronyms that will join your everyday lexicon as you get into the weeds in this area. One is the Climate Disclosure Project (CDP), which has disclosure models already set for companies, cities, states and regions. As you set out to report, you need to be comfortable with the model and the supply-chain members already on board with CDP. The CDP has been set up to help you capture relevant emissions established by the Task Force on Climate-Related Financial Disclosures (TCFD). This task force was set up by the Financial Stability Board to develop a set of financial metrics and targets, with 11 recommended disclosures covering areas of risk management, strategy and governance. To help you establish success in reporting standards are the Science-Based Target Initiatives (SBTis), a global set of standards developed as a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). SBTis help larger organizations develop and refine their plans to reduce carbon emissions.
It is essential for professionals to understand the terms and concepts involved in climate reporting to effectively measure and reduce GHG emissions, set science-based targets and disclose relevant information to stakeholders. When businesses are invested in helping address the global problem, it creates opportunities for growth, innovation, resilience and long-term solvency, and ensures that they aren’t left behind with industry laggards.
Are you ready to be a climate advocate in your organization and take important steps to apply these ideas into action? At Leeds, we offer an opportunity to apply these concepts and issues in a practical format through the Climate Action for Business, a two half-day program delivered via Zoom that teaches you the cutting-edge skills and perspective needed to lead in this changing environment. The Leeds School of Business offers this program several times throughout the year.