Calculate & Cut Emissions, & Lift Profits
Calculate and cut your emissions, and lift profits - a how-to guide for the voluntary carbon market is for organisations wanting to measure and manage greenhouse gas (GHG) emissions for voluntary purposes.
This guide shows you how to:
- measure your carbon footprint
- use that information to reduce your footprint, and
- explore options to offset those emissions you can't reduce (and become 'carbon neutral').
Who this guide will help most
This guide is for organisations wanting to measure and manage greenhouse gas (GHG) emissions for voluntary purposes.
It applies equally to other types of organisations with operations with GHG emissions, including nongovernmental organisations (NGOs) and universities. Organisations undertake voluntary easurement and reporting for many reasons, including to:
- identify emissions (and cost) savings
- understand the cost of becoming “carbon neutral”
- understand potential future regulatory costs (from emissions trading)
- increase market share by winning over the consumer who cares
- respond to customers’ requirements and supply chain expectations.
Companies and organisations participating in the proposed New Zealand Emissions Trading Scheme (NZETS) will be part of a regulatory market. In contrast to voluntary initiatives, these organisations must measure and report their emissions in accordance with the Climate Change Response Act legislation and regulations. Organisations affected by the proposed NZETS should seek professional advice on how best to approach carbon management.
The Greenhouse Gas Protocol
The principles and processes in this guide are generally based on the Greenhouse Gas Protocol Corporate Accounting and Reporting standard, usually referred to as the GHG Protocol.
The Protocol is a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), to which the New Zealand Business Council for Sustainable Development is affiliated. The Protocol is widely seen as the foundation document of “carbon accounting” and most international greenhouse gas programmes are based on this document.
The Protocol works with businesses, governments, and environmental groups globally to build a new generation of credible and effective programmes for tackling climate change. The Protocol can be downloaded free from www.ghgprotocol.org
Emissions factors are used to convert different emissions into the standard unit CO2e (the carbon dioxide equivalent in volume terms). As emissions factors are continually updated, usually on an annual basis, it is important that you are using the most up to date factors when calculating the current emissions in your business.
Lowering Emissions – Lifting Profits
This guide shows you how to:
- measure your carbon footprint
- use that information to reduce your footprint, and
- explore options to offset those emissions you can’t reduce (and become ‘carbon neutral’).
Many organisations find that reducing carbon also cuts costs – and increases profits, along with improving their impact on the environment and our community. Many organisations find that their own level of emissions are quite small and carbon neutrality is a feasible option and provides branding benefits.
The big picture on carbon
Organisations are now increasingly affected by the global movement to reduce emissions and minimise the impact of climate change.
The business case
Addressing climate change as part of your overall business strategy is about intelligent entrepreneurship and good corporate citizenship. Your customers and staff increasingly want business to be part of the climate change solution.
Establishing a strategy to deal with carbon emissions has wider benefits, including:
- Making your operations more energy efficient, and
- improving your knowledge of the effects and influences your business has on suppliers, consumers, regulators and competitors.
All of which affect your bottom line. By addressing climate change in this way you will better understand the issues facing you, minimise your risks and maximise your opportunities.
Use the Business Case to get buy in to measuring your emissions.
Knowing what your carbon footprint is will help you run your business better, but you will need buy in from management if the information on your carbon footprint is to be followed by action.
Carbon common sense
The good news is that while the national and global picture might be complex, at the individual business level measuring and managing emissions is straightforward and often makes good business sense.
Accounting and reporting your emissions will lead to a good understanding of your emissions sources, the systems used to track emissions (often accounts payable) and information on consumables, for example mainly petrol, electricity and gas consumption.
1. Measure your emissions
By quantifying your emissions you are able to prioritise actions, beginning with areas that have the greatest potential for savings.
This guideline supplements the standards and guidelines outlined in Key Concepts (page 2).
If you are unsure about anything in this document, further information and examples can be found in the Greenhouse Gas Protocol. www.ghgprotocol.org
First, calculate total emissions, based on consumption of various resources in your daily business activities.
These might include: fuel and electricity, travel, and waste to landfill. The result is an emissions profile or inventory. It’s essential to lead you to taking the first and most profitable emission-reduction initiatives, the focus of STEP 2 in this guide.
Do I measure a financial or calendar year?
The first step to account and report your emissions is to choose an appropriate time period for reporting. Businesses can choose to report on a financial or calendar year basis.
Many factors will rely on a review of historical data, such as the proportion of renewable generation feeding into the electricity grid. The previous calendar year’s emission factors will therefore be provided in this document each year, following the release of relevant publications. In some cases, quarterly figures are now available.
If you are reporting on a financial year basis then you should pro rata the emission factors according to the specific financial year used by your organisation.
Picking your base year
A base year is a term used to describe the first year for which you have reliable, verifiable data. A base year is used to compare your emissions over time. Within New Zealand, it is common for organisations to select a recent base year, such as 2006 or 2007.
The GHG Protocol provides an international standard in accounting for greenhouse gas emissions and defines three levels of accountability to help set the boundary or scope for measurement. This exercise will have to be carried out before you calculate your emissions.
Once you have selected a period to measure, you will need to define the boundary of your measurement.
There are two types of boundaries you will have to define; Organisational (business ownership) and Operational (business activities).
An organisational boundary relates to the ownership aspect of your company and its subsidiaries – which organisations within your Group you are going to account for and what their structure is (for example, whether they are wholly owned, a subsidiary or a joint venture.)
An operational boundary relates to the activities that your business undertakes – which business activities you are going to account for.
Setting the boundaries for measurement
Two approaches can be taken to set the organisational boundary:
- The Equity share approach, where a company accounts for GHG emissions from operations according to its share of equity in the operation, or
- The Control approach, where a company accounts for 100 per cent of the GHG emissions from operations over which it has control. It does not account for GHG emissions from operations in which it owns an interest but which it has no control.
Operational boundaries (or Scope)
Specifying which business activities you will account for up front is important, as it tells you where you need to gather data from, to enter into an emissions calculator. Setting specific operational boundaries also helps a company better manage the full spectrum of GHG risks and opportunities that exist along its value chain. (See Figure 1 on next page).
Setting an operational boundary means reviewing the activities which your organisation (or group of organisations) is engaged in. These activities will indicate where your emissions are originating from, and who owns those emissions.
Scope 1 – Direct Emissions:
Refer to emissions produced by the organisation. These emissions occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces and vehicles, or emissions from chemical production in owned or controlled process equipment
Scope 2 – Indirect Emissions:
Refer to emissions consumed by the organisation from the energy generated elsewhere but used inside the organisation. Electricity emissions are given their own special reporting category (Scope 2) because, for most organisations, electricity emissions represent a large proportion of their carbon footprint. Scope 2 is now generally taken to include the emissions from electricity, heat or steam. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organisational boundary of the company. Scope 2 emissions physically occur at the facility where the energy is generated.
Scope 3 – Indirect Emissions:
Refer again to emissions that occur due the consumption of goods or services by the reporting organisation. However, Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. Scope 3 emissions therefore are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. Some examples of Scope 3 activities which are commonly measured and reported by New Zealand organisations are air travel, organic waste, taxi, rental car hire and reimbursement of employee travel in employees’ own cars.
Including Scope 3 in your calculations is also an opportunity to clearly communicate to your stakeholders, including customers and suppliers, that you are serious about your business’ commitment. This guide recommends incorporating your Scope 3 emissions where appropriate.
Best practice measurement
It is good practice to engage a reputable, experienced third party assurance provider to verify your calculations and claims. This will help make sure you have not over or understated your profile. Errors in the quantity of tonnes of CO2e can be costly, in dollars and reputation.
Your assurance provider will talk with you about the internationally accepted standards they will use to verify your calculations and disclosures.
The SBC Emissions Calculator
The Sustainable Business Council has developed anew emissions calculator.
You can use it now at www.nzbcsd.org.nz/emissions-calculator.
It uses the latest available emissions factors at all times.
- This calculator is for organisations and individuals to calculate their current or past emissions.
- For calculating emissions from previous years, data from 2005, 2006 and 2007 is used in the SBC emissions calculator.
If you need to, please visit www.nzbcsd.org.nz/emissions-factors for more information on specific emissions factors and the type of data you will have to input.
The SBC online calculator will also allow you to:
- enter and save data (specially if you have to go away to collect and check data), and
- download and save your own result report into a Microsoft Excel spreadsheet.
This spreadsheet report will detail the emissions from specific parts of your business.
Please note: While online calculators are easy to understand and use, they are a guide – and not substitute for putting together a detailed emissions inventory for your business. Online calculators cannot fully anticipate all sources of emissions from your business or account for factors that are unique to the type of business you run. They do, however, provide a useful first cut estimate of your emissions.
For more information
The Greenhouse Gas Protocol Initiative:
Guidance on voluntary, corporate GHG reporting:
2. Cut your emissions
Now you have identified and quantified emissions sources and set the boundaries of measurement and reporting at both an organisational and operational level, you can determine how to best cut emissions and reduce costs.
A best practice approach to emissions reductions may include the following process:
- Policy and strategy development
- I dentify actions and commit resources
- Set targets, audit, monitor and report
- I nvolve and motivate staff
- Demand a response within the organisation.
Where should I put my resources?
Longer term considerations
Upgrade heating and lighting for greater energy efficiency.
Establish recycling programme and reduce waste.
Use more efficient packaging.
Use more efficient processing technologies.
Communicate and build awareness with staff.
Develop implementation plans for reducing energy consumption in daily operations, including:
Adopt more energy efficient technology as existing plant is replaced.
Map the supply chain for the organisation's products.
Identify opportunities for emissions reduction in the supply chain.
Develop new low-emission products which reduce the emissions along your supply chain.
Develop new low-carbon energy sources such as on-site generation.
For more information
A comprehensive guide to calculate your emissions is available at www.sbc.org.nz
The Energy Efficiency and Conservation Authority (EECA), through Emprove, provides specific guidance for business to assess and implement energy-reduction initiatives. For more information and case studies: www.eecabusiness.govt.nz/emprove
Other relevant examples include the Carbon Neutral Public Service initiative: http://mfe.govt.nz/issues/sustainability/public-service-carbon-neutrality.html
For fuel efficient and low emissions vehicle choices see the Green Car Company:
For travel reduction video conferencing:
New Zealand tourism Eco Friendly travel guide:
Travel sense travel guide:
The World Resources Institute provides a useful guide to greenhouse gas management: www.archive.wri.org/publication_detail.cfm?pubid=4137#1