Measuring GHG Emissions Up and Down the Supply Chain

A new collaboration launches to develop guidelines for measuring and managing corporate GHG emissions throughout the product life cycle and across the entire value chain.

The group is the GHG Protocol’s Product and Supply Chain Initiative, convened under the GHG Protocol. The project’s Steering Committee and technical working groups launched in September, in a series of meetings in Washington, DC and London, involving over 100 participants. The meetings signal the kickoff of a two-year process that ultimately will produce two new GHG Protocol publications that are expected to become international standards—product life cycle accounting guidelines and corporate value chain accounting guidelines.

The two new guidelines will allow organizations to understand and manage the life cycle GHG emissions associated with individual products, as well as emissions across the entire value chain. Like the previous standards, the new guidelines are being developed through an inclusive multi-stakeholder process—involving industry, government, NGOs and academia—to develop consensus GHG accounting and reporting methods.

The Steering Committee meeting included organizations such as the US Environmental Protection Agency, Wal-Mart, the European Commission, UNEP/SETAC, General Electric, and the Carbon Trust. The committee unanimously emphasized the urgent need to develop accounting methods that can lead to significant GHG reductions, support multiple business strategies, produce robust results, and encourage broad adoption by companies around the world.

Participants left the meeting enthusiastic about the evolving process. “The GHG Protocol has provided important guidance to companies, investors and individuals in a standardized method of GHG accounting” said Miranda Anderson, Director of Corporate Affairs for Sustainability at Wal-Mart. “This new effort to provide agreed-upon standards for measuring GHG emissions up and down the supply chain is needed as more and more companies seek to understand the full impact of the products they make, ship, and sell.”

The kick-off meeting for the technical working groups came two weeks later, and further established the need for robust and practical global guidelines.

“Businesses have been calling for a robust, consistent standard for measuring the carbon footprint of their goods and services,” explained Kay Williams, the representative from Defra, the UK’s environmental agency. “Defra along with the Carbon Trust have responded by sponsoring the British Standards Institute to develop PAS 2050. However, products and supply chains are global and we need an agreed international standard to assess these embedded emissions. By working with the GHG Protocol we hope to share our knowledge to develop a credible, practical and internationally acceptable method.”

“The Carbon Trust is delighted to be working with WRI and WBCSD in their work on carbon footprinting in product supply chains,” added Graham Sinden from Carbon Trust. “We see a strong relationship between this new initiative and the recent work of the Carbon Trust in developing PAS 2050 for product carbon footprinting, and we are keen to share the knowledge we have gained in this project to support further international development and harmonization of product carbon footprinting approaches.”

Opportunities and Challenges

There is a clear need for additional guidance on scope 3 (value chain) accounting and reporting at the corporate level, including recommendations for which scope 3 emissions sources a company should include in their inventory and how to calculate them. Participants said that the most significant opportunities for reducing emissions often reside with a company’s suppliers. The new guidelines will enable companies to determine where the greatest GHG reduction activities are in the value chain.

But experience so far with product-level GHG accounting has raised some interesting challenges, as shown by case studies presented in the working groups. One particular problem concerns how information is communicated publicly. Reflecting on PepsiCo’s experience, Robert ter Kuile, Senior Manager for Energy and Climate Change, asked “how can you ensure that consumers properly interpret the results from these studies when there might be 75 grams of carbon associated with a given product, when the product’s mass is only 30 grams? Communicating this information is very challenging.”

Nonetheless, several representatives declared that public communication may be what drives companies to make the needed GHG reductions to mitigate climate change, and they looked forward to making progress on this and other challenges.

The technical working groups will soon begin producing white papers and draft guidelines. Complete draft guidelines are expected within a year and final guidelines will be published by mid-to-late 2010.

Please visit GHG Protocol for more information. If you wish to participate in the process as a member of the stakeholder advisory group, please contact Anthony D’Agostino.