Package Design | packagedesignmag.com

(December 2010) posted on Fri Jan 21, 2011

By Karen Utt

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If your organization doesn’t already account for and report its carbon emissions, it probably will soon. More than 3,000 organizations in over 60 countries currently measure and publically disclose their greenhouse gas emissions and climate change strategies through the Carbon Disclosure Project (CDP). CDP acts on behalf of 534 institutional investors holding $64 trillion in assets under management and some 60 purchasing organizations such as Cadbury, PepsiCo, and Walmart. In addition, retailers such as Tesco, ConAgra, and Intuit have voluntarily announced reductions to the carbon footprint of their packaging.
Organizations use greenhouse gas (GHG) accounting to:
• attract institutional investment
• develop sustainable brand identity
• meet customer requests for it
• meet B2B performance specifications
• prepare for future regulation
• reduce costs
Modeled after financial accounting, GHG accounting practices provide a way for an organization to credibly inventory and report the GHG it emitted directly to the atmosphere and indirectly by its purchases of energy, products and services. Sometimes you will hear people talk about carbon accounting, but don’t worry—GHG accounting and carbon accounting are the same thing. How is it conducted?
Determine the applicable greenhouse gas accounting standard. GHG accounting can be done entity-wide or on a project basis. As with financial accounting, GHG accounting has its own standards to ensure credible reporting. Just about every GHG accounting standard and program in the world uses guidance from The Greenhouse Gas Protocol Initiative, a long-term partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) that began its process of GHG accounting standardization in 1998. (See http://www.ghgprotocol.org.)
WRI/WBCSD GHG protocol standards have achieved nearly universal acceptance because they have been developed using broad, global stakeholder consensus processes that have included business, government, and environmental groups. Of course, if you plan to publicly register your GHG inventory or you are under a regulatory requirement to report your GHG, you will need to use the specific accounting and verification standards or regulation defined by your registry or regulatory body.
Identify the GHGs to include. Generally, GHG accounting covers the accounting and reporting of the six greenhouse gases specified by the Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydroflurocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). These six gases are converted into carbon dioxide equivalents (CO2e) using a specified IPCC (Intergovernmental Panel on Climate Change) conversion table for accounting purposes.
Inventory emissions by their “Scopes.” For GHG accounting purposes, emissions of these six gases will be further divided into direct and indirect emissions. Direct and indirect emissions are analogous to a debit and credit in financial terms. While every organization will have Scope 1, 2 and 3 emissions, it is unlikely that a single organization will have all three Scopes in its inventory for the same emission. For example, if an organization emits a Scope 1 emission, it is unlikely that it will also book all related Scope 2 and Scope 3 emissions in its own GHG inventory.
Direct emissions are called Scope 1 emissions. Indirect emissions are further subdivided into Scope 2 (purchased electricity, heat, steam, and chilled water) and Scope 3 (upstream and downstream emissions related to the energy, products and services an organization purchases that are not included in Scope 2).
Anticipate the development of standards for Scope 3. For the last 10 years, GHG accounting of Scope 3 has been largely optional. This practice is changing as major supply chain-oriented business such as Walmart, Costco and Procter & Gamble take a greater interest in the GHG-related financial and operational risks that may be associated with their supply chains. The WRI/WBCSD Protocol is once again leading the processes to develop two new standards: the Product Life Cycle Accounting and Reporting Standard and the Scope 3 Accounting and Reporting Standard.
These standards are being developed using the same broad, multi-stakeholder process used in the previous WRI/WBCSD standards. These new standards will provide a common method to account for the emissions associated with individual products across their full life cycles and corporate supply chains, taking into account impacts both upstream and downstream of the organization’s operations. The use of these standards will give organizations the information they need to make more sustainable decisions about the products they buy, sell, and produce.

Karen Utt is a carbon management expert and is a current member of the WRI/WBCSD Greenhouse Gas Protocol Scope 3 Standard and Product Standard Technical Working Groups.