Emissions Reporting: Navigating the Essentials

Most organizations would agree that emissions reporting can seem complicated at first.

However, by following a clear, step-by-step framework, SME professionals can demystify the process and grasp the fundamentals.

In this guide, you'll navigate the key aspects of emissions reporting, from understanding mandatory requirements and emissions boundaries to sourcing data, calculating inventories, and applying best practices. Discover a practical pathway to optimizing your emissions reporting efforts.

Introduction to Emissions Reporting and GHG Reporting EPA

Emissions Reporting Demystified: Tackling GHG Emissions

Emissions reporting refers to the process of measuring, monitoring, and disclosing a company's greenhouse gas (GHG) emissions. This includes:

• Direct emissions from sources owned or controlled by the company, like fuel combustion, company vehicles, and manufacturing processes (Scope 1 emissions).

• Indirect emissions from purchased electricity used by the company (Scope 2 emissions).

• Other indirect emissions across the company's value chain, like in materials sourcing, transportation, product use, and disposal (Scope 3 emissions).

Emissions are measured in carbon dioxide equivalent (CO2e) - a standard unit that encompasses the warming potential of different GHGs. Tracking and reporting this data enables companies to understand, account for, and take action on their climate impacts.

The Importance of GHG Reporting for Businesses and Environment

There are several key reasons why emissions reporting is valuable:

• Demonstrates sustainability commitment to stakeholders like investors, customers, and regulators.

• Meets emerging regulatory requirements for corporate emissions disclosures.

• Informs GHG reduction strategies by identifying largest sources to focus efforts.

• Provides competitive edge from leading on climate transparency and performance.

Overall, quality GHG data helps drive environmental awareness and responsible business practices.

The Step-by-Step Journey of Emissions Reporting

Successfully navigating emissions reporting involves:

1. Establishing organizational and operational boundaries - Determine which operations, sites, vehicles, etc. to include based on ownership and control.

2. Collecting activity data across included sources - Quantities of fuel, electricity, materials consumed, waste generated, etc.

3. Calculating GHG emissions using appropriate calculations or tools.

4. Compiling emissions into a report documenting methodology, data sources, and key metrics and insights.

5. Disclosing emissions data through sustainability reports, CDP, regulatory disclosures, etc. to demonstrate climate action.

With the right preparation and expertise, emissions reporting can build corporate transparency and environmental stewardship.

Is emissions reporting mandatory?

Mandatory emissions reporting, also known as mandatory carbon reporting, is a legal requirement in many countries across the world. These regulations aim to increase transparency around greenhouse gas (GHG) emissions and drive climate action.

Over 40 countries now mandate corporate emissions disclosure. This includes major economies like the UK, EU member states, the USA, Canada, Australia, Japan and South Africa. Companies meeting certain size or emissions thresholds in regulated sectors must measure, report and verify their carbon footprint annually.

Emissions reporting provides key benefits:

• Drives corporate climate accountability
• Allows investors and stakeholders to assess emissions performance
• Informs government policy and national emissions targets
• Encourages companies to implement emissions reduction initiatives
• Provides consistent and comparable emissions dataset at a sectoral or national level

However, emissions calculations can be complex. Companies must follow established protocols like the GHG Protocol to account for all material emission sources across their value chains. This includes direct emissions from owned or controlled sources (Scope 1), indirect emissions from purchased electricity/heat (Scope 2) and other indirect emissions like supply chains and product use (Scope 3).

Small and medium enterprises may lack the expertise or data management solutions to efficiently handle emissions reporting. This is where carbon accounting software can help by automating data collection, providing customisable reporting tools and ensuring compliance. With the right solutions, companies can improve reporting accuracy, reduce compliance costs and effectively communicate sustainability efforts.

Do companies have to report emissions?

Reporting greenhouse gas (GHG) emissions is becoming an increasingly important practice for companies of all sizes. Major corporations and small-medium enterprises (SMEs) alike face growing pressure from regulators, investors, customers and the public to accurately measure and disclose their carbon footprint.

Though regulations differ globally, more jurisdictions now mandate emissions reporting - especially for high-emitting industries. In the United States, the EPA's Greenhouse Gas Reporting Program (GHGRP) requires facilities emitting over 25,000 metric tons of CO2 equivalent per year across specific industry sectors to submit annual reports. The SEC has also proposed rules requiring public companies to include emissions disclosures in financial filings.

California's SB 253 legislation goes further - targeting even non-emitting companies. By 2025, corporations with over $1 billion in annual revenue doing business in California must disclose Scope 1 and Scope 2 emissions. The following year, Scope 3 data also becomes mandatory. This captures indirect value chain emissions that often dwarf a company's operational impacts.

With complex methodology and data collection issues, calculating Scope 3 emissions poses particular challenges. Our emissions reporting software can assist companies in estimating these indirect emissions as accurately as possible. Leveraging automated data imports and industry-average calculations, we simplify this daunting task into clear, audit-ready reports formatted to global GHG standards.

As more regions enact disclosure laws, robust emissions accounting will enable corporations to fulfill compliance duties, benchmark against peers and identify hotspots for CO2 reduction. Though reporting alone won't spur decarbonization, informed and standardized emissions data represents an important first step on the net zero journey.

What are the requirements for carbon reporting in California?

California has passed legislation requiring companies operating in the state to measure and report their greenhouse gas (GHG) emissions annually beginning in 2026. This regulation applies to entities that meet minimum thresholds for emissions, covering the majority of large emitters in sectors like manufacturing, oil and gas, transportation, and agriculture.

The law requires reporting of scope 1 and scope 2 emissions as categorized under the Greenhouse Gas Protocol. Scope 1 covers direct emissions from owned or controlled sources like vehicles and equipment. Scope 2 accounts for indirect emissions from purchased energy.

By tracking and disclosing emissions data, California aims to incentivize carbon reduction initiatives and allow investors, policymakers, and the public to monitor progress. Robust measurement and reporting will be crucial for the state to achieve its goal of becoming carbon neutral by 2045.

The California Air Resources Board (CARB) is currently developing specific methods and tools for emissions accounting and reporting that entities will utilize to comply with the law. CARB aims to balance accuracy of emissions data with feasibility for businesses.

As the January 2025 deadline for the implementing regulations approaches, companies should prepare by assessing current capabilities to track emission sources, collect activity data, and calculate emissions according to GHG Protocol scopes. Familiarity with CARB's developing guidance will allow entities to effectively integrate new processes when formal statewide GHG reporting commences.

How are emissions tracked?

The US Environmental Protection Agency (EPA) utilizes its Greenhouse Gas Reporting Program (GHGRP) to track greenhouse gas (GHG) emissions across industry sectors. Major GHG pollutants like carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) are monitored to understand emission sources and trends.

The GHGRP aims to provide high-quality and consistent data that helps inform future climate change policies and solutions. Companies calculate and self-report their facility-level emissions data annually if they meet applicable thresholds. Data is submitted via EPA's user-friendly Electronic Greenhouse Gas Reporting Tool (e-GGRT).

The GHGRP covers direct emissions sources from facilities across 41 industry sectors, as well as suppliers of certain products like fossil fuels and industrial gases. This allows upstream, downstream, and lifecycle emissions to be accounted for. The data supports various programs and voluntary efforts aimed at reducing emissions. It enables companies to benchmark progress and identify opportunities.

Overall, the systematic GHG tracking process facilitates broader understanding and action around addressing climate change. It empowers both regulators and businesses to make smarter decisions grounded in quality emissions data.

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Defining the Perimeters for Greenhouse Gas Reporting

Understanding what to include in an emissions inventory is key to accurate and compliant reporting. This section covers establishing organizational and operational boundaries, as well as categorizing emissions based on the Greenhouse Gas (GHG) Protocol.

Setting the Scene: Organizational and Operational Boundaries

Determining which operations, sites, and activities to account for in emissions reporting depends on the level of control and influence a company has.

The GHG Protocol delineates this into two categories:

• Organizational Boundaries: Entities and operations owned or controlled by the company, such as subsidiaries, facilities, vehicles, etc. These direct emissions sources make up Scope 1 and 2.
• Operational Boundaries: Indirect emissions associated with upstream and downstream activities from third parties in the company's value chain. These mainly fall under Scope 3.

Companies have flexibility in terms of the consolidation approach for organizational boundaries, either reporting as a whole or separating emissions for subsidiaries or joint ventures. Most aim for full ownership consolidation, but equity share or financial/operational control are also options.

For operational boundaries under Scope 3, categories to report on are tailored based on relevance to the company's sector, size, influence potential, stakeholder concerns, and more. Common inclusions are purchased goods/services, transportation, waste, investments, leased assets, franchises, etc.

Getting organizational and operational boundaries right ensures accurate carbon accounting and prevent under/over-reporting. It also allows for emissions reduction targets to be set against appropriate baselines.

Categorizing Emissions: The Role of Scope 1, 2, and 3

The GHG Protocol categorizes emissions into three scopes:

• Scope 1 covers direct greenhouse gas emissions from owned/controlled operations like fuel combustion, manufacturing, fugitive refrigerants, company vehicles, etc.
• Scope 2 accounts for indirect emissions from purchased electricity, heating, cooling, and steam consumption.
• Scope 3 includes all other indirect emissions across the company's supply chain and wider value chain like transportation, materials procurement, waste management, etc. Examples include business travel, distribution, investments, and purchased goods/services.

Getting Scope 1 and 2 emissions is quite standardized, but Scope 3 can vary significantly depending on sector, size, and influence. Most regulators mandate Scope 1 and 2 reporting at minimum, but tracking Scope 3 provides a fuller picture for emissions accounting and reductions.

Distinguishing between scopes offers clarity on ownership, control, and options for abatement. It also prevents double counting and assists in streamlining data collection processes. Correct emissions categorization is key for accurate carbon accounting.

Gathering Data for EPA GHG Reporting

This section will provide guidance on gathering the data required to calculate your emissions footprint. Having accurate and complete data is crucial for understanding your company's true environmental impact and meeting emissions reporting requirements.

Finding the Figures: Sourcing Emissions Data

When beginning your emissions reporting journey, the first step is identifying your data sources and collection methods. Relevant emissions data can be found in:

• Utility bills: Provide details on electricity, natural gas, and other energy usage. Analyze monthly/annual consumption.
• Fuel purchase records: Log transportation and mobile emissions from owned/leased vehicles and equipment.
• Fleet data: Mileage logs from fleet vehicles help calculate associated emissions.
• Employee travel records: Business air and ground transportation emissions come from expense reports and travel provider data.
• Purchasing records: Understand emissions embedded in materials procurement and services.
• Financial documentation: Insights into capital goods emissions based on equipment purchasing and accounting docs.

Leveraging existing operational data streams simplifies data gathering without introducing new tracking responsibilities. While data coverage expands over time, focus first on largest and most accessible sources.

Ensuring Data Integrity for Accurate GHG Reporting

With emissions data compiled, assessing quality is equally crucial before GHG reporting. Indicators of reliable data include:

• Accuracy: Data precisely represents actual usage, emissions activities.
• Completeness: Full coverage of all relevant emission sources over reporting timeframe.
• Relevance: Data connects directly to GHG inventory and supports calculations.
• Consistency: Uniform collection and analysis methodology applied over time.
• Transparency: Sources, assumptions and methodologies are documented for stakeholder review.

Evaluate current data capture against these criteria to identity gaps affecting integrity. Establish systemic data validation checks and quality controls in GHG accounting systems.

By instilling data discipline and scrutiny upfront, companies improve the accuracy of emissions baselines and equip stakeholders with GHG insights integral to informing reduction strategies. Get your data house in order before advancing to final EPA emissions reporting.

Calculating Emissions with GHG Reporting Protocol

Accurately quantifying greenhouse gas (GHG) emissions is essential for robust emissions reporting. Once relevant emissions data is collected, the next step is applying standardized methodologies to calculate the total emissions.

The Greenhouse Gas Protocol, developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), outlines comprehensive global standardized frameworks to help companies and other entities measure and report their GHG emissions.

Applying Emissions Factors: From Data to GHG Inventory

Emissions factors are used to convert activity data, such as fuel consumed or miles driven, into associated GHG emissions quantities. Reputable sources for emissions factors include:

• EPA GHG Data: Provides average emissions factors for US electricity grids and fuels. Location-based factors account for regional generation mixes.
• IPCC: Developed by climate science experts, includes global emissions factors used internationally. Regularly updated based on latest research.

By multiplying activity data by the relevant emissions factor, entities can build out their GHG inventory and quantify emissions from various sources. Proper emissions factor selection is vital for accurate carbon accounting.

Crunching the Numbers: GHG Reporting Protocol Methods

The GHG Protocol outlines different calculation methods for various emissions sources across the value chain. Some key methods include:

• Stationary Combustion: For on-site fuel combustion in equipment like boilers and generators.
• Mobile Combustion: For fuel used in entity-owned/controlled transportation sources.
• Purchased Electricity: For emissions from consumed grid-supplied electricity.
• Waste Disposal: For methane and CO2 emissions from waste sent to landfills.

These methods provide step-by-step procedures tailored specifically to different emissions sources and activities associated with operations. Rigorously applying the standardized methods is crucial for emissions reporting consistency, transparency, and compliance.

Following internationally recognized protocols like the GHG Reporting Protocol ensures quantified emissions data is accurate and methodologically robust. This drives informed, strategic emissions reductions planning.

Navigating Greenhouse Gas Reporting Regulations

Effective emissions reporting is crucial for organizations on the path to net-zero. This section explores key considerations around emissions reporting frameworks and best practices for effectively communicating sustainability performance.

Choosing Your Framework: Greenhouse Gas Reporting Program (GHGRP) and More

Major emissions reporting programs to consider include:

• CDP: A global disclosure platform for companies, cities, states, and regions to report environmental data. Over 13,000 organizations disclosed through CDP in 2021.

• The Climate Registry: A nonprofit organization that provides standards, tools, and programs for organizations to calculate, report, and reduce GHG emissions. Over 1,000 organizations currently use The Climate Registry.

• EPA GHG Reporting Program (GHGRP): A national reporting system created by the Environmental Protection Agency (EPA) for facilities that emit over 25,000 metric tons of CO2e per year. Data is publicly accessible through the EPA GHG data publication.

When deciding on a reporting framework, consider both regulatory requirements as well as stakeholder expectations. For example, the EPA's GHGRP is mandatory for qualifying facilities in specific industries, while CDP provides flexibility for voluntary disclosure.

Additionally, choose a methodology that fits your business and sustainability goals. For example, the GHG Protocol separates emissions into three scopes based on operational control:

• Scope 1: Direct emissions from owned/controlled sources
• Scope 2: Indirect emissions from purchased electricity/steam
• Scope 3: Value chain emissions

Examples of scope 3 emissions sources include purchased goods, transportation, and product use. Consider where your company has the biggest climate impact.

Best Practices for Emissions Reporting and Disclosure

Once you have emissions data, effectively disclosing and communicating performance is key. Best practices include:

• Publishing an annual sustainability report showcasing reduction commitments, strategies, and year-over-year progress
• Featuring emissions metrics prominently on company websites to highlight achievements
• Integrating interactive GHG visualizations to showcase environmental initiatives
• Providing platform access to investors for enhanced due diligence

The right reporting and disclosure approach boosts stakeholder confidence and demonstrates your organization's sustainability leadership.

Overall, a clear methodology tailored to your business backed by transparent communication builds trust and credibility around your net-zero journey. Reaching out to experts can help navigate the technical aspects of emissions calculations and reporting.

Optimizing and Institutionalizing Emissions Reporting

This concluding section summarizes key steps to improve process efficiency for ongoing emissions monitoring and disclosure.

Harnessing Technology for Efficient GHG Reporting

Purpose-built software like EcoHedge can automate calculations, ensure consistency, enable scenario modeling, and simplify reporting workflows. By integrating emissions data collection and analysis into everyday business operations, companies can establish a process for continuous emissions monitoring. Features like automated data imports, calculation engines, and visual dashboards make the process more efficient. Setting up custom reports tailored to specific reporting frameworks also ensures compliance disclosure requirements are met. With the right technology, emissions reporting can become an ongoing, optimized part of doing business.

From Reporting to Action: Establishing Emissions Reduction Goals

Once a company has established a baseline emissions inventory through reporting, the next step is setting emissions reduction targets. Ambitious, science-based targets aligned with 1.5°C pathways can act as a north star guiding decarbonization efforts. Companies should assess emission sources to identify "hot spots" for reduction opportunities. This informs strategies across operations, supply chain, energy procurement, and beyond to drive down emissions over time. With ongoing tracking through emissions reporting software, companies can monitor progress towards goals, iterate on reduction plans, and communicate achievements to stakeholders. The reporting process lays the foundation for environmental action.

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