How to achieve ESG metrics you can trust
Companies are experiencing pressure from customers and investors to reduce greenhouse gas (GHG) emissions from their operations and supply chains. Fortunately, perfection is not a requirement in year one—rather the expectation that companies are engaging in the issues and showing progress over time.
Many companies are making the first step in setting lofty net zero goals. Across the full spectrum of ESG reporting, GHG emissions stand as the easiest to measure accurately. The challenge in GHG emission reporting is the breadth of the scope defined by the GHG protocol, and reporting emissions on a consistent basis.
GHG emissions are broken into three distinct scopes.
Scope 1: Covers emissions from direct operations such as those from on-site fossil fuel combustion and transport fleet fuel consumption
Scope 2: Includes indirect emissions from the purchase of power such as electricity, heat, or steam
Scope 3: Comprises any emission across the value chain generated from upstream suppliers to downstream activities getting products to market, including embedded emissions from the consumption of products.
Read more about Scope 3 emissions in our blog: What is the deal with Scope 3?
Once goals have been set, such as reaching net zero by X, it’s time to build your strategy on how to achieve them. The foundation of setting a realistic strategic plan to achieve goals begins with identifying emissions sources, then reporting on these sources with the same rigor and discipline as financial reporting—for the entire value chain.
The complexity and variability of emission data sources can seem overwhelming and daunting at first, especially as you depend on people in the field to hunt down data from disparate sources and then report and track the metrics in a spreadsheet.
Remember, perfection is not a requirement in year one. What is important is that steps are started towards the goals, no matter how small.
In the long term, GHG emission reporting and tracking will need to be consistent and verifiable, with a more sophisticated way of tracking to replace the ad-hoc methods of tracking you use currently.
Instead of depending on field workers, you can start grabbing the data directly from technology in the field using the industrial internet of things (IIoT). This data provides accurate and verifiable information to calculate GHG emissions across fleets.
The spreadsheet method of tracking will advance to new levels. Organizations can push IIoT data directly into a relational database. The challenge with a relational database is still a lot of room for errors, and the data can be manipulated at any time—reducing the level of trust in the data.
The best option to track and report GHG emissions you can trust is distributed ledger technology. This technology provides a single version of truth that is immutable and auditable.
There is an additional advantage to utilizing private, permissioned distributed ledger technology; it allows you to keep certain metrics private and identify which metrics you would like to make publicly available.
Accurate and verifiable data will allow you to effectively track progress towards goals, forecast future emissions, and offset requirements.
Steps to effective GHG measuring and reporting :
- Identify emission sources
- Establish a baseline measurement
- Measure on an ongoing and consistent basis
- Track progress towards goals
- Forecast emissions and offset requirements
Interested in learning more about how a private, permissioned based distributed ledger technology can help advance your GHG reporting goals, contact us today.