This article sets out the requirements for setting a complete emissions boundary for your organisation.
Calculating the emissions from your business involves the following steps:
Establish the emissions boundary
The first step in calculating the carbon account is to determine which entities (organisational boundary) and which related emission sources (emissions boundary) need to be included in the carbon account.
Pathzero requires the organisation to provide its ABN (if Australian) or equivalent international business number and company URL to identify the organisation.
Under the GHG Protocol, Pathzero applies the “Operational control approach” to determine which related entities would be included within the organisational boundary.
Under the Operational control approach, the organisation reports 100 per cent of the operations over which it has “the full authority to introduce and implement its operating policies” – ((GHG Protocol – Corporate Standard (WBCSD and WRI, 2004))
Requirement: All operations over which the reporting entity has operational control must be included in the organisational boundary.
Scope of emissions
To help differentiate between emission sources, emissions have been classified into the following scopes (adapted from the GHG Protocol).
Table 1: Emission source scopes
All stationary energy and fuels used in buildings, machinery or vehicles in the organisation’s control (e.g. natural gas, fuels used in generators or vehicles)
Emissions from the generation of purchased electricity, heat, cooling and steam (i.e., energy produced outside the organisation’s control boundary but used within the organisation).
Emissions that occur as a result of the activities of the organisation but occur from sources outside the organisation’s control boundary.
Requirement: The direct (Scope 1) and indirect energy (Scope 2) emissions of all organisations in the organisational boundary must be included in the Emissions Boundary.
Requirement: All other (Scope 3) emissions identified as a direct result of the organisation’s operations must be assessed for relevance. This includes indirect emissions outside the operational control (as defined) of the organisation.
Relevance test (adapted from GHG Protocol – Corporate Value Chain (Scope 3) Standard)
If two of the following five criteria are met by your organisation, this emissions source must be included in your emissions boundary.
- Size: They contribute significantly to the company’s total anticipated scope 3 emissions. (1)
- Influence: There are potential emissions reductions that could be undertaken or influenced by the company.
- Risk: They contribute to the company’s risk exposure (e.g., climate change-related risks such as financial, regulatory, supply chain, product and customer, legal, and reputational risks).
- Stakeholders: They are deemed critical by key stakeholders (e.g., staff, customers, suppliers, or investors).
- Outsourcing: They are outsourced activities previously performed in-house or activities outsourced by the reporting company that are typically performed in-house by other companies in the reporting company’s sector.
(1) Note this is aligned with GHG Protocol guidance. For companies that are certified or are interested in becoming Climate Active carbon neutral certified, this test would change to “The emissions from a particular source are likely to be large relative to the organisation’s electricity, stationary energy and fuel emissions.”.
Emission sources should be quantified wherever possible, with conservative estimates used where data is unavailable, and non-quantification used only when estimations are not practical.
An emission source can be “non-quantified” in the carbon inventory under the following scenarios:
- Immateriality (i.e. <1 per cent for individual items and no more than 5 per cent collectively).
- Quantification is not cost effective relative to the size of the emission (in this case, an uplift factor* must be included).
- Data is unavailable (a data management plan must be put in place to provide data within five years and an uplift factor* included).
- Initial emissions non-quantified but repairs and replacements quantified.
* An uplift factor is an upwards adjustment to the total carbon inventory to account for relevant emissions, which can’t be reasonably quantified or estimated.