The Greenhouse Gas Protocol has established a set of standards to measure and manage GHG emissions. To me it seems to be the dominant framework in measuring the carbon footprint of an organization and/or a supply chain.
The key to understanding the GHG protocal is that it includes three scopes:
- Scope 1: Any emission that is under the organization’s direct control
- Scope 2: Indirect emission ” from the generation of purchased electricity consumed by the company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.
- Scope 3: Other indirect emission from the supply chain of the organization.
It has been found that for many firms, scope 3 emissions are the largest sources of GHG emissions. For example, Cisco reported in 2013 that its upstream Scope 3 emission to be 79% of its total emissions, and SC Johnson reported the upstream Scope 3 accounted for over 90% of the company’s total (Blanco, Caro, and Corbett 2016).
The high percentage of upstream emission is not hard to understand. There are lots of energy-intensive activities that happen at the initial stage of value creation: Mining and extraction, raw material processing and manufacturing, and transportation. It can also be hard to keep track of all the emissions, as they often happen in a foreign country.
But the good news is that if one looks at a supply chain, then we can include almost all the emission activities along the chain. I found a beautiful example in Anthony J. Craig’s MIT thesis on the carbon footprint of the Banana production and logistics supply chain:
For those who needs a quick introduction, this video does a good job: