A company with a well-managed climate management system and the goal of carbon neutrality has a strong competitive advantage today. It sets itself apart from competitors through sustainability and is attractive as an employer. The first large companies have already announced that bonus payments to their executive boards will be linked to the achievement of sustainability targets, and the preparation of materiality analyses is on the rise. In this article, you will find information on which drivers are leading to changes in the topic of climate protection, what CO2 balancing in a company can look like and which standards are relevant for this.
- Political drivers for climate protection
- Networks and standards as drivers for climate protection
- Society as a driver for CO2 neutrality and climate protection
- Business as a driver for climate protection
- Climate management and CO2 neutrality - a classification
- Greenhouse gas accounting as a starting point
- The process according to ISO 14064
- How to achieve CO2 neutrality - Conclusion
- DQS: Simply leveraging Quality.
CO2 neutrality - a definition
In a narrow sense, the term CO2 neutrality means that no CO2 is emitted or that CO2 emissions are fully compensated. An action context that is CO2-neutral in this sense does not increase the concentration of the greenhouse gas CO2 in the atmosphere, but it can have other influences on the climate, for example by emitting other greenhouse gases such as methane or nitrous oxide or - in the example of aviation - by changing cloud cover. CO2 neutrality is therefore not synonymous with climate or greenhouse gas neutrality. [...] Climate neutrality means that a process or activity does not affect the climate. Source: Wikipedia
Political drivers for climate protection
In 1997, the Climate Change Conference was held in Kyoto, Japan, where the "Kyoto Protocol" was adopted. This protocol established a United Nations Framework Convention on Climate Change, which for the first time set legally binding limitation and reduction commitments for greenhouse gases such as carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), as well as fluorinated greenhouse gases (F-gases) such as hydrogen-containing hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
The agreement entered into force in 2005. It was followed by two commitment periods. After the first, which ran from 2008 to 2012, the participating nations determined that the desired climate targets had not been met. This led to a second commitment period, which ran from 2013 to 2020.
In order to maintain the international climate protection process after 2020, there was a need for another climate protection agreement. Thus, in 2015, the "Paris Climate Agreement" was adopted, which for the first time set a concrete target for limiting global warming to well below two degrees compared to the pre-industrial era.
In 1997, the Climate Change Conference was held in Kyoto, Japan, where the "Kyoto Protocol" was adopted. This protocol established a United Nations Framework Convention on Climate Change, which for the first time established legally binding limitation and reduction commitments for greenhouse gases such as carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), as well as the fluorinated greenhouse gases (F-gases) such as hydrogen-containing hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
The agreement entered into force in 2005. It was followed by two commitment periods. After the first, which ran from 2008 to 2012, the participating nations determined that the desired climate targets had not been met. This led to a second commitment period, which ran from 2013 to 2020.
In order to maintain the international climate protection process after 2020, there was a need for another climate protection agreement. Thus, in 2015, the "Paris Climate Agreement" was adopted, which for the first time set a concrete target for limiting global warming to well below two degrees compared to the pre-industrial era.
CO2 neutrality in Germany by 2050
At the European level, the Kyoto Protocol gave rise to EU emissions trading. This is considered an instrument for reducing greenhouse gas emissions, as only a limited number of emission rights may be issued and traded on the market. In Germany, the Climate Protection Plan 2050 was adopted in 2016. Its goal is to achieve extensive CO2 neutrality by that time.
ISO 14064-1 Greenhouse gases
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In October 2019, Germany published the Climate Protection Program 2030, which serves to implement and concretize the Climate Protection Plan 2050. This contains concrete targets and measures, including the amended Federal Climate Protection Act.
With this law, the federal government has tightened the requirements and set annually decreasing greenhouse gas emissions for a wide range of sectors, for example, transport, industry, buildings. By 2030,CO2 emissions are to be reduced by 65 percent compared with 1990 levels. By 2045, Germany is to achieve greenhouse gas neutrality. The respective ministries are responsible for monitoring the success of the targets and for possible follow-up action.
Networks and standards as drivers for climate protection
Sustainability networks and standards support the issue of climate protection and CO2 neutrality. These include, for example, the Global Compact, Global Reporting Initiative (GRI) or the German Sustainability Code (DNK), which include guidelines for non-financial reporting and address the issue of greenhouse gases. Furthermore, there are the Sustainable Development Goals of the United Nations, which were adopted in 2015 and came into force in 2017. They are part of the 2030 Agenda for Sustainable Development. In the 17 Sustainable Development Goals, one is "action on climate change".
Society as a driver for CO2 neutrality and climate protection
The generation of greenhouse gases such as CO2 is essentially based on human activity such as the intensive use of fossil fuels and carbon-based fuels. In order to achieve the set goals and, for example, CO2 neutrality, all actors are required: companies, non-governmental organizations as well as private individuals, who can exert a great deal of pressure in the direction of CO2-neutral companies. Consumers can help steer the issue of CO2 neutrality through their consumption behavior. Sustainability issues are now also a major, steadily growing factor in corporate competition, for example for new employees.
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Business as a driver for climate protection
Even the business community can no longer ignore the issue of climate protection. Many customers are now making demands on sustainability in supply chains and, more specifically, on climate issues. Some large companies have discovered the issue of climate protection for themselves and are pursuing CO2-neutral business practices. In some cases, they even want to make their choice of suppliers dependent on their sustainability targets.
Private and institutional investors are also increasingly focusing on climate protection, climate neutrality and other sustainability issues. Sustainability indices are listing more and more companies that are active in these areas. In addition to sustainability funds for private investors, institutional investors, for example through the Carbon Disclosure Project (CDP), have the opportunity to find out about companies' climate commitment andcarbon footprints on the path to climate neutrality.
This is important because, on the one hand, climate change causes great damage and thus also becomes a risk for companies through storms or flooding, and on the other hand, it is risky for insurance companies if they have to pay high damage payments. The Carbon Disclosure Project is an initiative with the goal that companies, but also municipalities, publish their environmental data. More than 655 institutional investors have access to this data.
Climate protection has become an integral part of today's world. If you want to be successful in the long term, it is imperative that you deal with climate management.
Climate managementent and CO2 neutrality - a classification
Climate management can be assigned to the topic block sustainability management and the sub-item environmental management (ISO 14001). Energy management (ISO 50001) can then be found in the area of climate management. If an energy management system in accordance with ISO 50001 has already been established in a company, benefits can be drawn from this for climate protection. It is worth building on existing structures and using the recognized ISO 14001 and ISO 50001 standards as input. Integrating climate management into an existing integrated management system is also a good choice. For this, organizations:
- Identify their own drivers from their context and stakeholder analysis
- Take a look iat their existing climate policy
- Define responsibilities
- Set targets, e.g.,CO2 neutrality, science-based targets
- Develop a climate strategy using a PDCA cycle (Plan-Do-Check-Act)
- Use data from the environmental and energy management systems
- Account for greenhouse gas emissions, which are an essential part of climate management. It is important to know their impact and set targets accordingly.
It is almost impossible today not to take a position on climate neutrality or not to become active through effective climate protection. A greenhouse gas inventory is therefore an important step towards a sustainable future.
Greenhouse gas accounting as a starting point
TGH accounting is based on five principles:
- Relevance
- Completeness
- Consistency
- Transparency
- Accuracy
1. Relevance
All relevant GHG emissions are covered, not just CO2 emissions, and reporting meets user needs.
2. Completeness
All GHG sources within the system boundaries/inventory boundary are covered. If there are exclusions, they must be disclosed and justified.
3. Consistency
Consistent methodologies must be used to ensure some degree of comparability across years. If changes (system boundaries, methods, data) are made, these are documented.
4. Transparency
The indication of assumptions, data sources used, calculation methods used, so that these can be traced.
5. Accuracy
The recorded greenhouse gas emissions must not be systematically higher or lower than the actual emissions. If this were to be the case, it could appear as if the company had saved a lot of emissions in the following year or suddenly had a lot of emissions without knowing where they came from. Therefore, accuracy in methods and calculation models must be ensured at all times.
What to consider before you start on data collection
Before GHG accounting is applied, the inventory boundaries should be defined. This includes the accounting period. This is usually one year, but can be chosen freely. The organizational inventory boundaries are used to decide which companies or company participations are to be included in the inventory.
An alternative approach is the equity approach. Here, greenhouse gases such as CO2 are determined from emissions from all sites and shareholdings, and the emissions are allocated proportionately.
Which approach is used depends on the company structure. It is important to look at the size of the company and what the participation structures are.
The operational inventory limits deal with what emissions should be included in the coverage. There are direct emissions that result from a company's operations, such as company-owned power plants, vehicle fleets, or chemical processes. Depending on the industry the company comes from, leakages (e.g. refrigerants) must also be taken into account here.
Indirect emissions are found in upstream and downstream activities in the supply chain. These include, for example, emissions that occur during the generation of purchased energy (electricity), but also emissions that occur at the supplier's site or during transport to the site. Downstream activities also include those emissions that occur during the use of the product or that result from transportation and waste disposal.
There are different approaches depending on which approach a company uses to account for emissions. The GHG Protocol (or Greenhouse Gas Protocol) provides standards and guidelines in English for preparing CO2 inventories in different areas. The Corporate Standard, for example, specifies which emissions should be included in an operational inventory boundary and breaks this down into three scopes:
- Scope 1: Compulsory recording
This includes the direct emissions mentioned above (vehicle fleets, company-owned power plants, chemical processes, etc.). - Scope 2: mandatory
This includes the aforementioned indirect emissions (emissions arising from the generation of energy outside the company, for example electricity and heat, etc.). - Scope 3: Optional
These are emissions that arise from the company's activities but are not under its control, e.g. activities of suppliers, customers or service providers.
Data collection and determination of emissions
The following gases must be accounted for. The conversion into CO2 equivalents (CO2 serves as the starting point here) is based on the Global Warming Potential (GWP).
Greenhouse gas emissions are almost never measured directly, but are determined using calculation logics. Activity data and emission factors are important for this.
Activity data usually represent the activities that result in greenhouse gas emissions. These include fuel consumption, electricity consumption, or rail kilometers traveled. Suitable data sources include meter readings, invoices, measurements, calculations, possibly estimates, or possibly surveys of employees regarding travel distances and modes of transportation. These values are then set in relation to the emission factors.
Emission factors describe the ratio of greenhouse gases emitted per unit of a raw material used (for example, per unit of diesel) and are usually expressed in tCO2eq/quantity. To obtain the relevant data, databases such as the free databases GEMIS, ProBas or the commercial databases GaBi, ecoinvent are suitable. Depending on the industry or location, other data sources or scientific publications may be important.
The process according to ISO 14064
The ISO 14064 management system standard enables companies to monitor, report and better manage their GHG emissions. The standard provides companies with a framework for GHG calculation and verification. It is voluntary and is used by companies of all sizes and from a wide range of industries.
ISO 14064-1 – Greenhouse gases
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ISO 14064-1 relates to greenhouse gases and can be used as a basis for balancing one's own CO2 emissions and for establishing the so-called Corporate Carbon Footprint (CCF). It distinguishes between direct and indirect greenhouse gas emissions. In principle, direct greenhouse gas emissions must be recorded. For indirect greenhouse gas emissions, ISO 14064-1 specifies that these should be recorded according to their materiality. In other words, if they are significant for the company concerned, they must be recorded. There are five subcategories for this:
- Indirect GHG emission from imported energy.
- Indirect GHG emissions from transportation
- Indirect GHG emission from products used by the organization
- Indirect GHG emission associated with the use of the organization's products
- Indirect GHG emission from other sources
These five categories may be expanded and further subdivided. Each organization performing accounting should establish materiality criteria that it will use to classify indirect emissions. Examples may include the volume of the emission, its influenceability, access to and accuracy of information, stakeholder interest and expectations, and others.
ISO 14064-2 provides guidance for capturing greenhouse gas removals or reductions at the project level.
ISO 14064-3 provides the basis for the verification ofcarbon footprints. This verification corresponds to the accounting period of generally one year and can be performed by DQS. It provides companies with the opportunity to demonstrate in their external statements that the requirements for balancing emissions are being met.
Additional Standards
Other helpful tools include ISO 14067, which provides guidelines for quantifying greenhouse gases at the product level, and EN 16258, which is a standard focused on the transportation sector that specifies a method for calculating and declaring GHG emissions and energy consumption. It can be used for freight transport, but also for passenger transport.
How to achieve CO2 neutrality - Conclusion
Climate neutrality as a whole - and CO2 neutrality in particular - doesn't just fall from the sky. But protecting our climate is worth the effort. The basis for climate neutrality is a resilient inventory, and your company will gain the highest credibility with an accredited certificate according to ISO 14064.
Thanks to this standard, a greenhouse gas inventory can consolidate your company's position in the market and make it more interesting for customers, applicants, suppliers and service providers. For this purpose, it is also worthwhile to prepare a materiality analysis in order to be able to disclose the key sustainability and environmental aspects of your company at any time. The more precisely you identify what impact your company has on the environment, the faster you can make changes and move the issue of CO2 neutrality and your company far ahead in the market.
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We are your specialist for audits and certifications, for management systems and processes - and have been doing so very successfully for over 35 years. Founded as Germany's first body for the certification of management systems, we focus on how companies are managed and organized. We audit according to around 100 recognized standards and regulations as well as company and association-specific standards. Through our work, we provide management with clear evidence for action.
Verification of your GHG footprint by our experts is based on ISO 14064-3 and increases your company's credibility with investors, customers and other interested parties, such as NGOs (non-governmental organizations). In addition, potential savings can be identified and reduction measures implemented, which means that market-relevant requirements, for example from the CDP (Carbon Disclosure Project), can also be covered. In addition, you are prepared to react quickly to any legal regulations.
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Altan Dayankac
Global Program Manager and Senior Sustainability Manager of DQS Group and international expert on numerous sustainability, climate, environmental, and occupational safety topics. Altan Dayankac also contributes his expertise as an author and moderator to HSE and sustainability committees and at various professional events.