Methodology for Climate Calculations and Emissions Factors at Position Green

Introduction

Making sustainability measurable and actionable

Position Green is a pure play sustainability partner that fuels the journey of competitive businesses, from compliance to sustainable impact. We work together with clients to navigate an evolving regulatory landscape, accelerate sustainability performance and sharpen their competitive edge. By making sustainability measurable and actionable, companies can transform and streamline their ESG data management and reporting, and embed sustainability strategies that reduce risk and create value. A core aspect of making sustainability measurable is adopting a rigorous approach to carbon emissions calculation.

While Position Green’s ESG software provides transparency in terms of applicable emissions factors and sources, this whitepaper offers deeper insights into Position Green’s calculation methodology. It describes the approaches and processes behind the carbon accounting and use of emissions factors in generating high-quality, accurate data.

It also outlines how Position Green implements the guidelines and methodologies of the GHG Protocol.

The foundation for carbon accounting

Greenhouse Gas Protocol

The Greenhouse Gas Protocol provides the world’s most widely used global standards for GHG accounting and reporting, and as such serves as core guidance in Position Green’s approach to carbon accounting. It has introduced a standardised method for measuring and managing emissions in both the public and private sectors.

The Corporate Accounting and Reporting Standard forms the foundation for GHG reporting and outlines principles, methodologies and data requirements for this.

Effective GHG accounting shines a light on sources of major emissions, and in doing so enables informed climate strategies and actions. It aids in identifying appropriate measures and tracking progress towards emission reduction targets. Businesses can leverage this information to drive industry change by setting common reduction goals for suppliers and colleagues, while also attracting climate-conscious investors.

The GHG Protocol establishes organisational boundaries for emissions reporting with guidance that also accommodates complex company structures. It specifies operational boundaries (Scope 1, 2, and 3) to determine emissions responsibility at different levels, whether direct, indirect or within the value chain. Furthermore, it provides guidelines for reporting, data collection and the utilisation of emissions factors.

Principles of greenhouse gas accounting

The GHG Protocol has established five principles to guide the carbon accounting process and ensure a high-quality, credible inventory. These form the backbone of Position Green’s methodology for climate calculations and emissions factors when creating an inventory together with clients:

1. Relevance: Ensure the GHG inventory appropriately reflects the GHG emissions of the organisation and serves the decision-making needs of internal and external stakeholders.
2. Completeness: Account for and report on all GHG emission sources and activities within the chosen inventory boundary. Disclose and justify any specific exclusions.
3. Consistency: Use consistent methodologies throughout the climate calculations for each area to allow for meaningful comparisons of emissions over time. Transparently document any changes to the data, inventory boundary, methods, or any other relevant factors in the time series.
4. Transparency: Address all relevant issues in a factual and coherent manner, based on a clear audit trail. Disclose any relevant assumptions and choices made relating to the different methodologies and sources of data.
5. Accuracy: Ensure that the quantification of GHG emissions is systematically neither over nor under actual emissions, as far as can be judged, and that uncertainties are reduced as far as practicable. Achieve sufficient accuracy to enable users to make decisions with reasonable assurance as to the integrity of the reported information.

Applying the right methodology

Our collaborative philosophy

While Position Green hosts companies’ data in our software for emissions and impact calculations, it is crucial to underline that customers own their own data. With recommendations from our sustainability experts, customers ultimately decide which data to focus on and the emissions factors to be used. Through close collaboration, we work to leverage our customers’ unique insights into their own organisation and needs.

Together, we determine the carbon accounting methodology to be implemented in the software, the choice of emissions factors and the key focus aspects. Position Green strives to fuel companies’ sustainability journeys and build self-sufficiency in data management and reporting. This is accelerated through accurate measures, expanding the scope of emissions accounting and fostering sustainability knowledge and commitments.

Defining organisational boundaries

Choosing the appropriate methodology for GHG accounting and reporting is crucial as it forms the foundation for the entire reporting process. Position Green has developed best practices for establishing case-by-case methodologies, drawing from the GHG Protocol guidelines and extensive experience in GHG accounting across diverse industries. Depending on the type of business, the organisational inventory defines the “how” of reporting and sets the scope of responsibility.

There are two distinct approaches to setting the organisational boundary for GHG accounting and reporting. These approaches should align with the organisational and legal structure, as well as the purpose of accounting and reporting.

Equity Share Approach

In the equity share approach, businesses account for emissions based on their share of equity in its operations. This method reflects the economic interest, risks and rewards associated with operations. In some cases, economic interest may take precedence over legal ownership to ensure that the equity share accurately represents the percentage of economic interest.

Control Approach

The control approach involves a company accounting for 100 percent of GHG emissions from operations it has control over. It does not account for emissions from its operations in which it owns an interest but lacks control. There are two sub-directions within the control approach: financial control and operational control.

A. Financial Control Approach

The financial control approach considers a company’s ability to direct financial and operational policies to gain economic benefits from its activities. Emissions should be accounted for based on this financial control. Financial control usually exists when a corporation has the right to the majority of the operation’s advantages and/or retains the majority of risks and rewards associated with asset ownership.

B. Operational Control Approach

The operational control approach is chosen when a company has full authority to introduce and implement operating policies within a specific operation. It encompasses accounting for 100 percent of emissions from the facilities and activities under its operational control. It is important to note that complete authority in all decision-making aspects of an operation is not necessary for this approach. The operational control approach is the most commonly used for GHG accounting.

Once the most suitable approach for organisational boundaries is defined, the next step is to set the operational boundaries:

• Identify emissions associated with one’s operations.
• Categorise them into direct, indirect or value chain emissions (Scope 1, 2, and 3), as defined by the chosen approach to operational boundaries.

Data quality and emissions factors

Calculating carbon emissions requires a methodology that considers the type of activity data and emissions factors involved. Position Green is able to calculate your organisation’s total carbon emissions by supporting data collection from all of your economic activities and matching each piece of data with the most suitable emissions factor. Emissions factors represent values that quantify the environmental impact of products, processes and consumption.

Carbon calculation methodologies can be categorised as:

A. Activity-based

Measuring consumption or quantity, such as kilograms or kilowatt-hours, which generally provides more accurate and detailed information and results.

For transportation and travel emissions, different methods can be used, including fuel-based, distance-based or spend-based, depending on data availability.

B. Spend-based

Measuring monetary expenditure, such as USD or EUR.

Given the challenges in collecting data for Scope 3 emissions and the increased focus on measuring these indirect emissions, the GHG Protocol has introduced a separate corporate standard for value chain emissions. This standard defines methodologies, allocation of emissions across 15 categories, and the required activity data and emissions factors. It also provides guidelines on how to locate and collect this information.

The level of quality in the reported data and emissions factors used for calculation steers the accuracy of the carbon accounting. The following methods are listed in hierarchical order in terms of data quality:

Supplier-specific method

The most accurate data. A combination of primary activity data on, for example, the mass or quantity of purchased electricity, fuel, specific goods etc. from specific suppliers and primary product and supplier-specific emissions factors. Emissions factors sourced directly from suppliers have high credibility and the most accuracy.

Average data method

A combination of primary activity data that is estimated based on the mass or quantity of, for example, used material, fuel, electricity etc. and average emissions factors. Due to supplier-specific data and emissions factors being difficult to obtain, this is the most common approach.

Spend-based method

A combination of primary activity data on the amount spent on purchased products and average emissions factors for purchased products and services per monetary value. This is the least accurate method as it includes multiple estimations and other aspects such as inflation that can affect the data quality. However, the data is typically easier to collect and serves as a useful first step in your climate accounting.

Data sourcing

The data needed for Position Green to calculate Scope 1 and 2 is generally sourced from the customers internal documentation, such as utility bills, contracts, invoices, meter records and purchasing records.

Scope 3 data is best obtained from suppliers and the customers end-users. However, certain data relating to categories such as business travel, waste and employee commuting can be sourced through the customers internal surveys, supplier contracts and purchasing records.

Emissions factors can be collected by obtaining different life cycle assessments (LCA), where our advisory experts guide the calculation of emissions from the entire life-cycle perspective of a product or process, or they can be provided by our trusted suppliers. Average emissions factors may also be available through industry associations, governmental agencies or reports, or through a third-party responsible for the customers’ carbon calculations and reporting.

Integrated ESG reporting standards and frameworks

Depending on the industry, there are multiple regulations and frameworks defining the specific areas within GHG accounting that are most pressing to disclose. The GHG Protocol serves as the foundation used in the majority of these for the division of emissions and the fundamental approach to reporting, and thereby the basis for calculations.

However, other standards and frameworks go beyond this to inform, recommend and require specific activities and reporting actions, for example, ESRS, EU Taxonomy, SFDR, GRI, SASB/ISSB and CDP. Position Green has integrated the most common ESG regulations and frameworks into our software to enable businesses to map, collect, analyse and report sustainability data in line with the specific standards and requirements.

Streamlined process for updated emissions factors

Beyond our methodological foundation in the GHG Protocol, Position Green utilises multiple databases for emissions factors, both licensed and public (see appendix). These databases undergo annual updates, which are also incorporated into our software. To ensure transparency, we thoroughly document all changes made to each emissions factor, enabling our customers to understand the reasons behind any modifications.

Depending on the specific activity or spend data available to the customers, conversion of emissions factors to different units may be necessary. For example, reporting diesel usage in litres for company cars or in kilowatt-hours for heating. While the databases we use for emissions factors contain a range of units, certain complex conversions may require manual calculations. Our solutions team, well-versed in sustainability standards, emissions factors and meticulous knowledge of emissions accounting and reporting, handles these calculations.

This process involves thorough research to determine relevant calorific values, comprehensive documentation of calculations and assumptions, and quality checks using a four eyes principle.

Overview of annual database updates

• Trafikverket
• AIB
• DEFRA
• IEA
• Circle K
• Energimyndigheten
• RISE
• Naturvårdsverket
• Refrigerants
• Naturvårdsverket
• Road traffic + stationary combustion
• Energiföretaget
• District heating

Research & quality assurance

Position Green’s dedicated team ensures accurate sustainability reporting by staying informed on regulatory amendments, quality checking internal work and updating emissions factors in the software. Through ongoing research and environmental monitoring, we expand Position Green’s knowledge base to provide comprehensive support to clients. Our internal processes ensure transparency and quality in researching and incorporating new emissions factors, guided by scientific research, regulatory developments and credible databases, and often motivated by our customer requests.

The method for establishing new emissions factors involves the following steps:

1. Determination of high source credibility.
2. Comparison with other sources and estimations.
3. Validation of outcome.
4. Quality check.
5. Justification of assumptions or estimations.

These key aspects, assumptions in particular, are well defined in the delivery of the emissions factor, both in the documentation process and client communication.

Emission Factor assumptions

Assumptions are always part of the work with finding new emissions factors. A checklist is therefore applied to define core aspects on which to base these:

1. The purpose and intended use of the emissions factor
2. Source credibility
3. What the emissions factor covers or applies to
4. Reasonable outcome of emission in terms of size
5. Comparison with other similar emissions sources (and potential replacement source)
6. Inhouse discussion with Position Green’s cross-disciplinary teams

Quality assurance is a crucial element in emissions factors as they form the basis for carbon calculations, which in turn are used to make strategic and operational decisions to improve sustainability performance. Position Green implements rigorous internal processes for quality assurance and continuously develops technical solutions to reduce the risk of human error. Quality is also supported by information sourced from database providers and methodology reports.

A pure play sustainability partner

Accurate carbon accounting is the first step in the sustainability transformation of a competitive business. Position Green’s emissions calculation methodology ensures you gain the actionable insights needed to reduce emissions in your organisation and value chain, embed sustainable business practices, and develop a clear roadmap towards a sustainable future.

Position Green’s unique offering combines leading ESG software with specialised ESG advisory services, e-learning and independent assurance. A versatile ESG product suite and data-driven insights enable enterprises and investors to cut through the complexity of evolving regulations and become more seamless, transparent and action-oriented.

Position Green supports you through your entire journey, from compliance to sustainable impact.

Appendix

Databases for emissions factors

References

1. Position Green website: positiongreen.com
2. The Greenhouse Gas Protocol webpage: https://ghgprotocol.org/
3. A Corporate Accounting and Reporting Standard, revised edition: https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
4. Corporate Value Chain (Scope 3) Accounting and Reporting Standard: https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf
5. EFRAG, First set of draft ESRS: https://www.efrag.org/lab6
6. EU Taxonomy for Sustainable activities: https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en
7. Sustainability-related disclosure in the financial services sector: https://finance.ec.europa.eu/sustainable-finance/disclosures/sustainability-related-disclosure-financial-services-sector_en
8. Global Reporting Initiative: https://www.globalreporting.org
9. Position Green ESG Solutions: https://www.positiongreen.com/esg-solutions/
10. SASB Standards, The IFRS Foundation’s International Sustainability Standards Board (ISSB): https://www.sasb.org/
11. CDP: https://www.cdp.net/en
12. International Energy Agency: https://www.iea.org/
13. The Association of Issuing Bodies: https://www.aib-net.org/
14. DEFRA/BEIS (Department for Environment Food and Rural Affairs / Department for Business, Energy & Industrial Strategy): https://www.gov.uk/government/collections/government-conversion-factors-for-company-reporting
15. Research Institutes of Sweden: https://www.ri.se/en
16. Energiföretagen: https://www.energiforetagen.se/
17. Ecoinvent: https://ecoinvent.org/
18. Exiobase: https://www.exiobase.eu/
19. Network for Transport Measures: https://www.transportmeasures.org/en/