WHAT’S YOUR CARBON FOOTPRINT? DRAFT “What’s your company’s carbon footprint?” asks Joel Makower, founder of GreenBiz.com. “It’s a hot question these days – one being asked increasingly of companies by customers, investors, activists, regulators and others. Okay, it may not be exactly that question, but it’s probably in some form like, ’What’s your company doing to reduce climate impacts?’” “Whatever the question, providing an answer will require understanding what, exactly, your company does to contribute greenhouse gases into the atmosphere, how much from each business sector and location, and what options you have for mitigation.”1 And while you focus on your emissions, others may be more interested in your emissions relative to your entire supply chain. AMI member companies often work with literally thousands of suppliers, partners and service providers throughout the US and the world to create and provide their products and services. They rely on these relationships to do everything from procuring energy and packaging materials to delivering case-ready meats. Until recently, these companies measured the efficiency of their global supply chain – in three ways – cost, service, quality. But as public and retailer concerns grow about greenhouse gases, supply-chain carbon emissions is entering the calculus. Companies are increasingly measuring their carbon footprints (75% of surveyed companies), according to the September 2006 Carbon Disclosure Project (CDP)2 report by Innovest Strategic Value Advisors.3 Protocols issued by carbon registries help organizations analyze their footprints. And while the scope of these protocols varies, they generally suggest estimating only direct emissions and emissions from purchased energy, with less focus on supply chain emissions, according to a recent study by scientists as Carnegie Mellon University. 4 According to the authors, direct emissions from an industry are, on average, only 14% of the supply chain carbon emissions, and those direct emissions plus energy inputs total, on average, only 26% of the total supply chain emissions. 1 Makower, J. August 15, 2006. Foot the Bill: Getting a Toehold on Your Company’s Climate Footprint. Grist Environmental News and Commentary. 2 www.cdproject.net/ 3 www.innovestgroup.com/ 4 Matthews HS, Hendrickson CT, Weber CL. 2008. The Importance of Carbon Footprint Estimation Boundaries. Environ. Sci. Technol. 42 (16): 839-5842. Calculating your company’s carbon footprint is far from simple, Joel Makower5 explains. “To begin with, there are the sheer number and range of business activities, facilities, operations, transportation, travel, and purchases of everything from raw materials to office supplies. Beyond that are complex questions of where to draw the boundaries.” Should you account for the greenhouse- gas emissions related to extracting nutrients for fertilizers or for harvesting, drying or milling feed, or transportation of animals to your processing facilities – or are they your suppliers’ responsibility? Makower adds, “when your employees travel by air, are you or the airlines responsible for counting GHG-related impacts?” He’s quick to point out that there are downstream considerations too. Who should account for the climate impacts of supermarkets’ operations and refrigeration of your meat products or consumer disposal of your products’ packaging? So as you collect all of this information, how do you ensure that it is collected consistently so it can be aggregated for different units, product lines, and geographic units? Direct and Indirect Emissions: Because energy use is directly related to GHG emissions, by tracking energy use across different units, product lines and geographic units you can calculate emissions. Direct emissions are those are produced by a source you control, such as boilers or vehicles, and can be stationary (boilers, generators), mobile (vehicles) or fugitive (refrigerant leaks, wastewater treatment). Indirect emissions are those that result from a company activity, but are produced by a source external to the company. Data on indirect emissions (amount of energy used, the utility supplying it, and their generation mix and emissions from that generation) is available from utility bills, the utility companies, and possibly EPA. Data on direct emissions is more difficult to assemble. Mobile source information includes the number and types of vehicles (all fuel operated vehicles – forklifts, cards, trucks, plane), where vehicles are registered, fuel consumption for each vehicle, fuel type of each vehicle, miles traveled or hours of operation by each vehicle, and model year of each vehicle. You can get these data from your company fleet management systems, fuel/mileage/hour logs, or surveys of employees. Stationary source information includes the type of fuel consumed by each boiler or other source, how much fuel is consumed, and any special circumstances for Combined Heat & Power or CoGen systems. You can get these data from your natural gas bills, fuel bills for generators and other stationary equipment, propane invoices, etc. Fugitive source emissions estimates are derived from data collected on type and quantity of air conditioning equipment, type and quantity of refrigeration equipment, total refrigerant charge for each, annual actual or calculated leak rates, types of refrigerants, quantity of refrigerants purchased and used in those systems. You can get these data from refrigeration services logs & invoices, purchased refrigerant invoices, and surveys of employees. 5 Makower, J, ibid. Calculation Boundaries: Many companies limit the GHG emissions calculations to their own facilities, equipment and vehicles, and exclude emissions from suppliers, leased equipment, indirect sources, pre-opening plant construction unless by their own personnel, employee commuting to and from work, and other sources. While there are many suggestions for how to do this6,7 , for the present it’s up to each company to make its own boundary choices. For example: o Organizational boundaries determine which part of your organization to include in the emissions inventory. If you have foreign subsidiaries, joint ventures, or leased property (trucks and other vehicles, warehouses, or manufacturing equipment), you will want to make a decision about whether to include these emissions in your calculations. o Operational boundaries determine the limits of the activities that your company counts towards its emissions. For example, will your company count the emissions from transportation of product to supermarkets or other retailers, emissions from employee business travel on commercial airlines, emissions from consultants working on a company project, or emissions from landfill or rendering of animal byproducts? o Supply chain boundaries will determine the limits you place on your calculation of GHG emissions generated in the production and delivery of feed grain, raising and delivery of animals to your packing facility, or emissions generated as a result of customers’ use of your products or disposal of your product containers. CO2 Equivalents: While CO2 is the most common greenhouse gas, it is not the most powerful. Several other gases, including methane and nitrous oxide, have the ability to absorb heat in the atmosphere. Methane is a common byproduct of animal processing and meat production. A pound of methane emissions is equivalent to 21 pounds of CO2, and a pound of nitrous oxide is equivalent to 310 pounds of CO2, so GHG emissions involving methane, nitrous oxide, or other GHG is generally reported in terms of “CO2 equivalents,” determined by multiplying the amount of emissions of a particular gas by its GHG potential.8 6 A good primer on setting boundaries in GHG emissions calculations is available from the Carbon Disclosure Project at: http://www.eco- info.org/IMG/ACV/Carbon_Disclosure_Project/cdp/GHG_Emissions_Calculations_72 3.pdf 7 Verisae. 2008. Measuring Your Carbon Footprint. How, Boundaries, Best Practices & Guidelines. http://www.fmi.org/docs/sustainability/carbon_footprint_verisae.pdf 8 http://www.eia.doe.gov/bookshelf/brochures/greenhouse/Chapter1.htm Available Tools for GHG Emissions Calculations: Recognizing how difficult and time consuming GHG emissions calculations can be, fortunately, there are programs and organizations available that many companies are using to measure and track GHG emissions. Two excellent examples are: 1. The Greenhouse Gas Protocol (GHG Protocol) is referenced as the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.9 The GHG Protocol is a partnership between the World Resources Institute and the World Business Council for Sustainable Development. According to WRI, the GHG Protocol provides the accounting framework for nearly every GHG standard and program in the world - from the International Standards Organization to The Climate Registry - as well as hundreds of GHG inventories prepared by individual companies. The GHG Protocol also offers developing countries an internationally accepted management tool to help their businesses to compete in the global marketplace and their governments to make informed decisions about managing GHG emissions. According to WRI, this standard is written primarily from the perspective of a business developing a GHG inventory. However, it applies equally to other types of organizations with operations that give rise to GHG emissions. It should not be used to quantify the reductions