S3 E6: “PAYING FOR GOOD” PODCAST ON ‘CO2 emissions reduction and bonuses’ with Pankaj Bhatia from the Greenhouse Gas Protocol

“Scope one, two or three?”

25th FEBRUARY 2021

This week on my ‘PAYING FOR GOOD’ podcast we’re looking into the highly complex topic of greenhouse gas emissions with our special guest Pankaj Bhatia, Global Director of the Greenhouse Gas Protocol at the World Resources Institute.

As part of their Responsible Reward offering, some firms demonstrate their commitment to sustainability by linking their bonuses to targets for CO2 emission reductions. So next time you buy an electric light bulb or a new fridge, choose wisely because it may affect someone’s bonus!

But how do we measure emissions?
The Greenhouse Gas Protocol establishes international standards for countries, cities and businesses on how to account for greenhouse gas emissions, using concepts from financial accounting. There are seven global standards, which apply either at product or organisational level. They provide guidance on what information to report in a consistent framework for transparent, accurate and complete comparisons across firms.

Emissions fall under three levels of ‘scope’:
Scope 1 concerns direct emissions from sources that are owned or controlled by a company.
Scope 2 relates to indirect emissions from purchased sources (for example, electricity) that are consumed by a company or in its operations.
Scope 3 emissions represent the rest of the value chain, from suppliers (upstream emissions) through to consumers (downstream emissions).

When you listen to Pankaj, you will learn:
• the benefits to you from signing up to the Greenhouse Gas Protocol
• the sector-specific and cross-sector tools available to quantify your emissions
• how to avoid emissions leakage from one location to another by adopting a global approach to reporting and monitoring your performance.

Is the protocol just for the most polluting industries?
Pankaj explains that finance is a very powerful tool for stopping fossil fuel pollution and redirecting investments towards more renewable energy and Greenhouse Gas Protocol-friendly alternatives. My view is that to accelerate progress towards greener energy, the inclusion of CO2 emission reduction targets from portfolio companies in financial services firms’ incentives would also help.

Your action takeaway:
As a business:
Consider linking your incentives to CO2 emission reductions. If you’re already doing so, well done! Don’t forget to use absolute greenhouse gas reduction metrics. Climate change and our ability to meet the 2015 Paris agreement to limit global warming to well below 2°C compared with pre-industrial levels are impacted by progress on absolute reductions – in other words, the reduction in the total amount of emissions. Some firms are focusing instead on intensity reduction, which refers to the amount of emissions compared to economic output such as the number of employees or revenue.

As a responsible investor:
You have a crucial role to play by quantifying the impact of your investments on greenhouse gas emissions. There is currently not enough transparency on this, despite the Greenhouse Gas Protocol making tools available to you.

As always, if you have any questions on the topic of Responsible Reward, feel free to email me at client.care@peoplenet.ltd.uk or book an introductory call here.