A-Z

CARBON
ACCOUNTING
TERMS
Measuring and Managing
Greenhouse Gas Emissions
 1.5°C

Paris Agreement obliges nations to limit the rise in

global temperatures to significantly under 2°C
above levels before industrialization, with a
preferred goal of not exceeding 1.5°C. Warming
beyond 1.5°C might result in far more severe
alterations to our climate. Experts have
determined that to maintain this 1.5°C target,
global emissions need to be reduced by 50% by
2030 and achieve a balance of zero new emissions
by 2050.
 Accuracy Gap

The accuracy gap refers to the discrepancy between

the greenhouse gas emissions a company reports and
the actual emissions it is responsible for. By narrowing
this gap, companies can mitigate risks, such as legal
penalties, and gain advantages, including a boost in
their market value. This gap often arises from the
methods and information utilized in calculating
emissions. Implementing thorough and scientifically
supported carbon accounting practices allows
companies to bridge this gap effectively.
 Activity Data

Activity data reveals the quantity of a specific item

or substance acquired by a firm, such as the
volume of fuel in liters or the weight of textiles in
kilograms. For carbon accounting, this type of
data typically yields more precise calculations of
emissions compared to data based on financial
expenditures.
Baseline Emissions

The starting point of greenhouse gas emissions

before implementing any strategies to decrease
them. It acts as a reference for tracking
improvements in reducing emissions.
 Base year

To begin the journey towards net zero and

establish targets for lowering emissions, it's
essential to first determine a starting year. The
annual goals for cutting emissions are then
defined as a portion of the total emissions
recorded in this starting year.
Carbon Accounting

Carbon accounting is a systematic process

for measuring, quantifying, and tracking the
greenhouse gas emissions, especially carbon
dioxide (CO2), that an organization or entity
releases into the atmosphere.
 Carbon Dioxide

Carbon dioxide is a colorless gas that occurs

naturally in the atmosphere. It is also created
in many industrial processes. Carbon dioxide
is a greenhouse gas and therefore
contributes to global warming.
 Carbon Dioxide
Equivalent (CO₂e)

For each type of greenhouse gas, carbon

dioxide equivalent (CO₂e) represents the
amount of CO₂ that would have the same
warming effect on the earth as that particular
gas. CO₂e offers a unified standard to analyse
the impact of various greenhouse gases on the
climate.
 Carbon Footprint

Carbon footprint refers to the total emissions

of greenhouse gases, including both direct
and indirect emissions, linked to a particular
product or action.
 Cabon Credits

Tradable certificates that represent the

reduction or removal of one metric ton of
carbon dioxide or an equivalent amount of
other greenhouse gases from the
atmosphere.
Carbon Intensity

The quantity of carbon, measured by

weight, released for every unit of
electricity used.
 Carbon Offset

Carbon offset refers to the process of

mitigating emissions of carbon dioxide or
alternative greenhouse gases by
implementing reductions to
counterbalance emissions generated
elsewhere, thereby achieving a net neutral
impact on the environment.
 CBAM

European Union's strategy to assign an equitable cost

to the carbon released in the manufacture of goods
with high carbon content imported into the EU. It
aims to promote more environmentally friendly
manufacturing processes outside the EU. The CBAM
will be progressively implemented in tandem with the
reduction of free emission allowances provided by the
EU Emissions Trading System (ETS), facilitating the EU
industry's move towards lower carbon emissions.
Climate Adaptation

The process of adjusting practices,

processes, and structures to moderate
potential damages or to benefit from
opportunities associated with climate
change.
Climate Resilience

The ability of a system, community, or society

to adapt to
and recover from the effects of climate
change, including climate variability and
extremes.
Control Approach

An approach used in carbon accounting

where emissions are
reported based on the operations that an
entity has control over.
 Corporate Level
Carbon Accounting

The process of measuring and reporting

on the greenhouse gas emissions
produced by a company's entire
operations.
Carbon Negative

A business is carbon negative (or climate

positive) if the net result of its
activities is a decrease in the amount of
carbon in the atmosphere. This is going
a step further than net zero.
 Carbon Neutral

A business achieves carbon neutrality when its primary

operations do not add any extra greenhouse gas
emissions overall. This status can be attained without
addressing scope 3 emissions, which often constitute the
bulk of emissions for many companies. However, to align
with the Paris Agreement objectives, businesses need to
progress further and aim for net zero emissions.
Carbon Reduction

Carbon reduction involves decreasing the volume

of greenhouse gas (GHG) emissions emitted by a
company. This can include actions such as
transitioning to suppliers with lower emissions or
adopting clean energy sources. Carbon reduction
is an essential phase in the transition toward
achieving net zero emissions.
 Carbon Target

A carbon target refers to a pledge made by a

company to decrease its greenhouse gas
emissions by a specific quantity before a
designated year. This commitment is typically
part of the company's strategy to mitigate its
environmental impact and contribute to efforts to
combat climate change.
 CDP

CDP provides a framework for companies,

cities, and states to disclose their
environmental impact.
 COP

The COP (Conference of the Parties) is an annual

United Nations conference focused on addressing
climate change. Leaders from nearly every
country convene to assess the progress made in
reducing emissions and to ensure that climate
targets are being met.
 Decarbonization

Decarbonization refers to the process of reducing

the greenhouse gas emissions generated by your
company. This can involve transitioning to
suppliers that are more environmentally friendly
or switching to providers of clean energy.
Decarbonization is a vital step toward achieving
net zero emissions.
 Direct Emissions

Direct emissions, also known as scope 1 emissions,

encompass the greenhouse gases generated by a
company during its operational activities. This
includes emissions from electricity generation,
manufacturing and processing of materials,
waste management, and the use of company-
owned vehicle fleets for transportation.
 Double Counting

A carbon removal project risks double-counting if

it sells the same climate investment multiple
times. Avoiding this practice is crucial for
maintaining the integrity of climate investments
and ensuring their effectiveness in reducing
greenhouse gas emissions.
 Downstream
Emissions

Downstream emissions refer to the greenhouse gas

emissions that occur after a company has sold its
goods and services. These emissions are generated by
the use of the company's products by consumers or
clients, as well as any subsequent waste disposal
processes. They are an important aspect of a
company's overall emissions footprint and are typically
categorized as part of scope 3 emissions.
 Emission Factor (EF)

The United States Environmental Protection Agency (EPA), which

publishes a library of U.S. emissions factors, defines an emissions
factor as:
"A representative value that attempts to relate the quantity of a
pollutant released to the atmosphere with an activity associated
with the release of that pollutant"
Here are some examples of real emission factors:
The emission factor for coal-fired power generation is about 0.85
kilograms of CO2 per kilowatt-hour of electricity generated
The emission factor for gasoline-powered vehicles is about 200
grams of CO2 per kilometer driven
 Environmental
Impact Assessment

An environmental impact assessment (EIA) is a structured

and formal process designed to thoroughly analyze and
evaluate the potential environmental effects of a proposed
project or development. This assessment involves
identifying, predicting, and assessing the potential impacts
on various aspects of the environment, such as air quality,
water resources, biodiversity, ecosystems, and human
health.
 EMS

EMS stands for Environmental Management System. It is a

structured approach that organizations use to manage their
environmental responsibilities effectively. An EMS typically includes
organizational structure, planning processes, and resources for
developing, implementing, and maintaining policies and
procedures related to environmental protection. It helps
organizations identify, prioritize, and manage environmental risks
and opportunities, ensuring compliance with regulations and
continuous improvement in environmental performance.
 Equity Share
Approach

The equity share approach in carbon accounting involves

attributing emissions to a company based on its ownership
stake in an operation, rather than solely on its level of
control over it. This means that companies are held
accountable for their proportional share of emissions from
joint ventures or other collaborative projects, reflecting their
ownership interest in those activities.
Fugitive Emissions

Fugitive emissions refer to leaks of gases and

vapors, constituting a portion of a company's
scope 1 emissions. These emissions typically arise
from various sources within the company's
operations and are directly generated during its
business activities.
 GHG Protocol

GHG Protocol offers widely used standards for

greenhouse gas accounting. Its corporate
accounting and reporting standard outlines
requirements and guidance for companies, serving
as the foundation for nearly all corporate reporting
programs globally.
 Greenhouse Gas
(GHG)

A greenhouse gas (GHG) is a gas that absorbs and

emits radiant energy within the thermal infrared
range, contributing to the greenhouse effect and
consequently global warming.
 Global Warming
Potential

Global Warming Potential (GWP) is a relative

measure of how much heat a greenhouse gas
traps in the atmosphere compared to carbon
dioxide over a specific time period.
 Greenwashing

Greenwashing refers to the deceptive practice of

providing misleading or false information about the
environmental sustainability of a company's business
activities. This can occur unintentionally or
intentionally. It's important to note that many
companies may not realize that a significant portion
of their emissions come from scope 3 sources, or that
some carbon offsets are ineffective.
 Indirect Emissions

Indirect emissions for a company include two main

categories: scope 2 and scope 3 emissions. Scope 2
emissions arise from the purchased energy used by the
company, such as electricity, heating, and cooling.
These emissions occur outside of the company's direct
operations but are associated with the energy sources it
procures. Scope 3 emissions extend beyond the
company's immediate operations and encompass
emissions throughout its value chain.
Life Cycle Assessment

Life Cycle Assessment (LCA) is a systematic

method used to evaluate the environmental
impact of a product or service throughout its entire
life cycle, encompassing all stages from the
extraction of raw materials (the "cradle") to the
disposal of the product at the end of its useful life
(the "grave").
Market Based Scope 2

Market-based scope 2 accounting is a method for assessing

greenhouse gas emissions associated with purchased
electricity. Market-based accounting considers the specific
attributes of the purchased power. This approach allows
organizations to account for the emissions associated with
their electricity consumption more accurately, taking into
account factors such as the renewable energy certificates
(RECs) or guarantees of origin (GOs) associated with the
electricity purchased.
 Paris Agreement

The Paris Agreement, established in 2015 and ratified by

nearly every nation globally, is a landmark international
treaty aimed at addressing climate change. Its core
objective is to limit the rise in global temperatures to well
below 2°C above pre-Industrial levels, with an aspiration to
cap the increase at 1.5°C.
 Product Based
Carbon Accounting

Product-based carbon accounting involves

quantifying the entire greenhouse gas emissions
associated with a product throughout its life cycle,
from production to disposal.
 SBTi

The Science Based Targets initiative (SBTi) is a collaboration

between CDP, the United Nations Global Compact, World
Resources Institute (WRI), and the World Wide Fund for Nature
(WWF). It helps companies set science-based targets to reduce
their greenhouse gas emissions in line with the goals of the Paris
Agreement. These targets are considered science-based when
they are aligned with what the latest climate science says is
necessary to limit global warming to well below 2°C above pre-
industrial levels, aiming for 1.5°C.
 Scope 1

These are direct emissions from sources that are owned

or controlled by the reporting entity. Scope 1 emissions
typically include emissions from onsite fuel combustion
in boilers, furnaces, vehicles, and other equipment, as
well as process emissions from industrial processes.
 Scope 2

These are indirect emissions associated with the

consumption of purchased electricity, steam, heat, or
cooling. They are emissions generated offsite but are
associated with the activities of the reporting entity.
 Scope 3

Scope 3 emissions, also known as value chain emissions, encompass all indirect
emissions occurring throughout a company's value chain that are not already covered
in scope 2. These emissions are a result of the company's activities but originate from
sources outside the company's ownership or control. Scope 3 emissions include:
Emissions from the company's supply chain, including the extraction,
production, and transportation of purchased materials and fuels.
Emissions arising from the use of products and services sold by the company.
Emissions stemming from waste disposal, encompassing the disposal of waste
generated during operations and the production of purchased materials and
fuels, as well as the disposal of products sold by the company at the end of
their life cycle.
 SME
Climate Commitment

The commitment for small and medium-sized

enterprises (SMEs) to halve emissions by 2030
and achieve net zero by 2050 was made
through the SME Climate Hub.
 Spend Based Data

The spend-based approach to calculating greenhouse

gas (GHG) emissions involves multiplying the financial
value of a purchased good or service by an emission
factor, which represents the amount of emissions
produced per unit of currency spent. This method provides
an estimate of the emissions associated with the
expenditure.
Supply Chain Emissions

Supply chain emissions, also referred to as upstream

emissions, are the greenhouse gas emissions generated
during the production, extraction, and transportation of
materials and fuels purchased by a company. These
emissions occur upstream in the company's supply chain
and are categorized as part of scope 3 emissions.
 TCFD

TCFD stands for Task Force on Climate-related Financial

Disclosures. It is a framework established by the Financial
Stability Board (FSB) to help companies and financial
institutions disclose climate-related risks and opportunities in
their financial filings. The TCFD framework provides guidance
on how organizations can assess and disclose climate-related
risks and opportunities across four key areas: governance,
strategy, risk management, and metrics and targets. The goal
of TCFD is to promote more informed decision-making and
better risk management in the face of climate change.
 Upstream Emissions

Upstream emissions, also known as supply chain emissions,

refer to the greenhouse gas emissions generated during the
production, transportation, and disposal of materials and
products used by a company, but which occur outside of the
company's direct operations. These emissions are associated
with the extraction of raw materials, manufacturing
processes, transportation of goods to the company, and
disposal of waste generated along the supply chain.
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