Glossary
Value chain emissions
"Value chain emissions" refers to all the greenhouse gas (GHG) emissions released throughout the lifecycle of a product. These emissions are associated with every stage of a product’s lifecycle, starting from the extraction of raw materials, through to manufacturing, distribution, usage, and ultimately, disposal.
Understanding the essence of value chain emissions requires an in-depth perspective on the functionality of various business processes. In the context of green energy and renewable industries, this refers to not only the emissions produced directly from a company’s operations, but also the emissions that result indirectly from their activities. This means considering the environmental impact of all activities ranging from the procurement of materials, production and manufacturing procedures, to the transportation and disposal of products and services.
Furthermore, value chain emissions are classified under three broad scopes by the Greenhouse Gas Protocol, a widely used international accounting tool. Scope 1 encompasses direct emissions from owned or controlled sources, such as company vehicles or factories. Scope 2 involves indirect emissions from the generation of purchased energy, such as electricity or heat. Lastly, Scope 3 includes all other indirect emissions occurring from activities of the company, such as business travel, waste disposal, and the use of sold products.
In the carbon accounting industry, calculating value chain emissions helps businesses measure their overall carbon footprint accurately. By assessing and addressing value chain emissions, companies can spot emission reduction opportunities, drive efficiency, and minimize environmental impact. Moreover, a comprehensive understanding of value chain emissions can aid in formulating strategies aimed at reducing GHG emissions, ultimately contributing to global efforts against climate change.
In conclusion, value chain emissions are a critical concept, encompassing all GHG emissions associated with a product or service’s lifecycle. They provide an extended view of a company’s environmental impact, recognising that a company’s carbon footprint is beyond merely their direct emissions but also includes indirect emissions. Consequently, assessing and managing value chain emissions is a critical component in the transition towards renewable energy and green practices.