26 February 2020
BSI, the business improvement company, is calling on organizations to make changes to their sustainability strategy to shore up reputational risk.
The international standard that companies use to independently verify the accuracy of their greenhouse gas (GHG) emissionsreporting has become more rigorous. The standard, ISO 14064-1 Greenhouse gases. Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements, now requires companies to report on emissions throughout their supply chain, replacing the earlier requirement to report only on direct emissions produced by the organization itself.
The standard remains voluntary, but BSI reports seeing a marked increase in the number of organizations around the world which are interested in the new standard.
The three types of emissions measured as part of internationally recognized greenhouse gas reporting are:
- Direct emissions – directly created by an organization on their premises, through actions like switching a boiler on or driving a car.
- Energy indirect emissions – these are emissions related to energy that is supplied to the organization by a third party e.g. electricity from the grid, steam or heat from another business. For example, when boiling a kettle or running a computer, although the organization is not burning fuel at the point of use, these emissions are created at the point of generation.
- Other indirect emissions – any and all emissions released throughout the organization’s supply chain. Any component or finished product will be a cause of indirect emissions, as will the subcontracting of any service.
Before the standard was changed, companies choosing to measure their greenhouse gas (GHG) emissions under the international standard were free to measure any of these three types. Although indirect emissions are almost always the most significant in size, at present most companies do not track and report these supply chain emissions.
Under the new guidelines, organizations must now include significant indirect emissions in their reporting.
Martin Townsend, Global Head of Sustainability and Circular Economy at BSI says: “Meeting this new standard will signal a dramatic shift in the way most organizations measure their greenhouse gas (GHG) emissions. Many companies struggle to get accurate data on their supply chain emissions, and being able to rely on the current figures is a further challenge. External verification will help to verify data from suppliers and provide a clear picture of the organizations’ total emissions.
“This remains a voluntary standard, and the change has not been reflected in regulation as yet. However those organizations around the world who are taking an interest in the new standard, will be on the right track to becoming more responsible industry leaders. We may even start to see contracts stipulating that supply chain partners must provide independently verified data.”
BSI believes the widened scope of this standard presents an opportunity for companies to get ahead of the issue and secure independent verification for their total emissions, including supply chain activities. Increased scrutiny on corporate sustainability reporting means that companies who fail to get ahead of the issue of emissions in their supply chain may be storing up reputational risk for the future.
Case study
One organization that has seen the benefits of independent verification in this area is Arçelik, a leading household appliances manufacturer, which has 23 production plants in 9 different countries with its 12 brands headquartered in Istanbul. Across operations in Turkey, Romania, China, Russia and South Africa, Arçelik has reduced its energy consumption per product by 40.22 per cent. This is now less than 5 per cent away from its 2020 target of 45 per cent reduction.
Fatih Özkadı – Sustainability & Corporate Affairs Directorat Arçelik said:
“At Arçelik, we have been in a successful collaboration with BSI since 2010 for Green House Gas Management and verification. Through our vision “Respecting the World, Respected Worldwide”, we consider the verification process as an essential step to increase our credibility and transparency in the global business market.”
The benefits of implementing ISO 14064-1 have extended beyond the practical reduction of GHG emissions, as the business has seen its inclusion in sustainability indices and initiatives such as the Dow Jones Sustainability Index (DJSI) and Carbon Disclosure Project (CDP), greatly enhancing the reputation of Arçelik in multiple markets.
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