Corporate GHG Inventorying and Target Setting Self-Assessment Beta V1.0 April 2020


Corporate GHG Inventorying
and Target Setting
Self-Assessment Beta V1.0

April 2020

v>EPA CENTER FOR CORPORATE

f	CLIMATE

tl„¦	LEADERSHIP

U.S. Environmental Protection Agency
Supporting organizations in GHG measurement and management • www.epa.gov/climateleadership

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Welcome

Purpose of this Self-Assessment

Companies are often in a stronger position to improve their greenhouse gas (GHG)
management efforts once they understand their relative performance compared to their
peers. This Beta Version 1.0 Self-Assessment is designed to help companies evaluate, at
a high level, how their GHG inventorying and target-setting approaches compare to large
peer companies representing different industry sectors.

Framework for Establishing Corporate Climate Leadership

Leading companies often embed GHG measurement approaches into their business
practices to establish a GHG emissions baseline that helps them reduce GHG emissions
from their facilities, energy use, and entire value chain. Developing a corporate GHG
inventory as a first step helps companies focus investments in GHG reduction efforts.
Publicly stated GHG reduction targets, based on corporate GHG inventories, help
galvanize internal support and external awareness for near- and mid-term actions and
investments that drive innovation and GHG emission reductions. Once companies achieve
their GHG emissions reduction targets, successes can often help validate corporate GHG
management efforts and help drive a cycle of continuous improvement.(See Figure 1:
GHG Management Framework for Corporate Climate Leadership).

Figure 1. GHG Management Framework for Corporate Climate Leadership

1. Inventory GHGs.

GHG inventory helps
companies prioritize emission
reductions.



5. Evaluate success and repeat to
improve.

Companies often expand GHG
inventories to include value chain
emissions & set new reduction
targets.

t

2. Set GHG reduction target.

Publicly-announced targets keep
companies accountable.

I

4. Achieve GHG reduction target.

Recognized GHG management
practices help ignite industry
competition.

3. Implement GHG reduction
efforts.

Action plans can help focus
internal resources and initiatives.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

How to Use the Self-Assessment

This self-assessment is designed to be read in under 30 minutes and can be used as an
internal communication and management resource, a proxy benchmarking assessment,
and an educational tool. Some GHG management activities described are commonplace
for all organizations included in the dataset, while others are more innovative and reflect
emerging trends seen in fewer companies and sectors. Companies can use the self-
assessment results in their stakeholder engagement efforts by sharing progress on their
GHG inventorying and target-setting efforts and highlighting gaps and opportunities for
continuous improvement.

The various levels of ambition highlighted in this self-assessment are
informed by data from large U.S.-based companies publicly disclosed to
CDP via CDP's Climate Change questionnaire, insights from EPA programs
and discussions with key organizations working with companies on GHG
inventorying and target setting (i.e., CDP, Science Based Targets Initiative,

The Climate Registry). A description of the methodology used to assess the
data and a list of all companies included in the dataset are available in the
Appendix.

How the Self-Assessment Can Lead to Action

For some companies, understanding their GHG inventorying and target-setting efforts
within the broader market may spur competition and garner internal support for
widening the scope of their GHG inventories or setting more aggressive GHG reduction
targets. Results from this self-assessment can also direct companies to examine in
greater detail how other companies develop their inventories and set ambitious GHG
reduction targets, and where they can reach out for help in navigating this journey.

This self-assessment applies to companies at different levels of ambition:

•	Entry-level: For companies beginning to address their GHG emissions, this
resource aims to help them identify which inventorying and target-setting actions
reflect common business practices today and provide them with a roadmap for
developing their own inventories and setting targets.

•	Intermediate: For companies further along their sustainability journey, this self-
assessment can validate more advanced inventorying and target-setting behaviors
that position them to deepen GHG emission reductions.

•	Advanced: For leading companies, this resource can also validate their efforts and
encourage them to explore implementing more cutting-edge GHG management
efforts, eventually pushing such innovations into the mainstream and sharing
practices with others.

As more companies inventory the full breadth of their GHG emissions, set ambitious
targets, and implement strategic and management decisions that drive down emissions,
more companies can leverage lessons learned and become leaders themselves.

POWERED BY

CDP

DATA

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Definitions

Greenhouse Gases (GHGs): Gases that trap heat in the atmosphere are called
greenhouse gases. They include carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride.1

The GHG Protocol Corporate Standard2 divides GHG emissions into three categories, or
"scopes," using the following definitions:

Scope 1: Scope 1 emissions are direct emissions from a company's owned or controlled
sources. Common examples include fuel combustion at company facilities or in
company-owned cars.

Scope 2: Scope 2 emissions are indirect emissions from the generation of purchased
energy Purchased energy includes purchased electricity, steam and heating/cooling.

Scope 3: Scope 3 emissions3 ire all indirect emissions (not included in scope 2) that
occur in the value chain of the reporting company. In the Greenhouse Gas Protocol
Corporate Value Chain (Scope 3) standard, "value chain" refers to all of the upstream
and downstream activities associated with the operations of the reporting company,
including the use of sold products by consumers and the end-of-life treatment of sold
products after consumer use. Emissions from purchased goods and services, outsourced
activities, employee business travel, and employee commuting are all examples of scope
3 emissions.

1	U.S. Environmental Protection Agency Overview of Greenhouse Gases:
https://www.epa.gov/ghgemissions/overview-greenhouse-gases

2	The Greenhouse Gas Protocol. A Corporate Accounting and Reporting Standard:
https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf

3	GHG Protocol Corporate Value Chain (Scope 3) Standard: https://ghgprotocol.org/standards/scope-3-
standard

3

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

The following diagram from the Greenhouse Gas Protocol demonstrates the activities
that fall under scope 1, 2, and 3 2

Figure 2. GHG Emissions Scope 1, 2, and 3



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Scope 2	Scope 1

INDIRECT	DIRECT

Scope 3	Scope 3

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Upstream activities

Reporting company

Downstream activities

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Inventorying and
Reporting

Please complete the following
questions regarding GHG
Inventorying and Reporting.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

A. GHG Inventorying and Reporting: Scope 1 and
Scope 2

1. Does your company calculate and publicly disclose4 scope 1 and scope 2
emissions?

No activity	Company does not calculate and publicly

disclose any scope 1 or scope 2 emissions.

Entry-level

Company calculates and publicly discloses all
major sources of scope 1 and scope 2
emissions.

~

Intermediate

Company calculates and publicly discloses all
scope 1 and scope 2 emissions (full inventory)
and has created year-to-year processes to
continue disclosing scope 1 and scope 2
emissions.

~

Advanced

Company has calculated and publicly disclosed
all scope 1 and scope 2 emissions for at least
five years.

~

2. Does your company track and publicly disclose energy usage?5



No activity

Company does not track and publicly disclose
energy usage.

~

Entry-level

Company tracks and publicly discloses major
sources of energy usage.

~

Intermediate

Company tracks and publicly discloses all energy
use and has created year-to-year processes to
continue tracking energy usage.

~

Advanced

Company has tracked and publicly disclosed all
energy usage for at least five years and has
created year-to-year processes to continue
tracking energy usage.

~

4	Examples of public disclosure include reporting to a public reporting platform (e.g., CDP, GRI), on an
organization's website, and/or annual sustainability report.

5	Energy use includes consumption or generation of fuel, electricity, heat, and steam.

5

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Resources to Assist Companies with Scope 1 & Scope 2 Inventorying and
!- Reporting

•	EPA's Cross-Sector Guidance on Direct and Indirect Emissions

•	EPA's Emissions Factor Hub to provide emissions factors for GHG emissions
estimations

•	EPA's Simplified Tools for Small and Medium-sized Companies

•	EPA's Greenhouse Gas Reporting Program for Sectors Required to Report on
Facility Emissions

•	Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and
ISO Standard 14064-1: 2018 Greenhouse gases — Part 1: Specification with
guidance at the organization level for quantification and reporting of
greenhouse gas emissions and removals

•	The Climate Registry's General Reporting Protocol

•	For benchmarking energy use: EPA's ENERGY STAR Portfolio Manager

•	Additional Calculation Tools "Built on the GHG Protocol"

•	CDP Disclosure Guidance for Companies

•	CDP Organizational Guide for Environmental Action

6

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

B. Inventorying & Reporting Scope 3 Emissions &
Supplier Engagement

3. Does your company calculate and publicly disclose at least some scope 3
emissions?6

No activity Company does not calculate and publicly disclose

any scope 3 emissions.

Entry-level

Company calculates and publicly discloses at least
some scope 3 emissions.

Intermediate

Company calculates and publicly discloses more
than two categories of scope 3 emissions that are
considered relevant in their value chain.

Advanced

Company calculates and publicly discloses all
relevant categories6 of scope 3 emissions.

4. Does your company assess the climate impacts of major suppliers and
engage them on climate-related issues?

No activity

Company does not assess the climate impacts (both
actual and significant potential impacts) of major
suppliers or engage them on climate-related issues.

Entry-level

Company assesses the climate impacts (both actual
and significant potential impacts) of major suppliers
and engages them on climate-related issues.

Intermediate

Company assesses the climate impacts (both actual
and significant potential impacts) of their major r
suppliers and engages them to report and reduce
their GHG emissions.

Advanced

Company assesses the climate impacts (both actual
and significant potential impacts) of their major
suppliers, engages them to report and reduce their
GHG emissions, and considers supplier GHG
management in business decisions.

6 Scope 3 consists of 15 emissions categories: Purchased goods and services, capital goods, fuel- and
energy-related activities (not included in scope 1 or 2), upstream transportation and distribution, waste
generated in operations, business travel, employee commuting, upstream leased assets, downstream
transportation and distribution, processing of sold products, end-of-life treatment of sold products,
downstream leased assets, franchises, and investments. See Greenhouse Gas Protocol Corporate Value
Chain ("Scope 3) Standard.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Resources to Assist Companies with Scope 3 Inventorying & Reporting
!- and Supplier Engagement

•	EPA's Scope 3 Inventory Guidance (references the Greenhouse Gas
Protocol)

•	EPA's Emissions Factor Hub to provide emissions factors available for
certain scope 3 categories

•	EPA's Guidance on and Trends in Supplier Engagement

•	Greenhouse Gas Protocol Corporate Value Chain fScope 3) Standard

•	Greenhouse Gas Protocol Corporate Technical Guidance for Calculating
Scope 3 Emissions

•	Greenhouse Gas Protocol Corporate Product Lifecvcle Accounting and
Reporting Standard

•	Additional Calculation Tools "Built on the GHG Protocol"

•	World Resources Institute Scope 3 Evaluator

•	Science-Based Targets Initiative: Best Practices in Scope 3 GHG
Management

•	ISO 14067: Carbon Footprint of Products: Requirements and Guidelines for
Quantification

•	CDP Supply Chain initiative

•	CDP Organizational Guide for Environmental Action

8

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

C. Third-Party Verification

5. Does your company receive third-party verification for its scope 1 and 2
emissions and publicly disclose the results?

No activity	Company does not receive third-party verification

for its scope 1 and 2 emissions or publicly disclose
the results.

Entry-level

Company receives third-party verification for a
portion of its scope 1 and 2 emissions and publicly
discloses the results; third party verification is done
to a limited level of assurance.

~

Intermediate

Company receives full third-party verification for all
its scope 1 and 2 emissions and publicly discloses i
the results; third party verification is done to a
limited level of assurance.

~

Advanced

Company receives third-party verification for all its
scope 1 and 2 emissions and publicly discloses
results; third-party verification is done to a
reasonable level of assurance, preferably from an
accredited verification body.

~

6. Does your company receive third-party verification for its scope 3 emissions
and publicly disclose the results?

No activity

Company does not receive third-party verification
for its scope 3 emissions or publicly disclose the
results.

~

Entry-Level

Company receives third-party verification for a
portion of its scope 3 emissions and publicly
discloses the results.

~

Intermediate

Company receives third-party verification for all its
scope 3 emissions and publicly discloses the
results.

~

Advanced

Company receives third-party verification for all its
scope 3 emissions to at least a level of limited
assurance and publicly discloses results.

~



9

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Resources to Assist Companies with Third-Party Verification

•	ANSI National Accreditation Board (ANAB) Accreditation Program for
Greenhouse Gas Verification/Validation Bodies

•	ISO 14065: Greenhouse Gases: Requirements for Greenhouse Gas
Validation and Verification Bodies for Use in Accreditation or Other Forms
of Recognition

•	CDP Verification Guidance and Accepted Standards

•	The Climate Registry's General Verification Protocol

10

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

D. Analysis of Business Impacts

7. Has your company analyzed climate-related opportunities7 8 with the
potential to have a substantive financial or strategic impact on your business?

No activity

Company has not analyzed and publicly
disclosed climate-related opportunities with the
potential to have a substantive financial or
strategic impact on its business.

~

Entry-level

Company has analyzed but not publicly
disclosed climate-related opportunities with the
potential to have a substantive financial or
strategic impact on its business.

~

Intermediate

Company has analyzed and publicly disclosed
climate-related opportunities with the potential i
to have a substantive financial or strategic
impact on its business.

~

Advanced

Company has analyzed and publicly disclosed
climate-related opportunities with the potential
to have a substantive financial or strategic
impact on its business and incorporates
findings into its business strategy and
decisions.

~

III Resources to Assist Companies with Analyzing Business Impacts of
GHG Emissions

•	Sustainabilitv Accounting Standards Board (SASB) for tools and resources on
financial impacts of sustainability

•	Task Force on Climate-Related Financial Disclosure rTCFD) for recommendations
and status report on financial disclosure of climate impacts

•	CDP Organizational Guide for Environmental Action

•	CDP Report: Major Risk or Rosy Opportunity: Are Companies Ready for Climate Change

7	Climate-related opportunities can include opportunities involving resource efficiency, energy source,
products and services, markets, resilience.

8	Many companies are also beginning to reference climate-related transition risks in accordance with
accepted reporting frameworks (i.e. Task Force on Climate-related Financial Disclosure (TCFD)
recommendations). Future versions of this self-assessment can examine corporate disclosure on climate-
related transition risk.

11

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Target Setting

Please complete the following
questions regarding GHG emissions
reductions target setting.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

A. Scope 1 and 2 Absolute Emissions Reduction
Targets

8. Has your company set a combined scope 1 and scope 2 emissions reduction
target?

No activity Company does not have a GHG emission reductions

target for full scope 1 and 2 emissions.

Entry-level Company has a GHG emissions reduction target that

covers all scope 1 and 2 emissions. Target can be an
absolute or intensity-based reduction target.

Intermediate

Company has an absolute reduction target or an
intensity-based target that results in absolute
reductions that covers all scope 1 and 2 emissions.
Reduction targets are consistent with the level of
decarbonization required to keep global temperature
increase to 2°C compared to preindustrial
temperatures.

~
~

Advanced

Company has an absolute reduction target or an
intensity-based target that results in absolute
reductions that covers all scope 1 and 2 emissions.
Reduction target is consistent with the level of
decarbonization to limit global temperature increases to
well below 2°C or 1.5°C compared to preindustrial
temperatures9 or exceeds this ambition e.g. net zero.10
Target may also be third-party approved.

Resources to Assist Companies with Setting Absolute Reduction
Targets

• Science Based Targets Criteria and Recommendations (Version 4.0')

• CDP Organizational Guide for Environmental Action

9 According to Science-Based Targets initiative (SBTi), as of 2019 targets adopted by companies to reduce
greenhouse gas (GHG) emissions are considered "science-based" if aligned with climate science to limit
global warming to well-below 2°C above pre-industrial levels. Companies setting SBTi-approved targets are
encouraged to pursue targets that limit warming to 1.5°C.

10 At the time of this writing, some companies began announcing net zero and carbon negative targets. More
clarification is needed in the market on terms such as net zero, carbon neutral, carbon negative, etc.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

B. Scope 3 Emissions Reduction Target

9. Has your company set a scope 3 reduction target?

No activity	Company has not set a scope 3 reduction

target.

Entry-level

Company has developed a scope 3 reduction
target and/or supplier engagement target11 for
at least one relevant source of scope 3 GHG
emissions.

~

Intermediate

Company has developed a scope 3 reduction

~



target and/or supplier engagement target for



more than two relevant scope 3 categories.



Advanced

Company has developed a scope 3 reduction
target and/or supplier engagement target that
collectively covers at least two-thirds of its total
scope 3 emissions. Reduction targets are
consistent with the level of decarbonization
required to keep global temperature increase
to 2°C compared to preindustrial
temperatures.

~

Ill Resources to Assist Companies with Setting Scope 3 Reduction Targets

•	Science Based Targets Criteria and Recommendations: V 4.0

•	CDP Organizational Guide for Environmental Action

11 Companies seeking to reduce their Scope 3 emissions may elect to set supplier engagement targets,
whereby suppliers would themselves measure their GHG inventories and set their own GHG scope 1 and 2
reduction targets, effectively reducing a company's scope 3 emissions.

13

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

C. Renewable Energy

10. Has your company established a 100% renewable energy (green power) use
target?12 13 14

No activity

Company does not have a renewable
energy use target.

Entry-level

Company has established a renewable
energy use target of less than 50%
renewable energy.

Intermediate

Company has established at least a 50%
renewable energy use target.

Advanced

Company has set a 100% renewable
energy use target.

III Resources to Assist Companies with Setting Renewable Energy Use
Targets

• RE100 Reporting Guidance: CDP Climate Change 2019

• EPA's Green Power Partnership: Partnership Requirements and
Eligible Resources

12 EPA's Green Power Partnership program references the widely accepted U.S. voluntary market definition
for green power as a subset of renewable energy representing those renewable energy resources and
technologies that provide the highest environmental benefit. Under this definition, renewable energy use
includes wind, geo-thermal, solar, eligible biomass, and eligible hydro.

13 While many companies use the term "100% renewable energy" to describe their efforts to achieve a net-
zero energy use, a more accurate term might be a "100% renewable electricity target," as many companies
seek to mitigate their scope 2 emissions with this target and often use "energy" and "electricity"
interchangeably. Renewable electricity is a subset of renewable energy. Further clarification is needed across
programs and initiatives on whether "100% renewable" targets apply only to electricity purchased or all
forms of energy. For purposes of this self-assessment, the percentages listed apply mostly to 100%
renewable electricity.

14 Sectors with high thermal use such as industrials may not be able to set 100% renewable energy use
targets. In this case, committing to procure as much energy as possible from renewable sources is
recommended. Efforts to develop commercially available and cost-effective renewable thermal solutions are
underway.

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

SUMMARY

Fill in the following with your results (no activity, entry-level, intermediate, advanced).

Inventorying:

1.	Does your company calculate and publicly disclose scope
1 and scope 2 emissions?

2.	Does your company track and publicly disclose energy
usage?

3.	Does your company calculate and publicly disclose at
least some scope 3 emissions?

4.	Does your company assess the climate impacts of major
suppliers and engage them on climate-related issues?

5.	Does your company receive third-party verification for its
scope 1 and 2 emissions and publicly disclose the results?

6.	Does your company receive third-party verification for its
scope 3 emissions and publicly disclose the results?

7.	Has your company analyzed climate-related opportunities
with the potential to have a substantive financial or
strategic impact on your business?

Target setting:

8.	Has your company set a combined scope 1 and scope 2
emissions reduction target?

9.	Has your company set a scope 3 reduction target?

10. Has your company established a 100% renewable
energy (green power) use target?

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CORPORATE GHG INVENTORYING AND TARGET SETTING SELF-ASSESSMENT: VI.0

Congratulations on completing the self-assessment!
You have reached the end of the Corporate GHG
Inventorying and Target Setting Self-Assessment VI.0.

This self-assessment is being developed through an iterative
process, and we rely on feedback from users to improve in
the future. Your comments and questions can be submitted
at (cccl@epa.gov).

center for corporate

CLIMATE
LEADERSHIP

U.S. Environmental Protection Agency

Supporting organizations in GHG measurement and management • www.epa.gov/climateleadership

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