Making of a Carbon

CO2nscious Company
An introduction to Carbon Accounting Advisory

Copyright 2009

Agneya
Carbon
Ventures
It takes 153 growing, 20 feet tall, eucalyptus trees to absorb a car’s
annual CO2e emissions1.
Making of a Carbon Conscious Company

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Content
Introduction

Product Carbon Accounting

Corporate Carbon Accounting

Value Chain Carbon Accounting

Carbon Mitigation and Neutralization

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Introduction

Climate change is one of biggest threats faced by humanity. Temperature

records back to the middle of the last century establish that recent
temperatures are warmer than any since direct measurements began —
all the 10 warmest years have occurred since 1990, including each year
since 1995. Global warming is expected to lead to massive loss of the
glaciers and ice-caps at the poles. The loss of land based arctic ice caps
would cause rise in sea levels threatening countries like Maldives and
coastal populations in many countries including India. Greenhouse gases
(GHGs) such as CO2 are believed to be responsible for this and therefore
the efforts to limit the CO2 concentration in the atmosphere below 550 ppm
are underway. The one way to do so is to control rate of greenhouse
gases emission into the atmosphere.

Europe has been at the forefront of these initiatives, having

established world’s first carbon cap-and-trade system (EU-ETS)
in 2005. This mechanism is intended to cap the emissions from
more than 12,000 large emitters in the EU. USA through
Waxman-Markey Bill, is planning for GHG emission allowance
on the lines of EU-ETS of Europe. Though India’s contribution
to global CO2 emissions is currently only around 4%, it is
expected to continue growing given the aggressive growth
plans driven by infrastructure, power, and other sectors. India,
China, Brazil and South Africa (the BASIC) would continue to
face pressures from the developed world to measure and report
emissions, as least measure, which later may become
compulsory. India has already agreed for measuring and
reporting GHG emissions from foreign funded projects. Coupled
with this and to meet increasing need for information on climate-
risk management by stakeholders and investors, companies are
increasingly disclosing their carbon emission profiles and taking
reduction targets.

Various voluntary initiatives such as Carbon Disclosure Project

(CDP2), Investor Network on Climate Risk (INCR3), and
Institutional Investor Group on Climate Change (IIGCC4) are
increasing the thrust on this area. An organization can undertake
the measurement and reporting of its GHG emissions in a mode
and format that suits the nature of its business and the
requirements. Agneya Carbon Ventures, through its Carbon
Accounting Advisory, offers three distinct services, which are
discussed at length below.

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Product Carbon Accounting

Product Carbon Accounting is ideally suited for organizations which have distinct branded products
or services. It delivers a product-centric view of the GHG emissions – providing the organizations
to apply reduction and/or communication efforts on a single product before scaling it up for the
entire organization. Organizations which treat their products or service lines as distinct profit
centers and therefore manage them accordingly are best suited to take on this approach to Carbon
Accounting. The Product Carbon inventory can be created to capture a business-to-business
(Cradle-to-gate) view or a business-to-consumer (Cradle to grave) view of the GHG emissions
associated with the product depending on its nature. Various approaches to establish product GHG
inventory are PAS 2050 (Publicly Available Standard 2050) instituted by BSI and a GHG Protocol
Product Life-cycle accounting and reporting standard under development by WRI5 and WBCSD6 .

CO2 Emission

Distribution/
Raw Material Manufacture Consumer
Retail

As raw material for

further value addition

Agneya Carbon Ventures can help the organization in making

decisions including selection of an appropriate approach (B2B or
B2C), choice of best suited product / service to achieve carbon
accounting objectives, setting a suitable system boundary,
collection of data, GHG inventory quantification, data quality
management, and assurance plan. The outcome of these
activities can be presented to the stakeholders as a summary
report containing carbon disclosure and emission reduction
targets. Product Carbon Accounting can help the organization
identify emissions and cost reduction opportunities along the
supply chain of the product being accounted. A product-based
accounting creates a matrix against which the year-on-year
performance can be monitored, measured, and communicated.
As and when regulations or laws about labeling products with
their associated carbon emissions get established – this analysis
can provide jump start to establish product level GHG inventory
according to the then prevalent rules. Within an organization, Product Carbon Accounting
assignment are best handled by the practitioners of Life Cycle Management – the personnel
responsible for development and marketing of the product (or service) – as the decisions and
communication arising as a result of accounting have a direct implication for promotion,
enhancement, modification or replacement of the product (or service).

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Corporate Carbon Accounting

Corporate Carbon Accounting is an approach suited for an organization which wishes to take an
overview of the entire organization’s GHG footprint. This approach is suited to all types of
organizations irrespective of their domain or nature of operations. A robust approach to establish
corporate GHG inventory is GHG Protocol Corporate Accounting and Reporting Standard
developed by WRI and WBCSD. This approach has been in use since 2004 and organizations
worldwide including Nike, Shell, IBM and DuPont have tested this approach for robustness and
used it for reporting their own GHG emissions.
Agneya Carbon Ventures can help the organization in establishing its corporate GHG inventory by
identifying the business goals for the GHG inventory, setting a suitable organizational and
operational boundaries, selecting an appropriate base year, creating a robust data collection, and
preparing plan for data quality management and assurance. The outcome of these activities can
be presented to the stakeholders as a summary report containing carbon disclosure and emission
reduction targets. This report can be used for communicating the inventory to voluntary disclosure
programs such as the Carbon Disclosure Project. The robust systems and processes established
can be verified independently by a designated third party and can possibly lead to ISO 14064
certification for the developing organization.
Corporate Carbon Accounting can help the organization identify its emissions and communicate
the same to the stakeholders. Communication of the emissions and reduction targets taken (if any)
can boost the corporate image by demonstrating the commitment to measure (and reduce) GHG
emissions. Within an organization, Corporate Carbon Accounting assignment is best handled by
the Corporate Communications and Corporate Branding – the personnel responsible for
communication of organizations’ initiatives and activities to the stakeholder community.

Corporate Carbon Accounting in India

Indian companies are increasingly focusing on their corporate GHG emissions. Tata Motors, Tata
Chemicals, Asian Paints, Infosys, Wipro, ACC, ONGC, Tata Steel, Aditya Birla Group, Ashoka Buildcon Ltd,
among other have established corporate carbon accounting system and have disclosed their GHG
emissions on Carbon Project Disclosure. Ashoka Buildcon Ltd has become India’s first infrastructure
company to get ISO 14064 certification.
Government of India has committed to reduce its Carbon Intensity by 20% by 2020 in recent
Copenhagen Climate Summit. Also it has allowed for monitoring, measuring, and reporting of GHG
emissions for foreign funded projects. Such initiatives from government side would put increasing pressure
on corporate sector to go for Carbon Accounting at corporate or project or product (service) level. Most of
the developed world already has or going to have regulations which would put limit on the GHG emissions.
Europe has EU-ETS, and soon USA would have Waxman-Markey Bill, which would regulate GHG
emissions in their domestic industry. These regulations will impact the trade of the goods and services with
these countries.
Some of the world’s leading organizations have started asking their suppliers to disclose their GHG
emissions. Walmart has asked its all suppliers to start measuring GHG emissions and report the same.
Carbon emissions information is playing crucial role in business deals, joint ventures, and collaboration
decisions. These are game changing challenges and opportunities, and winners would be the organizations
which can capitalize on these opportunities and mitigate any risks in their value chain.

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Value Chain Carbon Accounting

Value Chain Carbon Accounting is the approach designed for organizations wishing to understand
and communicate carbon emissions in all its core and allied activities. This includes activities in its
direct control and those associated with its products or services over entire value chain. This
implies that emissions arising out of raw material procurement and pre-processing till the end of life
of the product are accounted for. The corporate overheads such as travel, commuting of
employees are also included. This view is an aggregate view of all the products and services of the
company as against the Product Carbon Accounting, which takes a single product / service view of
the emissions.
Agneya Carbon Ventures can assist the company in selecting the right organizational and
operational boundaries, designing of data collection system, selecting GHG quantification
methodology across the products and service, and designing of GHG data quality assurance
system, and reporting subsequent findings. Implementing this form of carbon accounting involves 2
standards – both instituted by collaboration of WRI and WBCSD. They are GHG Protocol
Corporate Accounting and Reporting Standard (in use since 2004) and GHG Protocol Scope 3
Standard (under development and being road tested).
By taking an initiative to measure carbon emissions across the entire value chain, the organization
can establish itself as the environmental leader. The knowledge of the relative extent of emissions
under direct control as against those outside can provide a starting point to engage with the supply
chain to highlight hot spots of emissions and thus potential for reductions in emissions and costs.
The appropriate groups to implement this in the organization are the corporate communications,
supply chain practitioners, and the marketing groups.

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Carbon Mitigation and Neutralization

As a natural extension of its efforts in accounting the carbon
emissions, an organization can take carbon reduction or
carbon neutrality targets for itself. Such reduction can be a
part of an internal target that is monitored on a periodic basis
or a public commitment to reduce the emissions, disclosed
and discussed in communications such as the annual
reports, sustainability reports, or on company website.
Agneya Carbon Ventures can help to identify appropriate
reduction targets that are in sync with the business goals.
Such target could be to reduce product carbon footprint or
absolute emission against the base year or carbon intensity7 of the product (service) and
organization.
The process can then navigate through setting a plan for achieving these targets, measuring, and
monitoring. Multiple options exist to reduce and offset the emissions. A careful evaluation of these
options for cost-benefit and implications for the implementing organization is essential to finalize
the mitigation plan. MAC (Marginal Abatement Cost) analysis can highlight the appropriate options
for reduction and offsetting the emissions. By establishing and communicating such reduction
commitment, the organization can establish itself as environmental leader. It can engage with its
stakeholders, supply chain partners, and include employees in
the move towards carbon mitigation and neutrality. The top
management and the communications group support is
essential for implementation of such an initiative. Top
management involvement is essential since the targets are
set for the organization as a whole and requires a senior level
commitment for the planning to realize actual reduction in
GHG emissions. Communications group can be involved in
spreading the awareness internally to the employees and to
the stakeholders outside.

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1 A eucalyptus tree absorbs approximately 16 kg of CO2 annually. Assuming car runs 15,000 KM in a year,
its total emissions is 2.4 tCO2.
2 Carbon Disclosure Project, an NGO, on behalf of its 475 financial institutions and investors signatories,
asks leading organizations worldwide to disclose their GHG emissions and Corporate GHG strategy. More
details at www.cdproject.net
3 More details at http://www.incr.org
4 More information at http://www.iigcc.org
5 World Resource Institute (http://www.wri.org)
6 World Business Council for Sustainable Development ( http://www.wbcsd.org)
7 Carbon intensity indicates the amount of carbon emissions per chosen parameter. The parameter could
any measure, that gives a true picture of emissions. Carbon intensity could therefore be reported as CO2e per
rupees of profit or per product or per employee or at revenue.
Cover Photo: 3D Image of CO2 molecule. Photo Source: Wikipedia

Agneya Carbon Ventures is a focused Carbon

Management consulting firm. We provide services
in the wide spectrum of carbon management,
helping our clients identify the risks and
opportunities in climate change, mitigate the risks,
exploit the opportunities, and thus tackle the
environmental challenge.

For further details, reach us at

indrajeet@agneya.in I www.agneya.in
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Agneya Carbon Ventures +91-96654 07848 I +91-90287 88430 7