Accounting for greenhouse gas emissions

Today, business must keep up with the times in order to remain in demand among a new generation of socially responsible consumers and investors. They form a green, sustainable economy. Now it is not only the governments of states that solve the world’s problems of climate, atmospheric pollution and social inequality. Representatives of companies who are responsible for implementing sustainable development programs come into play.


Climate change is an unavoidable natural process. Nevertheless, the anthropogenic factor plays a significant role in it. Countries aim to achieve zero carbon emissions by 2050. This solution will help to stop the temperature rise and the formation of ozone holes in the atmosphere. Businesses strive to adapt to the requirements of the green economy, which the entire world community is now focused on.


The concept of carbon neutrality is gradually penetrating into business processes. First of all, it affects buildings and businesses. In achieving zero emissions, engineers are developing carbon-neutral building concepts. It is believed that carbon-neutral facilities should not emit greenhouse gases at all and should not use energy from non-renewable sources. Electricity for such an object can be purchased on the wholesale market from renewable energy suppliers. Specialists set out to create an eco-friendly building that operates on a self-sufficiency mechanism. For example, it can generate heat independently with the help of air heat pumps and electric boilers.


This is the ideal picture of the implementation of the concept of zero emissions, but not everyone can afford to implement it. In most cases, electricity for the building is generated by non-renewable energy sources, such as thermal power plants. In this case, it is possible to find another solution to reduce emissions, for example, to limit the use of energy from thermal power plants only at critically low temperatures. Another option is to compensate for the emissions that are produced at the power plant using the greenhouse gas compensation mechanism – offsetting, i.e. to purchase special iRec certificates. The mechanism operates according to the scheme: the company buys a certificate, extinguishes its emissions and, equivalent to these emissions, acquires the status of carbon neutrality.


Accounting for greenhouse gas emissions is gradually becoming mandatory for reporting companies in accordance with the green regulation of the economy. The carbon footprint for companies is assessed primarily according to the international GHG protocol and the ISO 14064 identical to it. According to them , the calculation is carried out in three areas: Scope 1, Scope 2, Scope 3. The first two are mandatory, they consider direct and indirect energy emissions. It is possible to calculate the carbon footprint according to the domestic standard, for example, by order of the Ministry of Construction, but they do not affect Scope 3, which takes into account the remaining indirect emissions, i.e. there is a local limitation of such calculations. Therefore, customers prefer to use an international standard that is recognized and appreciated more in the global community.


The carbon footprint of the products is confirmed by the EPD (Environmental Declaration of the product) certification. The EPD evaluates the life cycle of LCA products and their impact on the environment in accordance with international standards ISO 14040/14044. The evaluation mechanism makes it possible to make the production system transparent for consumers, which allows them to form a market favorable for the environment and society.


In which case should I order the calculation of the carbon footprint for the enterprise and in which case for the products?


The calculation of the carbon footprint of products is more suitable for exporters, namely for:


1. Exporting clients focused on the international market.
2. International companies with a branch in Russia, which must comply with the requirements of the company’s policy.
3. Metallurgy companies, producers of steel, platinum, etc., aimed at export.
4. Companies voluntarily reporting emissions in their supply chains to meet ESG requirements.


These companies lay down a criterion in the procurement policy — the ecological footprint of products supplied to their enterprises. The corresponding certificates show numerically what their ecological footprint is. This accounting process is promoted by ESG trends.


The calculation of the company’s carbon footprint is suitable for companies that are traded on the stock exchange and on inter-row markets. For them, the main thing is the relationship with investors. Such companies adhere to the policy of sustainable development and ESG, which shows stakeholders their understanding of the problem of climate change in the long term. The calculation of greenhouse gases by Scope 1 and Scope 2 confirms the company’s ability to see and manage climate risks.


To date, approximately 30-50 companies in Russia report on CDP (climate disclosure project), where the calculation of Scope 1 and Scope 2 per year is required in order to get a positive rating. It is also necessary to develop a climate strategy, a policy that shows how the company plans to develop, how it will respond to risks.


There are two types of risks for companies in this area:


1. Real climate. These include risks associated with real climate disasters and changes. For example, the foundations of an oil storage tank may fail due to the fact that permafrost will subside. It is necessary to prepare a response program for these risks.


2. Transition risks. They confirm that humanity is trying to adapt to climate change. They are related to legislation and the attitude of investors, partners, and customers to this issue. For example, a law on carbon emissions and units is being introduced in Russia. Stricter reporting will begin in 2023. Europe is introducing a carbon adjustment mechanism for exports. Investors are already looking at projects strategically. Now it is difficult to invest in coal-fired power plants, because the world is gradually abandoning coal, and investors are unlikely to invest in this facility. This is an example of long-term investments, which are associated with pension funds, institutional investments, treasury bonds. Companies are working on their projects taking into account ESG trends. The process of “greening” is launched, which begins with calculations and a climate strategy.


More and more Russian companies are starting to order research in the field of carbon neutrality.

The reason is the rise in the cost of products due to high prices for carbon resources. Prices for aluminum, fertilizers, cement, steel have doubled, which puts a lot of pressure on exporters. High price spikes in the carbon market occur because it is a limited resource in Europe. Therefore, our country needs to create a transparent system of verification and compensation, which is based on real actions of people. Greenhouse gas regulation will help transform Russia’s environment, free up landfills, improve the energy efficiency of our economy, clean the air in cities and preserve nature.


HPBS is engaged in the preparation of technical climate strategies. We determine what exactly the company needs to do in order to achieve certain greenhouse gas reduction goals. For example, to make the facility energy efficient, introduce renewable energy, optimize supply chains, etc.

Calculation of the Carbon Footprint

Verification of Greenhouse Gas Reporting

The Concept of Carbon Neutrality

Development of the Concept of Optimization and Compensation of the Carbon Footprint