GHG Accounting: How Can SaaS Companies Accurately Calculate Greenhouse Gas Emissions?
Human-induced climate change is, without a doubt, impacting all regions of the world. And while humans played a key part in starting the climate crisis, it also means we can play a key part in stopping and reversing it. Businesses across all sectors are starting to measure their carbon footprints as a way to clearly identify where they stand on the path to decarbonization, and figure out the true steps they need to take to continue running their operations in a way that’s connected and beneficial to the environment, instead of harmful. This process is known as greenhouse gas accounting (GHG accounting), or carbon accounting.
Given their unique operational setup, GHG accounting can be especially helpful for software companies. However, it’s not very obvious how these companies can calculate the full scope of their emissions, and what they can do to reduce these down to zero. We’ve identified the key ways that SaaS companies can accurately calculate their greenhouse gas emissions, encompassing Scope 1, 2, and 3 emissions, and how to focus on improving the most important areas.
What are Scope 1, 2, and 3 Emissions?
Not all emissions are created equal, and they come from sources that people may not even think about in their company’s day-to-day operations. Thankfully, emissions can be broken down into three distinct categories:
Scope 1 Emissions are direct emissions from company-owned and company-controlled sources, such as fleet vehicles or gas boilers. For a software company, these emissions are likely to be minimal.
Scope 2 Emissions are indirect emissions from purchased sources, such as electricity, heat, and steam. For example, software companies may have significant scope 2 emissions from office energy use.
Scope 3 Emissions are all other indirect emissions across the supply chain, including business travel, employee commuting, and waste disposal. For software companies, these often represent the largest source of emissions.
A Real-Life Example: Sylvera’s Journey in Calculating Emissions
Consider the real-life case of Sylvera, a carbon intelligence platform based in London. Sylvera had been managing its GHG emissions with a small team. As they grew, they reached out to us at OnePointFive for support in accurately calculating the full scope of their emissions. Here’s how we did it.
Identify the company’s probable sources of GHG emissions
Since Sylvera operates primarily as a SaaS company with limited physical offices, we could eliminate certain emission categories:
Upstream & Downstream
Transportation of Goods & Services
Processing of Sold Products
Process Emission
Simultaneously, we hypothesized that the most significant emission categories for a company of Sylvera's size and industry would consist of the following:
Purchased Goods & Services
Business Travel
Purchased Electricity
Gather data about the company’s operations
To test our hypothesis, we asked exploratory questions, delving into the key inputs and processes contributing to Sylvera's software platform, the company's structure and operations, and the locations and work environments of its employees. We then identified data owners and collected information from various departments within the organization. This included finance and P&L data, employee surveys, and documentation from field teams. Subsequently, we utilized this data to quantify Sylvera's emissions across all three scopes.
In 2022, the total emissions for Sylvera amounted to 812.91 tCO2e, or tonnes (t) of carbon dioxide (CO2) equivalent (e), categorized as follows:
Scope 1: 1.39 tCO2e
Scope 2: 27.04 tCO2e
Scope 3: 784.48 tCO2e
Use the data to set net-zero targets
With this information, Sylvera set a net-zero target, giving them a clear pathway for reducing their emissions and aligning their business with the goals of the UN Paris Agreement. Sylvera’s target is now validated by SBTi (Science-Based Targets Initiative).
Tips in GHG Accounting for Companies
Collecting accurate and precise data is one of the most challenging aspects of GHG accounting. Generating actionable insights requires extensive preparation–here are some specific recommendations we have for companies looking into greenhouse gas accounting.
Track and collect information for most emissions categories on a regular basis.
A monthly record will be especially helpful for categories with a significant number of unique data points, such as business travel.
Share GHG calculation objectives early-on with key value chain stakeholders.
Sharing information with facility management teams, employees, and suppliers will allow for the collaborative design of reasonable and feasible data collection procedures.
Integrate data collection into regular business processes.
Once a company identifies material emissions categories, integrating data collection into regular processes minimizes the burden on employees. For example, consider updating internal expense and reimbursement systems to include questions about travel mode, flight class, and distance traveled, to proactively collect this information as it occurs rather than in retrospect months later.
Following these steps can streamline the GHG accounting process, ultimately leading to better insights and decision-making.
GHG Accounting with OnePointFive
Measuring GHGs is a fundamental step towards meaningful climate action. As Sylvera's experience shows, it's possible for software companies to calculate their emissions accurately and use this data to drive their sustainability strategies. Remember: you can only manage what you measure! With the right preparation and planning, you can be well on your way to accurately account for your company's GHG emissions, and you can then take action to decrease them.
Setting up a GHG accounting program doesn’t just happen overnight, either. It takes time and resources to develop the processes necessary for proper data collection and analysis. However, setting this foundation in place allows companies to make informed and impactful decisions about their climate goals. By investing in GHG accounting, companies can create new opportunities and develop better strategies for mitigating their environmental impacts.
Here at OnePointFive, we specialize in helping you grow your organization without destroying the planet. If you’re ready to get started on calculating your business’s GHG emissions, reach out to us today!
