A Corporate Accounting and Reporting Standard

Training Curriculum

A Corporate Accounting and Reporting Standard

 Introduction
Lesson Modules

Principles
2. GHG Accounting and Reporting Principles

Organizational
Boundaries
3. Setting Organizational Boundaries

Operational
Boundaries
4. Setting Operational Boundaries

5. Tracking Emissions Over Time

over time
Tracking
6. Identifying and Calculating Emissions

Calculating
Emissions
7. Reporting GHG Emissions

Reporting
8. Review

Review
A Corporate Accounting and Reporting Standard
Tracking Emissions Over Time
Lesson 5

A Corporate Accounting and Reporting Standard

 Introduction
Learning Objectives

Principles
Organizational
Boundaries
In this lesson, you will learn:

• How to assess your company’s emissions trends

Operational
Boundaries
• How to choose a base year

over time
Tracking
• Why you may need to re-calculate base year emissions

Calculating
Emissions
• How to recalculate base year emissions

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Base year

Principles
Base year= the period in history against which an

Organizational
organization’s emissions are tracked over time

Boundaries
Advantages

Operational
Boundaries
- Track progress towards reduction targets
- Put effects of inventory changes into context

over time
Tracking
2010: Increase of
~21% over base
Base Year period emissions

Calculating
Emissions
Year 2007 2008 2009 2010

Reporting
Mt CO2e/ yr 33,000 35,000 42,000 40,000

Review
A Corporate Accounting and Reporting Standard
 Introduction
Choosing a Base Year

Principles
• Select the earliest year with verifiable emissions data for required Scopes

Organizational
Boundaries
2005 2006 2007 2008

Operational
Boundaries
Scope 1 Scope 1 Scope 1 4,500 Scope 1 4,500

Scope 2 8,000 Scope 2 8,500 Scope 2 9,000 Scope 2 9,500

over time
Tracking
Scope 3 Scope 3 Scope 3 Scope 3 11,000

Calculating
Emissions
• Specify why you chose that particular year

• If emissions fluctuate dramatically annually, consider averaging emissions

Reporting
over a series of consecutive years as your base year

Review
A Corporate Accounting and Reporting Standard
 Introduction
Recalculating Base Year Emissions

Principles
Organizational
Boundaries
• Retroactively recalculate base year emissions to reflect company
changes that could compromise consistency and relevance of
emissions data

Operational
Boundaries
over time
Tracking
• Develop a base year emissions recalculation policy and apply it in a
consistent manner

Calculating
Emissions
• State the basis and context for any recalculations

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Recalculate for

Principles
Organizational
Boundaries
• Significant changes in structure of organization

Operational
Boundaries
• Significant changes in calculation methodology
– Improved emission factors

over time
Tracking
– Improved activity data

Calculating
Emissions
• Discovery of significant errors or smaller errors that are
collectively significant

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Significance Threshold

Principles
• Significance threshold: a criterion used to determine

Organizational
Boundaries
whether a change is significant enough to warrant
recalculation

Operational
Boundaries
• The GHG Protocol does not specify a significance

over time
Tracking
threshold

Calculating
Emissions
• Each organization must define what significance
threshold will trigger base year recalculations

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Structural Changes

Principles
• Structural change: transfer of ownership or control of

Organizational
Boundaries
emitting activities from one company to another

Operational
Boundaries
– Mergers, acquisitions, and divestments

over time
Tracking
– Outsourcing or in-sourcing of emitting activities
• Don’t recalculate if out- or in-sourced activities were

Calculating
Emissions
previously included in a different Scope

• Recalculate base year emissions for structural changes

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Recalculating for Structural Changes

Principles
If A acquires B

Organizational
Boundaries
(assuming B existed in A’s base year)
• A should include B’s emissions in

Operational
Boundaries
– A’s base year inventory and
– A’s current year inventory

over time
Tracking
If A divests of B

Calculating
Emissions
(assuming B existed in A’s base year)
• A should exclude B’s emissions from
– A’s base year inventory and

Reporting
– A’s current year inventory

Review
A Corporate Accounting and Reporting Standard
 Introduction
Changes NOT Requiring Recalculation

Principles
Organizational
Boundaries
• Changes involving facilities that did not exist in the base
year

Operational
Boundaries
• Out-sourcing/in-sourcing of activities previously
reported under a different Scope

over time
Tracking
• Organic growth or decline

Calculating
Emissions
Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Recalculation: Acquisition

Principles
Recalculated Figures
Facility C 15 20 20

Organizational
Recalculating 2nd

Boundaries
emissions year: optional

Operational
Boundaries
20 20
EMISSIONS

EMISSIONS

over time
Tracking
30 30 30 30
25 25

Calculating
Emissions
25 30 30 25 30 30

Reporting
1 2 3 1 2 3
Base Year Increase in Company
production acquires unit

Review
C
A Corporate Accounting and Reporting Standard
 Introduction
Recalculation: Divestment

Principles
Recalculated Figures
Recalculating 2nd

Organizational
Boundaries
year: optional

30 30 30

Operational
Boundaries
EMISSIONS

EMISSIONS
25 25

over time
Tracking
30 30 30 30
25 25

Calculating
Emissions
25 30 30 25 30 30

Reporting
1 2 3 1 2 3
Base Year Increase in Company
production divests

Review
unit C
A Corporate Accounting and Reporting Standard
 Introduction
Recalculation: Acquisition of facility not existing in base year

Principles
Recalculated Figures
Facility C did NOT
15 20

Organizational
Boundaries
emissions exist Do not Recalculate
recalculate 2nd year:
base year Optional

Operational
Boundaries
20 20
EMISSIONS

EMISSIONS

over time
Tracking
30 30 30 30
25 25

Calculating
Emissions
25 30 30 25 30 30

Reporting
1 2 3 1 2 3
Base Year Increase in Company
production acquires

Review
unit C
A Corporate Accounting and Reporting Standard
 Introduction
Timing of Recalculation

Principles
Organizational
Boundaries
• If structural changes occur in the middle of the year,
recalculate for the entire year

Operational
Boundaries
• This “all-year” option

over time
Tracking
– is less complicated
– gives the same result as calculating for the remainder

Calculating
Emissions
of the year and making adjustments
– avoids recalculations for subsequent years

Reporting
Review
A Corporate Accounting and Reporting Standard
 Introduction
Example 1

Principles
• The demand for Company A’s products increases.
• It opens a new factory in year 2 to meet this demand.

Organizational
Boundaries
Should the base year emissions be recalculated?
No

Operational
Boundaries
(don’t recalculate for organic growth)

over time
Tracking
Calculating
Emissions
Base year Year 2 Year 3

Reporting
50,000 80,000 83,000

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example 2

Principles
• The demand for Company D’s products increases.
• It acquires an older factory from Company E in year 2 to meet this
demand.

Organizational
Boundaries
Should the base year emissions be recalculated?
Yes

Operational
Boundaries
(recalculate for acquisitions)

over time
Tracking
Calculating
Emissions
Base year Year 2 Year 3

Reporting
50,000 80,000 83,000

Review
A Corporate Accounting and Reporting Standard
 Introduction
Example 3

Principles
• Company sets a 5% significance threshold for errors
• Original emissions calculations:

Organizational
Boundaries
Base year Year 2 Year 3
325,000 300,000 330,000

Operational
Boundaries
• Later, an error was detected.
• Emissions were then correctly calculated:

over time
Tracking
Base year Year 2 Year 3
90,000 80,000 85,000

Calculating
Emissions
Should the base year emissions be recalculated?
Yes

Reporting
(errors met 5% significance threshold, triggering recalculation)

Review
A Corporate Accounting and Reporting Standard
 Introduction
Review

BASE YEAR

Principles
SITUATION
RECALCULATION?

Organizational
Boundaries
Company acquires Yes
another company if acquired company existed in base year
of reporting company

Operational
Boundaries
Production of steam No
is out-sourced emissions move from

over time
Tracking
Scope 1 to Scope 2

Calculating
Emissions
Company produces more and
emissions increase No

Reporting
Company installs
continuous emissions monitoring Yes
systems and collects more accurate if more accurate data show changes that
meet significance threshold

Review
data
A Corporate Accounting and Reporting Standard
 Introduction
Summary

Principles
• Base year: the year in history against which an organization’s emissions are
tracked over time

Organizational
Boundaries
• Define your organization’s recalculation policy
– Define significance threshold to trigger base year recalculation

Operational
Boundaries
• Recalculate for
– structural changes

over time
Tracking
– changes in calculation methodology
– discovery of significant errors

Calculating
Emissions
• Don’t recalculate for
– organic growth or decline

Reporting
– Changes involving facilities that didn’t exist in base year
– Out-/in-sourcing of activities previously accounted for in different Scope

Review
A Corporate Accounting and Reporting Standard
 Introduction
Further Reading

Principles
Organizational
The Greenhouse Gas Protocol: A Corporate Accounting &

Boundaries
Reporting Standard
Chapter 5: Tracking Emissions Over Time

Operational
Boundaries
Chapter 11, Step 4: Choose the Target Base Year

Appendix E: Base Year Recalculation Methodologies for

Structural Changes (http://www.ghgprotocol.org/standards/corporate-standard)

over time
Tracking
Hot Climate, Cool Commerce: A Service Sector Guide to
Greenhouse Gas Management

Calculating
Emissions
Part 3, Step 5: Establishing an Emission Reduction Target

ISO 14064-1
Section 5.3 Base-year GHG inventory

Reporting
Review
A Corporate Accounting and Reporting Standard