This week's guest blogger - Don Bain | Greenhouse Gas Management Institute

Please join me in welcoming one of our alumni and members as guest blogger this week for Inside the Institute. Don Bain is a highly successful management consultant, software expert and professional engineer. He recently participated in the stakeholders’ workshops at WRI on new draft standards and is guest posting on Inside the Institute to stimulate a conversation with our Membership.

Last week I was privileged to attend the last stakeholder workshop for review of the GHG Protocol Standard for Value Chain and Product Life Cycle accounting and reporting. The workshop was hosted by WRI in Washington, D.C. and was the final workshop in a multi-national series to afford the opportunity for the stakeholders to provide in-person feedback on the draft standards. Work on these standards kicked off in 2008 in response to needs assessed by a survey conducted by WRI and WBCSD and included GHG Management staff on multiple workgroups. These standards follow the well-received and successful GHG Protocol Corporate Accounting and Reporting Standard and GHG Protocol for Project Accounting, published by WRI/WBCSD.

Here are the headlines:

over 100 people showed up and are engaged (my estimate)
many companies including IBM, Levis, Kraft, DuPont, Sun Microsystems and Unilever attended
a few NGOs, and a number of U.S. govt. agencies including EPA, Commerce and GSA attended
consultants, at least one accountant and a few software providers attended.
according to the WRI/WBCSD project team, over 50 companies have volunteered to “road-test” the new standards in 1Q & 2Q2010; remarkable
motivation to participate is high and not just based on anticipated regulatory compliance requirements.

My observations:

The 2 standards are well-written, large relative to the previous standards (nearly 100 pages), and ambitious. There was some ‘grumbling’ about the amount of work and data implied by some practitioners in the room, but this constructive tension seemed borne of a grasp of the personal effort that will be required and a tacit commitment to getting it done. In fact, an informal poll in a break-out session as to whether the standards should proceed to road testing and implementation resulted in an overwhelming ‘Yes’ response.

There are a few gaps in the documents remaining to be completed, but none that would preclude proceeding to the road test and implementation phases. There were many comments back to the standards project teams, constructively delivered and well received.

One group of comments particularly struck me. These comments advocated closing potential loopholes in the draft language that might be exploited to avoid accounting for all emissions. The consensus was to favor more rigorous standards language in hopes that the uptake and results would be of higher quality. At first, this seems in paradox to the previously mentioned concern for the quantity of work involved, as tougher standards mean more effort. But it makes sense. People in that room were highly motivated, alpha adopters. It is no surprise they want to demonstrate leadership.

In one of the breakout sessions, I polled the room informally, asking: “This supply chain standard depends upon suppliers and trading partners to provide quality data on their scope 1 and 2 emissions. Do you feel they are in a position to do so?” The prevailing consensus in the room was ‘No, not yet’ and ‘They still need our help.’ I further asked, “What percent of your suppliers are in a position to provide quality data?” Only one person ventured a response: “Maybe 20%.”

Reflecting on the workshop, it was a good investment of time. I studied the standards beforehand, had some things to say and the GHG Protocol team listened. Moreover, I heard some great anecdotes from practitioners and met some excellent people — birds-of-a-feather so to speak.

The comment period for the draft standards is open until December 21, 2009. I strongly urge practitioners to read the draft standards available here and submit comments via the comment templates provided on the same source page.

If you attended one of the workshops, I encourage you to weigh in on your experience via the comment section below.

Don M. Bain, P.E.

Comments

Jim Jonas

December 17, 2009 AT 9:00AM

Really interesting sounds like the workshop is worth attending

Ines Sousa

December 19, 2009 AT 3:21PM

Don, thanks for sharing your experience at the workshop! Unfortunately, I was not able to attend, and was hoping for a second round of workshops to provide in-person feedback after the pilot testing…

While reviewing the draft standards, I was wondering if the workshop debated category 1 (purchased goods and services – direct supplier emissions) vs. category 2 (purchased goods and services – cradle-to-gate emissions), the two ‘general’ categories of upstream scope 3 emissions in the ‘scope 3′ standard. In particular, it strikes me I struggled with the following:

If category 1 accounts for scopes 1 and 2 emissions of direct (tier 1) suppliers and category 2 accounts for scopes 1, 2 and 3 of tier 1 and tier 2-X suppliers, one might double count direct suppliers’ emissions. In a simplified example, company Y buys a steel component from supplier A (direct supplier) and supplier A buys steel from supplier B; scopes 1 and 2 emissions of supplier A are accounted for in category 1 as scope 3 emissions of company Y, and scopes 1, 2 and 3 emissions of supplier A are accounted for in category 2 as scope 3 emissions of company Y – so company Y would be double counting scopes 1 and 2 of supplier A. If so, then why was category 1 defined in the first place?

I thought likely I was missing a fundamental definition or interpretation of the general framework or the concept of category. I sent a note to Don and as always I received immediate and helpful feedback from him. The draft does mention “This category includes all purchased materials and services not otherwise included in the other categories of upstream scope 3 emissions” (section 2.1, page 54). I realized I repeatedly had interpreted this sentence as it referring to the other ‘specific categories’ mentioned in following sentence in the section.

I believe this misunderstanding further demonstrates the need to “favor more rigorous standards language”, as you’ve mentioned in your post, Don, and more clarity overall, to also address unintended misinterpretations from the user that may lead to incorrect accounting in the first place. To address this particular potential misinterpretation, I’d suggest including a system context-level data-flow diagram aligned with the definitions, entities and sources of the categories. By the way, I’m submitting these and other comments to WRI as part of the stakeholder review process.

On a broader note, I’d suggest both standards to further clarify the relationship between the ‘scope 3’ and ‘product life cycle’ standards, and how the product level inventory will inform and support the scope 3 inventory – identify points of linkage, synergy and complementariness to effectively guide management and optimal use of resources by companies using both standards. Science is fundamental to the creation of these standards, but I wouldn’t underestimate ‘usability’ as critical to a successful, broad adoption. The pilot testing planned for January – June 2010 is definitely an excellent opportunity to further research and address ‘usability’ (and functionality) issues with potential adopters.

Ines Sousa, Ph.D.

This week’s guest blogger – Don Bain

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