Developing carbon footprints under ASRS - 100% Renewables

Developing carbon footprints under ASRS

In this article, we’re focusing on developing and disclosing your greenhouse gas emissions/your carbon footprint under the Australian Sustainability Reporting Standards (ASRS).

Join Barbara Albert, our Co-CEO, as she discusses the requirements for developing carbon footprints under ASRS.

Previously in the series

Ensure you’re up to date with the steps needed to get your organisation ready for ASRS compliance.

Introduction

The Australian Sustainability Reporting Standards (ASRS) are setting a new benchmark in sustainability reporting, mandating a transparent and comprehensive disclosure of climate-related financial information. This article goes into the details of developing an ASRS-compliant carbon footprint, focusing on greenhouse gas emissions disclosure requirements and the practical steps you can take to meet the new mandatory climate disclosure standard.

Understanding ASRS greenhouse gas emissions disclosure requirements

Depending on your reporting group, ASRS mandates the disclosure of:

➡️Scope 1 greenhouse gas emissions, in alignment with the National Greenhouse and Energy Reporting (NGER) standards.

➡️Location-based Scope 2 greenhouse gas emissions, and when applicable, market-based Scope 2 emissions along with any renewable energy purchases. It’s important to note the phased-in approach for market-based reporting, allowing a three-year grace period before it becomes mandatory. If you are unsure about the differences between market- and location-based accounting, please watch our explainer video.

➡️Scope 3 greenhouse gas emissions, which require you to account for material emissions (see below for the definition of materiality) both upstream and downstream from your operations, as per the GHG Protocol standards. We have produced a video that explains the 15 upstream and downstream Scope 3 categories.

Scope 3 emissions: the path to comprehensive disclosure

Scope 3 emissions, reflecting the interconnectedness of transition risk within your value chain, represent a significant portion of most organisations’ carbon .

Figure 1: Upstream and downstream Scope 3 categories
Figure 1: Upstream and downstream Scope 3 categories

Initial disclosures may rely on estimates, acknowledging the challenges in obtaining detailed information across the value chain. Over time, as businesses enhance their internal capabilities and methodologies, these disclosures are expected to become more precise. What we have noticed is that some large emitting organisations are starting to collaborate more closely with their value chain to obtain carbon footprint information directly from their suppliers. We discussed this collaborative approach in a previous blog post that talks about the ripple effect of the ASRS legislation.

Key considerations for Scope 3 emissions:

➡️Use of NGA factors: Where appropriate and available, the National Greenhouse Accounts factors should be your first point of reference.

➡️One-year delay: You have an additional year to report Scope 3 emissions, acknowledging the complexity of these calculations. For general timelines, please refer to our earlier blog post on timelines and assurance requirements.

➡️Categorisation: Align with the 15 categories from the GHG Protocol Standards, addressing both upstream and downstream material emissions. We have listed further information about the scopes below.

➡️Data quality: Aim for the highest quality data achievable, prioritising primary data from value chain activities. Primary data is data obtained directly from specific activities within your value chain, such as supplier-specific emission factors for purchased goods or services, or distance travelled and travel mode used by employees when travelling.

➡️Verification: Where possible, prioritise verified data to enhance the credibility of your reporting. Note that data can be internally verified, such as by reviewing calculations, or externally verified by a third party.

Developing a compliant carbon footprint: a step-by-step approach

1️⃣Scope identification: Begin by clearly defining the scope of your emissions, categorising them into Scope 1, 2, and 3, as per ASRS requirements.

2️⃣Methodology selection: Align your measurement approach with the NGER legislation for Scopes 1 and 2. Although the methods for Scope 1 GHG emissions prescribed in NGER Scheme legislation may be useful in some instances when estimating Scope 3 GHG emissions, NGER Scheme legislation does not prescribe measurement methods specific to Scope 3 GHG emissions. In these cases, apply the GHG Protocol and draw on Australian-specific emissions factors where relevant.

3️⃣Data collection and analysis: Collect data across all relevant categories, understanding that while primary data is ideal, secondary data may be necessary for comprehensive Scope 3 assessments. Ensure your data collection processes allow for the capture of detailed, activity-specific information.

4️⃣Emission factor application: Apply appropriate emission factors, prioritising Australian-specific data for Scope 1 and 2. For Scope 3, also prioritise Australian-specific emissions factors, such as the National Greenhouse Accounts Factors, over international data.

5️⃣Assumptions and estimates: Acknowledge the role of estimates in early Scope 3 reporting. Be transparent about your assumptions and the basis of your calculations, working towards refining these estimates over time.

6️⃣Verification and assurance: Seek to verify your data wherever possible, enhancing the reliability of your disclosures. Understand the limitations of verification in complex supply chains and strive for improvement and accuracy in your reporting.

Continuous improvement

As methodologies and data availability improve, so too will the precision and reliability of carbon footprint disclosures, which will pave the way for more informed and effective climate action strategies.

Remember that if you need help with developing your carbon footprint, we are here to help. At 100% Renewables, developing carbon footprints is part and parcel of what we do. We specialise in empowering businesses with the necessary tools and strategies to prepare for ASRS compliance. Whether it’s providing carbon footprint assessments, identifying climate-related risks and opportunities, establishing targets, or developing transition plans, we’re dedicated to supporting you through each phase of the process.

Further information about materiality in the context of ASRS

In the context of climate-related financial disclosures, information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports, which include financial statements and climate-related financial disclosures and which provide information about a specific reporting entity.

Further information about the scopes

➡️ Scope 1 greenhouse gas emissions

Direct greenhouse gas emissions that occur from sources that are owned or controlled by you.

➡️ Scope 2 greenhouse gas emissions

Indirect greenhouse gas emissions from the generation of purchased or acquired electricity, steam, heating or cooling consumed by your organisation. Please note that Scope 2 greenhouse gas emissions physically occur at the facility where electricity is generated.

➡️ Scope 3 greenhouse gas emissions

Indirect greenhouse gas emissions occur in your value chain, including both upstream and downstream emissions.

You should consider categorising the sources of your Scope 3 greenhouse gas emissions under the following categories in line with the GHG Protocol:

  1. purchased goods and services;
  2.  capital goods;
  3. fuel- and energy-related activities not included in Scope 1 greenhouse gas emissions or Scope 2 greenhouse gas emissions;
  4. upstream transportation and distribution;
  5. waste generated in operations;
  6. business travel;
  7. employee commuting;
  8. upstream leased assets;
  9. downstream transportation and distribution;
  10. processing of sold products;
  11. use of sold products;
  12. end-of-life treatment of sold products;
  13. downstream leased assets;
  14. franchises; and
  15. investments.

Next in the series

In our forthcoming blog post, we’ll explore climate risk disclosures under ASRS…

Our ASRS complimentary course

In our ongoing dedication to assist businesses in their sustainability endeavours, we’ve revamped this multi-part blog and video series into a complimentary online course. Alongside the video content, the course offers additional resources and quizzes designed to enhance your comprehension of the ASRS.

Kickstart your journey towards mastering the ASRS. Join now by following this link. Don’t hesitate to share this opportunity within your network to collectively advance the climate agenda.

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