Publication: Business Standard

The process of calculating the amount of greenhouse gas emitted directly by operations or indirectly by supply chain and subsidiaries is known as carbon accounting

Corporations and nations are setting targets to achieve zero greenhouse gas (GHG) emissions produced by any operation, production, supply chain or subsidiary.

Two paths to net zero

A target can be reached by two means. An organisation can either buy carbon credit in a trading market where companies taking carbon-positive initiatives, like planting trees or investing in technologies, can sell their positive points to a company with a negative carbon rating.

 The other way to reach the net zero target is to lower the carbon rating points internally. This can be done with the help of several initiatives, like optimising manufacturing processes and using renewable technology. This is a better and more efficient way to reach the net zero target, as a company won't be buying credits but actually working to reduce its carbon footprint.

Carbon accounting

The process of calculating the amount of greenhouse gas emitted directly by operations or indirectly by supply chain and subsidiaries is known as carbon accounting. How companies or nations calculate generation will be crucial in reducing or offsetting carbon

It collects metrics like fuel and energy usage every year in three categories. Scope 1 refers to direct emissions by sources owned and controlled directly by the organisation. Scope 2 is about indirect emissions generated by the producer of raw material or energy the company uses. Emissions emitted by third party suppliers or contractors come under Scope 3.

Measuring carbon Emissions

The first step in moving towards net zero is proper carbon accounting. "Direct CO2 emissions from our mobile fleet are tracked by obtaining information from country-specific leasing suppliers, which are consolidated into one system. Emissions calculation is based on actual driven mileage and official CO2 emission value per km of each car make and model. Applicable emission factors are sourced from car manufacturers. As an exception, in the USA emissions are calculated based on driven mileages and actual fuel consumption. In the case that the distance travelled is not available from the leasing supplier, the budgeted annual mileage in the leasing contract is used for calculation’’ said Subho Mukherjee, vice-president of sustainability, Nokia, the Finnish telecom gear group.

Digital tools

Switching to more energy-efficient technology is one way to reduce carbon emissions. Nokia launched Intelligent RAN operations which use machine learning to reduce 5G base station energy consumption, and is using innovative technologies (such as liquid cooling technology) for the latest AirScale base station portfolio to reduce the energy consumption of the base station cooling system, as stated in their 2022 sustainability report.

Digital and artificial intelligence tools will play a key role in calculating these emissions, ''Allcargo and its group companies focus on accelerating the digital transformation to optimize processes and operations, thus further reducing their carbon footprint. Allcargo Group adopted a standards-based digital SaaS platform that leverages AI-enabled automation to compute enterprise-wide carbon footprint in CO2,'' said Suresh Kumar R, head of ESG initiatives at Allcargo Group, a logistics company.

As companies expand, they have to track their growing number of emissions sources. Suppose a company opens a new manufacturing facility in another country and gets supplies for it from a factory in another country, it will have to keep account of the emissions emitted during transportation, ''Emissions from production processes, which were considered to be irrelevant at a corporate level in 1996, today constitute almost 20 per cent of aggregated GHG emissions at the relevant (Volkswagen) plant sites. Examples of growing emissions sources are new sites for engine testing or the investment into magnesium die-casting equipment at certain production sites.’’ according to a World Resources Institute report on GHG protocol.

Net zero

Setting clear targets and plans is essential to achieving net zero goals. Plans involve reduction in emissions, increased energy efficiency, and innovative technologies. "Our target is to reduce our GHG emissions by 50 per cent between 2019 and 2030 across our value chain (Scope 1, 2 and 3). The reported emissions for 2022 were 37 627 000 metric tons CO2e. Our SBT is aligned with the goal of limiting global warming to 1.5 degree C," said Mukherjee.

Implying innovative solutions to sources of high emissions can be effective in GHG reduction, ‘‘By replacing reach stackers with Rubber Tyred Gantry Cranes (RTGs) at our CFS facilities in JNPT and Chennai, we have been able to reduce carbon emissions to the tune of 3.4 million kilograms per annum,’’ said Kumar R.

Carbon accounting is the bedrock of any organisation's journey to achieve net zero emissions. While carbon credits have a role to play, the most significant and sustainable impact comes from reducing emissions at the source.