The CarbonNeutral Protocol Index

1.1. Corporate value chain (Scope 3) accounting and reporting

The GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (also referred to as the Scope 3 Standard) was developed by the WRI and the WBCSD and provides requirements and guidance for companies preparing and publicly reporting GHG emission inventories that include indirect emissions resulting from value chain activities (i.e. Scope 3 emissions). The Scope 3 Standard complements and builds upon the GHG Protocol Corporate Accounting and Reporting Standard to promote additional completeness and consistency in the way companies account for and report on indirect emissions from value chain activities.

The Scope 3 Standard groups Scope 3 emissions into 15 distinct categories, as shown in Table 10. The categories are intended to provide companies with a systematic framework to organise, understand, and report on the diversity of Scope 3 activities within a corporate value chain.

The CarbonNeutral Protocol has adopted this framework to identify which emission sources are required and recommended for its various CarbonNeutral® entity certifications. This is to ensure consistency of reporting between The CarbonNeutral Protocol and the Scope 3 Standard.

In line with emerging best practice for entity certifications, all applicable Scope 3 emissions sources should, as far as practicable, be included in the assessment of the subject’s GHG emissions. However, in many cases it will not be practical to collect data for all Scope 3 sources (e.g. upstream emissions associated with purchased goods and services).

The Protocol requires the inclusion of certain Scope 3 emissions (waste generated in operations, business travel, etc) for certain certifications. The inclusion of any other Scope 3 emissions is at the discretion of the client. Clients may find it helpful to consider the following issues when determining which additional Scope 3 emissions sources to include:

  1. The influence that the company has over reductions
  2. The likely contribution those emissions make to the subject’s overall footprint – where an emission’s source is judged likely to be material, it could be included
  3. The availability of reliable data

For additional information about the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard and its 15 Scope 3 categories refer to:

Table 10: The Scope 3 Standard

1.2 Selecting boundaries for “cradle-to-customer” CarbonNeutral® products

The boundary of a cradle-to-customer product certification is dependent on the client/organisation applying for the certification and their position in the supply chain.

It is important that CarbonNeutral® claims are both robust and do not overstate the emissions covered by the certification. With this in mind, the client certifying a product CarbonNeutral® must include:

  • All emissions upstream
  • Emissions within their control, until the point at which their customer takes control of (or purchases) the transportation, storage or use of the product

If the organisation applying for the CarbonNeutral® certification is neither a member of (nor has a stake in) the product supply chain, the minimum boundary applied must extend to the point at which the customer of the manufacturer takes control of (or purchases) the transportation, storage or use of the product.

Where the CarbonNeutral® product certification logo is used on the product itself, it is strongly recommended that the boundary of the certification is extended to the point of purchase by the end-user or as close as is reasonably possible in the following scenarios:

  • Where the end user is a member of the general public
  • Where transportation of the product includes air freight, long-haul journeys or temperature controlled storage

Figure 7: Minimum CarbonNeutral® Product Boundaries for Various Organisations Within a Product Supply Chain

1.3 Using environmental product declarations (EPDs) for CarbonNeutral® products

The 2014 revision of The CarbonNeutral Protocol introduced Environmental Product Declarations (EPDs) as an alternative way to demonstrate achievement of Steps 1 and 2 of the CarbonNeutral® certification process for products. Step 1 covers the definition of the subject and Step 2 covers measurement of the subject’s GHG emissions.

An EPD is a type III environmental label declaring the environmental impacts of a product over its expected life. EPDs can be thought of as the environmental equivalent to nutrition labels for food products, stating a product’s carbon footprint and other environmental impacts such as resource depletion, acidification, and eutrophication. It is a comprehensive, voluntary, internationally recognised report that compiles and standardises technical LCA information, eliminating the need to contend with numerous individual documents.

Figure 8 demonstrates how the integrity of EPDs is established by the application of a variety of third- party standards and processes:

  • The ISO 14025 standard establishes the principles and specifies the procedures for developing type III environmental declaration programmes and type III environmental declarations, specifically EPDs
  • The ISO 21930 standard establishes the principles and requirements for type III EPDs of building products
  • The EN 15804 is a European standard that provides core Product Category Rules (PCRs) for type III EPDs for any construction product and construction service
  • PCRs describe the harmonised LCA-rules for data collection, methodology, calculations and presentation of the results for a specific product category such as pre-fabricated buildings or leather footwear. PCRs are developed in accordance with ISO 14025, and additionally with ISO 21930 and/or EN 15804 for construction products
  • LCAs are based upon the parameters set out in ISO 14025, ISO 21930 and EN 51804, and should also be compliant with the ISO 14040 series of standards. The measurement of the carbon footprint should follow the ISO/TS 14067 (the Technical specification for GHGs — carbon footprint of products — requirements and guidelines for quantification and communication)
  • Transparency is a key component of EPDs, and upon completion, all EPDs should be publically registered with an EPD programme operator, in addition to being independently verified
  • Programme operators are responsible for maintaining type III EPD programmes, and establishing procedures for the development of Product Category Rules and EPDs

Figure 8: Establishing the Integrity of EPDs

Given the rigour applied to the development of Product Category Rules, the strict requirements of ISO LCA methodologies and the need for independent third-party verification, The CarbonNeutral Protocol recognises that EPDs provide robust, high quality GHG measurement outputs.

There may be minor differences in requirements of The CarbonNeutral Protocol relative to an EPD. EPD product category rules for any given subject will by definition be more relevant to the subject than the general requirements of The CarbonNeutral product certification. Therefore, where there are differences, the EPD prevails and is deemed to have met the requirements of The CarbonNeutral Protocol. Table 11 explores some of these requirements in more detail.

Table 11: Comparison of Requirements Between The CarbonNeutral Protocol and EPDs for CarbonNeutral® Product Certification

Requirements for a CarbonNeutral® compliant EPD

  1. The EPD must be developed using a suitable PCR which follows ISO 14025 guidelines, and additionally with ISO 21930 and/or EN 15804 if used for construction products
  2. The LCA must conform to the ISO 14040 series of standards
  3. The EPD must be validated by an independent, qualified third party approved by Natural Capital Partners to ensure it has met the necessary requirements
  4. The EPD is registered with a programme operator approved by Natural Capital Partner

1.4 Treatment of assets rented or leased to customers of CarbonNeutral® entities

In line with Annex G to the GHG Protocol Corporate Standard, emissions arising from entity assets rented/leased to a third party can be treated as either Scope 1 or Scope 3 emissions. The correct treatment is dependent on whether the entity is taking an “equity share” or “control” approach to their GHG emissions, as defined by the GHG Protocol Corporate Standard. Most applications of The CarbonNeutral Protocol take a “control” approach to entity emissions, resulting in emissions from rented or leased assets being categorised as Scope 3 emissions for the entity providing the assets that are being rented/leased. Therefore, for consistency, The CarbonNeutral Protocol recommends this approach.

An example of an entity taking an “operational control” approach to their GHG emissions would be that of a car rental or leasing company. When their vehicles are leased to customers, the emissions arising from customer use are counted as Scope 3 by the company. The emissions count as a Scope 1 emission for the customer of the company, as they have operational control of the vehicle for the duration of the lease.