Taking Steps to Close the Carbon Accounting Gap

In this decade of climate action, as companies set increasingly aggressive carbon reduction goals and timelines, the transitioning from wasteful linear models to regenerative ones is gaining momentum. Often referred to as circular economics or closed-loop systems, this shift away from take/make/waste in favor of reuse/repair/refurbish/remanufacture has been growing, as early adopters share stories of their financial and environmental gains. However, while clearly impactful and extremely encouraging, these results are still largely anecdotal.  What’s missing is an objective and consistent way to account for, prove and report on the carbon benefits of circularity on a global scale.

ITRenew is at the forefront of the movement to develop new carbon accounting frameworks that comprehend circularity and accurately reflect its impact.  We recognize that the kind of broad, global adoption needed to turn the tide on climate change will only happen if the vision for transformation is demonstrated at scale and backed by compelling data.

To give you an example of what I mean by frameworks that comprehend circularity, let me share just a few ideas on what a future circular economy-based carbon accounting framework could include. These were inspired by recent findings from one of the many research and data modeling initiatives ITRenew currently has underway.

  • Embodied carbon emissions could be “shared” throughout a product’s lifecycle in Scope 3 accounting. Circularity means that the  lifecycle of a piece of IT hardware is shared by multiple parties. So it stands to reason that the total embodied Scope 3 emissions of a particular piece of equipment would also be shared between multiple users, as would the carbon allocation. Enabling natural regeneration through these closed loop models could also allow for an “avoided” emissions accounting for each user as well.  The allocated emissions could be shared proportional to the depreciation value as the equipment cycles through different owners, with allocation across multiple users clearly outlined in the GHG Protocol. This would set the stage to require these multi-life technologies to be certified and come with a carbon disclosure label, like when we purchase used cars. In this way there is a “mass balance” of embodied Scope 3 emissions in the carbon accounting equation, with the embodied Scope 3 emissions of the original equipment being “shared” by multiple users of the equipment.
  • Carbon offset credit’s “additionality” requirement could be amended to incentivize reuse.  When the first user of an asset consigns that asset for subsequent use, that action itself does not directly decrease additional emissions – as  the emissions associated with manufacture and production of the asset have already been released and are therefore not further reduced by the first user. However rewarding the original owner with carbon offset credit for that decision to reuse vs. creating new landfill could serve as a strong incentive to them and others. The purchaser of that asset should also be recognized for their behavior, by allowing them to count the Scope 3 emissions that would otherwise have been released in the manufacture phase of a newly manufactured product toward their carbon footprint reduction.  Today, this circular motion is not defined in the GHG Protocol’s definition of “additionality,” which leaves some questioning the true value of prioritizing reuse.  Amending the additionality requirement to extend the offset credit opportunities as the product life extends would fix that problem and further the case for the business value of circularity.
  • Scope 4 or “avoided emissions” (climate positive, net-positive accounting) could be incorporated into carbon accounting models. There is much inconsistency across the industry as to what Scope 4 emissions entail. In our definition they mean simply “avoided emissions”. Companies that develop circular manufacturing models, or utilize products from those closed loop supply chains, in effect create avoided emissions that support net positive carbon accounting. These circular economy incentives are currently missing in the GHG Protocol, but are essential to inspire action across the board.

There is a great opportunity ahead for Greenhouse Gas Protocol makers to incorporate circular economy concepts that make carbon accounting practices equitable and transparent for companies embracing sustainable infrastructure and reuse.  The most progressive IT organizations, those committing to zero-carbon goals, zero-waste goals, and a circular economy alignment, have an opportunity and obligation to work with the GHG Protocol authors to revise the framework to  incorporate and incentivize circular business models.  This will improve the pace of adoption, and result in greater reductions in greenhouse gas emissions, without compromising business performance.

Before I close, I’d like to personally thank Presidio Graduate School (PGS) students Alexa Basse, Shana Forsman, Mari Gilmore, and McKenzie Wilson (pictured below) who assisted us on this project as part of our sustainable education community outreach.