Renewable Choice Energy

What are GHG Reduction Targets and How Do You Define Them?

Reduction TargetsAn Overview of GHG Reduction Targets

Carbon disclosure season is upon us here at Renewable Choice, and as companies begin to conduct their greenhouse gas (GHG) inventories, many are simultaneously considering setting emission reduction targets.  Targets are a method for companies to reduce their impact on the environment, lower energy costs, hedge their risk to future regulations, bolster brand reputation, communicate their commitment to sustainability to stakeholders, and engage their employees.

Many firms are hesitant to even consider the process, intimidated by the possibility of setting the bar too high.  Luckily, setting a substantial and achievable target is quite easy.  Defining a target’s scope, framework, and basis for measurement that best fits your company is a crucial step towards setting an appropriate—and achievable--target.

Defining a Reduction Target

Setting a target requires that your organization conduct a GHG inventory to establish a baseline year from which to benchmark.  GHG inventories are a great value to companies of all shapes and sizes, regardless of whether or not you choose to set a reduction target.  These inventories systematically identify and quantify the emissions resulting from your organization’s operations.  The information is then synthesized into a report that often reveals low-hanging fruit such as where energy is being wasted in your operation.

Once a baseline is established, choosing the type of target that best fits your company’s circumstances will require weighing the pros and cons of how each fits your firm.  Two common types of targets are Absolute and Intensity based targets.

Absolute targets require a specific reduction in a company’s overall emissions, such as, “By 2015 our company will reduce GHG emissions by 10% relative to 2011 emissions.” These types of targets are popular because they mean concrete progress toward de-carbonizing our economy, and can hedge a company’s exposure to future GHG legislation.

Intensity targets are normalized against a business metric, like unit of product or revenue.  For instance, “By 2020 our company will reduce our GHG per unit of product by 10% relative to 2011 emissions.”  These targets are ideal for companies that are experiencing rapid growth, and can help companies capitalize on economies of scale.  Yet, with companies like Walmart setting absolute targets and changing how companies engage with sustainability, intensity targets have begun to receive criticism since they do not necessarily mean a company will contribute any less to climate change.

To learn more, I recommend you download our new brief How to Set Greenhouse Gas Reduction Targets.

Renewable Choice's Tanner Hayes

Author: Tanner Hayes
Tanner Hayes is a Sustainability Analyst for Renewable Choice.