As the world becomes more interconnected, businesses operating on a global scale are starting to find themselves facing the challenge of navigating diverse ESG reporting requirements.

Part of this is due to the varying emissions factors used by different countries for reporting on GHG emissions. In this blog we will explore what emissions factors are and why they are different depending on the country you are reporting in. Most importantly, we’ll also explain why that matters for global ESG reporting, and help you understand how larger businesses can overcome the challenge of jurisdictional GHG emissions reporting.

What are emissions factors?

To understand emissions factors, it’s essential we first explore how emissions are measured.

There is a long list of greenhouse gases which makes measuring the comparative impact of these very complicated due to the differing impact they have on the atmosphere. For example, methane has a higher global warming potential (GWP) than carbon dioxide (CO2), meaning it has a more significant warming effect on the atmosphere.

As carbon dioxide is the most well-known, GHG emissions are measured in CO2e (CO2 equivalents) expressed in weight, normally kg (kilograms) or t (tonne/metric ton). Therefore, to compare the impact of methane emissions to carbon dioxide emissions, the methane emissions are converted to CO2e using its GWP. This allows for a standardised and comparable measure of the overall greenhouse gas impact.

To put it simply, CO2e is the quantity of CO2 that, over a period of 100 years from the point of release, would warm the atmosphere by the equivalent amount of any given GHG.

Conversion factors are used then to calculate what the raw usage of goods equates to in CO2e. Take for example in the case of diesel, on average, one litre of diesel is the equivalent of 2.68kgCO2e, and so for every one litre, you would simply multiply the total usage by the conversion of 2.68. When it comes to scope 2 energy however, things can be a bit more complicated.

Why do they vary in different countries?

Emissions factors for electricity in scope 2 will vary across countries depending on the source used to produce the energy off the grid. This is known as market-based scope 2 reporting, using accurate data for conversion on basis of the market and its grid composition.

Countries that rely more on fossil fuels will emit more carbon per unit of energy generated compared to countries that rely more on nuclear and renewable energy sources. Therefore, a country that is heavily dependent on fossil fuels for energy generation will have a higher emissions conversion factor.

For example, the mix of sources of energy used in the UK is very different to that in France. National Grid ESO published the UK’s 2023 energy generation mix, which highlighted gas as the largest contributor to energy in the UK. In comparison, France’s largest contributor is currently nuclear power.

Overall, it is suggested that the UK grid is 55.9% low carbon electric compared to France which is 93.7% low carbon electric.

Therefore, due to the different mix of energy sources, with the UK relying more heavily on greenhouse gas intensive sources, this results in a higher carbon conversion factor for electricity usage. This distinction in carbon intensity underscores the critical role that a countries energy infrastructure plays in determining its environmental impact, emphasising the need for strategic shifts toward low carbon and renewable energy sources to mitigate the global carbon footprint.

If you’re interested in understanding your countries carbon intensity, you can see where each country ranks and the percentage of their energy that is low carbon here.

Also a really useful tool is the National Grid ESO free Carbon Intensity App where you can see real time information on how UK’s electricity is being produced.

Why are varying carbon factors important for international businesses?

Carbon reporting is essential for businesses to report their full environmental impact when it comes to ESG reporting. In many countries globally, carbon reporting is now a mandated requirement in at least scope 1 and scope 2, with mandatory scope 3 requirements evolving.

Requirements such as Corporate, Social Responsibility Directive (CSRD), placing requirements on countries that have any operations in the EU to report back on their whole carbon footprint to the EU by 2028.

Moreover, with the ISSB standardising sustainability reporting in line with the International Financial Reporting Standards (IFRS), global organisations operating in multiple jurisdictions must familiarise themselves with these standards. As an international business you may have a supply chain that spans multiple countries, each with their own energy infrastructure, resulting in different emissions factors required for reporting.

To have an accurate footprint and comply with emerging global regulation, international firms need to ensure they are considering the carbon intensity of each jurisdiction, not just that of their domestic market and using local data to calculate the footprint company-wide.

How can global businesses work around that challenge?

Reporting is the most important part of carbon reduction. Without data it's impossible for organisations to track the impact of investments and understand whether the actions they are taking are reducing carbon outputs.

Adopting ESG technology can streamline the process of data collection, analysis, and reporting. By implementing a standardised reporting methodology businesses can enhance consistency and comparability, particularly if you are operating across different countries.

Investing in a proven methodology, such as the one we provide at SustainIQ, can help companies start off on the right foot. SustainIQ helps users by taking energy usage data and using our bank of global conversion factors to calculate GHG emissions across all sites in real-time. Grab a chat with us to see how it could work for you!