THE ROLE OF INPUT–OUTPUT ANALYSIS FOR THE SCREENING OF CORPORATE CARBON FOOTPRINTS

Abstract

In developing a standardised approach for companies to inventory greenhouse gas (GHG) emissions along their value chains, key challenges identified by stakeholders and technical experts include: which emissions sources a company should include in their inventory and how to calculate them, what constitutes a full list of indirect supply chain activities, and how to determine which activities from such a list are significant by application of a cut-off threshold. Using GHG accounting based on input–output models from Australia and the United States, this work presents specific case study examples and general results for broad industry sectors in both economies to address the development of a complete upstream carbon footprint for screening purposes. This is followed by an analysis of the issues surrounding application of cut-off thresholds and the relationship with system capture rate and efforts in carbon footprint analysis. This knowledge can inform decision makers about where to expend effort in gaining progressively greater accuracy for informed purchasing, investing, claiming carbon credits, and policy-making. The results from this work elucidate several findings: while it is probably true that some companies will know what sources contribute most significantly in the supply chain, this is not likely to be true for all. Contrary to common perception, scope 1&2 emissions are not always more significant than scope-3 sources, and, for some sectors, the largest sources of emissions may be buried further upstream than many companies may have previously perceived. Compiling a list of core elements of significance across all sectors may be problematic because these elements are not necessarily significant for most sectors. Lastly, the application of cut-off thresholds results in highly variable performance in footprint capture rate and is not a reliable criterion for including emission sources in GHG footprints. Input–output analysis is a powerful tool in informing supply-chain GHG accounting, and there is a need for plain language education, training, support materials and information to be made easily accessible to a global business community.