# Definitions & Terminology ## **What are Climate Targets?** A climate target is a measurable goal that a company sets to reduce its **greenhouse gas (GHG) emissions** over a defined period. In simple terms, it answers the question: > *“By how much, and by when, does a company plan to reduce its emissions?”* Climate targets turn ambition into action. They translate corporate climate ambition into quantifiable outcomes: turning short and long-term visions into trackable progress. #### **Why Climate Targets Matter** Setting and disclosing climate targets makes corporate climate action measurable, comparable, and accountable. Companies set these targets to: * Drive internal planning and investments toward lower-emission operations. * Meet growing regulatory and investor expectations for climate transparency. * Track and demonstrate progress toward global goals such as the Paris Agreement. * Enable consistent comparison of climate ambition and performance across peers and industries. Without standardized targets, it becomes difficult to measure real progress or benchmark how effectively companies are reducing emissions. *** ## What are Greenhouse Gas (GHG) Emissions? Greenhouse Gas (GHG) emissions are gases released into the atmosphere that trap heat and contribute to climate change. These emissions are produced when companies carry out everyday activities, such as burning fuel for energy, running industrial processes, or transporting goods. When companies talk about their “GHG emissions,” they are referring to the amount of these gases generated by their operations or value chain. Tracenable follows the **Greenhouse Gas Protocol (GHG Protocol)**, the global standard for measuring and reporting these emissions. It requires companies to account for seven gases: * Carbon dioxide (CO₂) * Methane (CH₄) * Nitrous oxide (N₂O) * Hydrofluorocarbons (HFCs) * Perfluorocarbons (PFCs) * Sulfur hexafluoride (SF₆) * Nitrogen trifluoride (NF₃) {% hint style="info" %} #### What’s Not Included in GHG Emissions? Under the Greenhouse Gas Protocol, GHG reporting focuses only on gases with global warming potential (GWP), and excludes: * **Biogenic CO₂ emissions** – These are reported separately and not counted in Scope 1 totals. (Biogenic CH₄ and N₂O, however, remain part of Scope 1 process emissions.) * **Air pollutants** – Gases such as NOₓ, SOₓ, CO, particulate matter (PM), and volatile organic compounds (VOCs). These affect local air quality and health but are not greenhouse gases and are tracked under different reporting frameworks. {% endhint %} *** ## Scopes of Emissions When companies set GHG reduction targets, they must first define *which emissions those targets cover.* The GHG Protocol classifies emissions into **three scopes** based on where they occur in relation to company operations. Think of them as three “boundaries” that help identify what a company is responsible for. ### Scope 1 – Direct Emissions Emissions from **sources that a company owns or directly controls**, including: #### **Stationary Combustion** * Emissions from burning fuels in on-site equipment, such as boilers, furnaces, or generators. * *Example: A manufacturing plant burning natural gas in industrial furnaces.* #### **Process Emissions** * Emissions from chemical or physical processes that are not related to fuel combustion. * *Example: A cement company reporting CO₂ emissions from clinker production.* #### **Mobile Combustion** * Emissions from fuel burned in company-owned vehicles or mobile equipment, such as trucks, ships, or aircraft. * *Example: A logistics company reporting diesel use from its delivery truck fleet.* #### **Direct Releases** Gases released intentionally or unintentionally into the atmosphere. This includes: * **Fugitive emissions** (e.g., leaks from pipelines, tanks, or wells) * **Refrigerant emissions** (e.g., leakage from air conditioning and refrigeration units) * **Venting emissions** (e.g., direct release of natural gas during oil extraction) * **Flaring emissions** (e.g., burning of natural gas during oil production) ### Scope 2 – Indirect Energy Emissions Emissions from the generation of **purchased or acquired energy** consumed by the company, including electricity, heat, steam, and cooling. {% hint style="info" %} These occur at the energy provider’s facilities but are attributed to the company because of its energy use. {% endhint %} #### **Electricity** * Emissions from purchased electricity used to run buildings, facilities, and equipment. * *Example: An office sourcing power from a grid that relies on fossil fuels.* #### **Heat** * Emissions from purchased heat for industrial processes or building climate control. * *Example: A commercial building using district heating supplied by an external provider.* #### **Steam** * Emissions from purchased steam used in production or heating. * *Example: A paper mill purchasing steam for its manufacturing process.* #### **Cooling** * Emissions from purchased chilled water or cooled air supplied by third-party providers. * *Example: A data center relying on external cooling services.* {% hint style="warning" %} #### **The GHG Protocol requires reporting of Scope 2 emissions under two methods:** * **Location-based method**: Reflects the average emissions intensity of the grid where the energy is consumed. It uses published grid emission factors and does not account for specific energy purchasing decisions. \ \&#xNAN;*Purpose:* Shows the environmental impact based on the regional energy mix (e.g., fossil-heavy vs. renewable-heavy grids). * **Market-based method**: Reflects emissions based on specific contractual arrangements or instruments — such as renewable energy certificates (RECs), power purchase agreements (PPAs), or supplier-specific emissions factors. \ \&#xNAN;*Purpose:* Allows companies to demonstrate their choice to purchase lower-emission electricity or participate in green energy programs. {% endhint %} {% hint style="success" %} Tracenable captures and distinguishes both values (when disclosed), ensuring consistency with GHG Protocol requirements. {% endhint %} ### Scope 3 – Other Indirect (Value Chain) Emissions All other indirect emissions across the value chain, often the largest part of a company’s footprint. It includes: #### **Upstream Scope 3 Emissions** {% hint style="info" %} Emissions generated **before a company’s operations**, linked to the production and delivery of inputs it relies on. {% endhint %} * **Purchased goods and services** - emissions from producing raw materials or services a company buys. * **Capital goods** - emissions from manufacturing long-term assets like buildings, vehicles, or machinery. * **Fuel and energy-related activities** - emissions from fuel supply chains, not already counted in Scope 1 or 2. * **Transportation and distribution (upstream)** - emissions from moving inputs to the company. * **Waste generated in operations** - emissions from treatment and disposal of waste from company facilities. * **Business travel** - emissions from employee flights, trains, and other work-related travel. * **Employee commuting** - emissions from daily transport between employees’ homes and workplaces. * **Leased assets (upstream)** - emissions from assets used but not owned by the company. #### **Downstream Scope 3 Emissions** {% hint style="info" %} Emissions generated **after a company’s operations**, linked to how its products and services are distributed, used, and disposed of. {% endhint %} * **Transportation and distribution (downstream)** - emissions from moving products to customers. * **Processing of sold products** - emissions from customers transforming sold products into other goods. * **Use of sold products** - emissions from consumers using the company’s products (e.g., fuel use in cars). * **End-of-life treatment of sold products** - emissions from disposal, recycling, or waste treatment after use. * **Leased assets (downstream)** - emissions from assets owned by the company but leased to others. * **Franchises** - emissions from operations of franchisees not directly controlled by the company. * **Investments** - emissions associated with investments in other businesses. *** ## **What are GHG Reduction Targets?** Once a company understands the sources and boundaries of its emissions across Scopes 1, 2, and 3, the next step is to define *how much it plans to reduce them.* This is where GHG reduction targets come in. A GHG reduction target is a measurable goal that defines *how much* a company intends to lower its greenhouse gas emissions from a given baseline and within what timeframe. **For example**: *“Reduce total Scope 1+2 emissions by 40% by 2030 from a 2020 baseline.”* Targets translate climate ambition into specific, trackable outcomes. They differ from broader climate commitments in one key way: * **Targets** are *quantified and time-bound*. * **Commitments** (such as “net zero” or “climate neutrality”) are broader intentions that may or may not include measurable goals. ### **Types of GHG Reduction Targets** Climate targets generally fall into **two main categories**, based on how emissions reductions are measured: #### **1. Absolute Targets** Absolute targets measure total emissions reductions in physical terms: for example, total metric tons of CO₂e reduced over time. They focus on the *overall decline* in emissions, regardless of changes in the company's size or output. **Example:** *“Reduce total Scope 1 and 2 emissions by 50% by 2030 from a 2020 baseline.*” This approach is ideal for organisations committed to making significant, system-wide emissions reductions. #### **2. Intensity-Based Targets** Intensity targets measure emissions relative to a unit of activity, such as output, revenue, or energy consumed. They show how efficiently a company operates, even if total emissions rise with growth. **Example:** *“Reduce Scope 3 emissions intensity by 30% per unit of production by 2030 compared to 2019.”* This approach is particularly effective for rapidly growing companies, as it allows them to balance business expansion with emissions reduction efforts. *** ## **Components of a GHG Reduction Target** Every GHG reduction target has three key components that together define its intent, scope, and measurability: 1. **The Baseline Component** 2. **The Target Component** 3. **The Achievement (or Progress) Component** Understanding these elements helps interpret how companies plan, measure, and track their decarbonization goals. ### 1. Baseline Component The **baseline** defines the starting point from which reductions are measured. It establishes the company’s emissions level before reduction actions begin and serves as the reference for calculating progress. **Attributes include:** * **Baseline Year:** The specific year against which reductions are measured (e.g., 2019, 2020). * **Baseline Value:** The total GHG emissions (absolute or intensity) in that year, expressed in metric tonnes of CO₂ equivalent (tCO₂e) or an intensity ratio. * **Baseline Unit:** The measurement format used, either absolute (tCO₂e) or intensity-based (tCO₂e per unit of activity such as revenue, production, or energy consumed). * **Scope Coverage:** Which emissions scopes (1, 2, and/or 3) and sources the baseline represents. * **Intensity Metric**: Specific denominator that a company reports to measure the intensity of its GHG emissions. It reflects the exact operational or financial measure, such as the amount of energy consumed or revenue generated, and is used to normalize emissions data. **Example:**\ A manufacturing company reports a 2020 baseline of 100,000 tCO₂e covering Scope 1 and Scope 2 emissions. The baseline anchors the target, ensuring reductions are measurable and comparable over time. ### 2. Target Component The **target** defines the company’s intended level of reduction, the timeframe for achieving it, and how success will be measured. It translates ambition into a quantifiable, time-bound goal. **Attributes include:** * **Target Type:** Whether the target is absolute (e.g., total tonnes reduced) or intensity-based (e.g., per unit of revenue or production). * **Target Value:** The magnitude of reduction aimed for, expressed as a percentage decrease or an absolute emission value. * **Target Unit:** The unit in which the goal is expressed, such as percentage (%) or metric tonnes CO₂e. * **Target Unit Direction**: Direction of the target compared to the baseline (e.g., absolute decrease from baseline, percentage increase from baseline). * **Target Year:** The year by which the company intends to achieve its goal (e.g., 2030). **Example:**\ “Reduce total Scope 1 and 2 emissions by 50% by 2030 from a 2020 baseline.” The target component is what transforms a baseline into a measurable plan for emissions reduction. ### 3. Achievement (or Progress) Component The **achievement** (also referred to as progress over time) component tracks the extent to which the target has been realised at any point between the baseline and the target year. It shows whether the company is on track, behind, or ahead of its stated goal. **Attributes include:** * **Achievement Year:** The year for which progress is being reported (e.g., 2023). * **Achievement Value:** Quantified progress made towards the GHG target as of the achievement year (e.g., 20% or 20,000 tCO2e). * **Achievement Unit**: The measurement unit used to express the achievement value, consistent with the units used for the baseline and target (e.g., tCO₂e or %). * **Achievement Direction:** Indicates whether the progress represents a decrease or an increase relative to the baseline. **Example:**\ From the earlier example, if the company reports 70,000 tCO₂e in 2023 against its 2020 baseline of 100,000 tCO₂e, it has achieved a **30% reduction** toward its 50% target. Tracking achievements over time helps assess performance, credibility, and the pace of decarbonization. {% hint style="success" %} #### **Putting It All Together** A complete GHG reduction target connects these three components in a single logical framework with each element providing context for the others: the baseline defines where the company began, the target defines where it wants to go, and the achievements show how far it has come. Together, they make GHG reduction targets measurable, comparable, and actionable across industries. {% endhint %} *** --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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