Crafting Action Plans for Effective GHG Management

Once a company has decided to take action on climate change, it’s time to develop a comprehensive greenhouse gas management plan. Such a plan may be a requirement for companies planning to join a GHG registry or partnership. In these cases, the partnering government agency or nongovernmental organization may provide a template for an action plan. In other cases a company may create its GHG management plan independently.

Climate action plans can vary greatly depending on the company and its specific projects. There are, however, common elements to most plans. These include:

• explaining the business rationale for taking climate action
  
• identifying sources of emissions and how those emissions are projected to change due to sales growth, acquisitions, divestitures, operational changes, etc.
  
• describing steps that might be taken to reduce emissions from each source.

Some companies may also choose to include emissions trading, offsets, and other management practices within their mitigation plan, and may also discuss development of climate-friendly products and services.

Key Questions and Issues

The Pew Center for Global Climate Change, U.S. Environmental Protection Agency, state registries, and other interested organizations have identified key issues companies face in creating a greenhouse gas management plan. Taken together, they provide a roadmap for developing a climate action plan.

• Project scope: A climate action plan may or may not take into account greenhouse gases other than carbon dioxide; the decision may be based on requirements of any registries or partnerships in which the company is involved, as well as the types and amounts of baseline corporate emissions. As part of or in addition to a reduction target, a company may choose to benchmark its performance against others in its industry.
• Top-down versus bottom-up: In a bottom-up plan, business units determine reduction targets, and the corporate target and action plan is essentially a compilation of targets and plans of individual business units. By contrast, a top-down approach starts with a corporate target, which is then allocated across business units.
• Incentives and enforcement: A company must decide what incentives will be in place to push managers towards decisions that reduce emissions. This is especially true for companies that take a bottom-up approach.
• Connection with other environmental management efforts: Corporations that have environmental management systems or other formal mechanisms for managing environmental factors must decide whether to make the climate action plan a subset of these efforts. (Additional discussion on this topic is found in the backgrounder on Climate and Environmental Management Systems.)
• Research and development: Many companies may be able to make initial significant emissions reductions through operational changes. Deeper cuts over the long term may require major changes in equipment and processes, which in turn often requires an investment in research and development.
• Assessment and verification: How will results be measured, and how will they be verified? Metrics for evaluating progress must be clearly stated to preserve the credibility of any climate action plan. Many companies name a third-party verifier.
• Offsets: Many environmental organizations use offsets to achieve an emissions target after an appropriate level of internal emissions reduction has been reached. Whether to pursue offsets, and if so what type, is a key question to be addressed within a climate plan.
• Feedback and adaptive management: Companies should be able to determine the successes and failures of their climate plan and adapt accordingly, expanding what is working and correcting what is not working. The emissions target may need to be revised.
• Communication: How will the company’s emissions efforts, and successes or failures, be communicated? Most plans discuss approaches to communication, both internal (e.g., to employees, managers, board of directors) and external (e.g. to government agencies, environmental organizations, local citizens groups, investors).