Scope 3 shows you where GHG’s mostly occur,
Scope 4 who is mostly paying for them, and so financially responsible
I sketch here in (in somewhat exhaustive detail) the basis for the SCOPE 4 accounting principle, that every dollar spent has a nominally proportional share of responsibility for all the dangerous impacts of our growing economy on our future. A deep appreciation of how the “economy” physically works as a whole will emerge from the effort. Other posts outline holistic accounting methods to guide economic choices for optimal long term profitability, as what’s “sustainable”. Appendix I & II gives examples, The big impact of a CO2 tax & GHG’s for $500, as airfare or a painting
I attended a remarkable meeting of UNEP and Wall Street investing experts at the 7 WTC offices of MSCI, led by “2 Degree Investing “. Business is just starting to react with appropriate alarm to the wave of climate change risks for their businesses and investor portfolios, and the metrics community is rushing to turn the various models for impact metrics into true financial measurement tools. The tangled complexity of the economy and environment and how both are dangerously changing… are what gets in-between, raising the challenges and the stakes.
—- No one wants to change as fast as the science makes clear is needed to escape the severe harm from climate change and its economic effects. We also have rising societal needs and other impinging harms from degrading and depleting our resources of many kinds, all caused by the mysterious “externalities” of how businesses operate, that people are largely unaware of the financial consequences of. Several advantages of my SEA “Scope 4″ whole system metric came out, designed to force all the hidden impacts of a business to come out of hiding, by “dividing up” the world’s totals rather than by “adding up” traceable parts. The latter makes it easy to overlook the lions share. So as a scientific problem it “how to measure a glass half hidden“. First you need to sense “something’s missing”!
I found it easier than expected to understand and communicate, I guess because this whole group was struggling with the same enormous set of still undefined problems. It’s been a mystery why so much discussion of the economic hazards ahead hasn’t led to world business responding, given how clear the problem developing seems to be. So I personally had a great time, finding my insights fitting in with others, much better than in other discussions is seemed.
That we’re facing a convergence of interacting crises, not just one big one,
is part of what I added, as well as pointing out that
our metrics allow business to “eliminate” environmental impacts by moving them to undefined categories….
The following is an edited version of my letter to a speaker presenting the GHG Protocol and World Resource Institute work on defining of its “Scope 3″ method of accounting for a business’s whole economic GHG impact, that my “Scope 4″ is in some ways “competing with”.
When we talk about measuring impacts,
…every measure is an “imprint” of a real world economy that will be mentally hard to connect. It helps a lot if a group of people seeing separate parts of an elephant, as a result, are all raising questions about the connections rather than arguing!
At MSCI yesterday the range of experts on a dozen different sides of the financial issues had one remarkable thing in common, asking really interesting questions, covering very broad topics with some detail and specificity, in a quite surprisingly clear and lucid way. One humorous note arose when the two very different ways of measuring a business’s whole economic GHG impact, the GHG & WRI “Scope 3″ and my SEA “Scope 4″, were verbally described with the exact same words, even though they measure very different things. ;-)
I think the answer is that each different well designed measure will highlight different points of influence, with some measures better for one or another purpose.
Scope 3 uses conventional economic data, a big benefit, and is particularly good for directing attention to high concentrations of GHG impact, for example. Those are candidates for direct regulatory and publicly funded technology interventions.
The strength of SEA “Scope 4″ is being designed to account for whole business impacts as shares of responsibility for the economy’s impacts as a whole. Despite using a less developed field of analysis, all the parts of business decision making and the organization of the business as a whole are included, which “Scope 3″ doesn’t do. Continue reading