Sustainability is often viewed as a way to manage risk; Sustainability reporting is the measure of that risk. With the growing urgency of climate and resource risk has propelled Sustainability reporting from a niche activity to a mainstream expectation for businesses. Investors, regulators, and consumers increasingly demand transparent and comparable data on how companies are managing their climate-related risks and opportunities. As we discussed in our previous article, “Converting Recycled Material Weights to Carbon for ESG Reporting: An International Sustainability Standards Board (ISSB) Aligned Approach,” the International Sustainability Standards Board (ISSB) has provided a globally recognized framework for such disclosures. A key aspect of this is quantifying the impact of a company's sustainability initiatives, including the benefits derived from recycling. In this article we will explore the structure of Sustainability Reporting and how to integrate GHG into all components of Sustainability Reporting. The Sustainability Reporting Frameworks typically are structured around four core elements of how organizations operate:

1. Governance: The organization's governance around climate-related risks and opportunities.


2. Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning.


3. Risk Management: The processes used by the organization to identify, assess, and manage climate-related risks.


4. Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities. This is where quantifying the carbon impact of recycling becomes crucial.

The GHG Protocol provides the standards and guidance for companies to prepare a GHG inventory. It categorizes emissions into three "scopes":

• Scope 1: Direct emissions from owned or controlled sources.


• Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, or cooling.


• Scope 3: All other indirect emissions that occur in a company's value chain. This is typically where the primary impacts of recycling activities are accounted for.

Reporting Carbon Impacts of Recycling under GHG Protocol The carbon impact of recycling activities typically falls under Scope 3 of the GHG Protocol or can be reported as "avoided emissions."

• Scope 3 Emissions:
  
  
  
  • Category 1: Purchased Goods and Services: If your company uses recycled materials as inputs for its products, the emissions associated with producing those recycled materials (which are generally lower than virgin materials) would be part of this category. The reduction in emissions from using recycled content instead of virgin content can be a key part of your carbon reduction strategy.
  
  
  • Category 5: Waste Generated in Operations: Emissions from the third-party transportation and treatment (including recycling) of waste generated within your own operations. Here, the choice of recycling over landfilling can lead to lower reported emissions in this category if the emission factors for recycling are lower than landfill factors (especially considering methane from landfill).
  
  
  • Category 12: End-of-Life Treatment of Sold Products: This is where demanufacturing can add value to your sustainability reporting. If your company's products are recycled at the end of their life, the emissions associated with this recycling process can be reported here. Companies increasingly take responsibility for the end-of-life impact of their products. High recycling rates for your products, coupled with the carbon benefits of that recycling, can be a positive story.
  
  
  
  


• Avoided Emissions: The GHG Protocol provides guidance on "Estimating and Reporting the Comparative Emissions Impacts of Products" (often referred to as avoided emissions). These are emission reductions that occur outside of a product's life cycle or a company's Scope 1, 2, and 3 inventory but are a consequence of the use of the company's products or services. For recycling, this often means quantifying the CO2e savings achieved by recycling materials that would otherwise have been produced from virgin resources or disposed of in a more carbon-intensive way. Crucially, avoided emissions should be reported separately from a company's Scope 1, 2, and 3 emissions inventory. This maintains the integrity of the scopes while allowing companies to communicate the positive climate contributions of their recycling initiatives. The methodology and assumptions for calculating avoided emissions must be clearly stated.

Integrating into ISSB Reporting The quantified carbon impact of recycling activities can be woven into all four pillars of ISSB reporting:

• Metrics and Targets:
  
  
  
  • Report the total weight of materials recycled and the corresponding CO2e savings or emissions.
  
  
  • Set targets to increase recycling rates, increase the use of recycled content, or reduce the carbon intensity of waste management, using the CO2​e conversions as a metric.
  
  
  • Track performance against these targets.
  
  
  
  


• Strategy and Risk Management:
  
  
  
  • Opportunities: Discuss how increasing recycling and using recycled materials contributes to resource efficiency, potentially reduces costs, meets customer demand for sustainable products, potentially creates new revenue streams for recycled materials, and enhances brand reputation. The CO2e savings quantify these climate-related opportunities.
  
  
  • Risks: Explain how recycling initiatives help mitigate transition risks such as increasing carbon prices (by opting for lower-carbon recycled inputs), regulatory changes concerning waste and resource use, and reputational risks associated with poor environmental performance. It can also mitigate physical risks by reducing reliance on primary resources potentially affected by climate change.
  
  
  
  


• Governance:
  
  
  
  • Describe the board's oversight and management's role in setting recycling targets, monitoring performance (including carbon impacts), and managing climate-related risks and opportunities associated with waste and material use.
  
  
  
  

Conclusion

• Converting recycled material weights to carbon equivalents provides a powerful metric for companies to understand and communicate the climate benefits of their circular economy initiatives. By aligning these calculations with the GHG Protocol and integrating them into ISSB-recommended disclosures, organizations can enhance the credibility of their Sustainability reporting, demonstrate a proactive approach to climate stewardship, and provide stakeholders with decision-useful information about their climate-related performance and strategy. This quantification is not just an accounting exercise; it is a strategic tool for driving meaningful environmental improvement and potential economic positive outcomes.

Do you need help? Do you need assistance with demanufacturing solutions to help you to track your diversion, calculate your emissions reductions and contribute to the Circular Economy? Genesis Dome can assist; our unique management processes can support you in ensuring that up to 98% of materials are diverted from the landfill. We can also provide guidance and solutions to solve recycling challenges. Contact Us!