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Product Life Cycle Accounting and Reporting Standard

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he GHG Protocol Initiative follows a multi-stakeholder, consensus-based process to develop greenhouse gas accounting and reporting standards with participation from businesses, government agencies, nongovernmental organizations, and academic institutions from around the world. This draft standard was developed between January and October 2009 by two technical working groups collectively comprised of over 70 members from a diversity of businesses, government agencies, NGOs, and academic institutions. The development was led and coordinated by WRI and WBCSD. A Steering Committee consisting of 25 organizations met three times between September 2008 and September 2009 to provide strategic and technical direction to the process.
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REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009

World Business Council for
Sustainable Development










Product Life Cycle Accounting and Reporting Standard

SUMMARY OF KEY REQUIREMENTS

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
NOVEMBER 2009







Copyright © World Resources Institute & World Business Council for Sustainable Development, 2009



1

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
Table of Contents
1.
Introduction to the GHG Protocol ....................................................................................................................... 5
2.
Goal and Scope of the Product Standard .......................................................................................................... 5
3.
Key Requirements .............................................................................................................................................. 6
3.1.
Overview of the Product Life Cycle Methodology ...................................................................................... 6
3.2.
Selecting the Functional Unit ..................................................................................................................... 6
3.3.
Setting the Boundary .................................................................................................................................. 6
3.4.
Allocation .................................................................................................................................................... 7
3.5.
Collecting Data ........................................................................................................................................... 8
3.6.
Data Quality and Uncertainty Assessment ................................................................................................ 8
3.7.
Assurance .................................................................................................................................................. 8
3.8.
Reporting .................................................................................................................................................... 9
4.
Glossary ........................................................................................................................................................... 10




2

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
Introduction to Stakeholder Review Draft
Standard Development Process
The GHG Protocol Initiative follows a multi-stakeholder, consensus-based process to develop greenhouse gas
accounting and reporting standards with participation from businesses, government agencies, nongovernmental
organizations, and academic institutions from around the world.
This draft standard was developed between January and October 2009 by two technical working groups
collectively comprised of over 70 members from a diversity of businesses, government agencies, NGOs, and
academic institutions. The development was led and coordinated by WRI and WBCSD. A Steering Committee
consisting of 25 organizations met three times between September 2008 and September 2009 to provide
strategic and technical direction to the process.
Process Structure


Timeline
Date
Activity
November 2007
 Survey and consultations to assess need for new standards
September 2008
 Steering Committee Meeting #1 (Washington DC)
 Technical Working Group Meeting #1 (London)
January 2009
 Working groups begin drafting
March 2009
 Steering Committee Meeting #2 (Geneva)
June 2009
 Technical Working Group Meeting #2 (Washington DC)
August 2009
 Stakeholder webinar and comment period



3

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
October 2009
 Steering Committee Meeting #3 (Washington DC)
 First draft of standards released for stakeholder review
November -
 Five stakeholder workshops (in Berlin, Germany; Guangzhou, China;
December 2009
Beijing, China; London, UK; Washington, DC, USA)
 Stakeholder comment period on first drafts
January - June
2010

 Pilot testing by several companies
Summer 2010
 Public comment period on second drafts
December 2010
 Publication of final standards

Process for Submitting Written Comments

This draft is open for stakeholder comment from November 11, 2009 through December 21, 2009.

To provide written comments, please use the comment template provided, instead of sending comments
in a separate file or e-mail, in order to streamline the comment process.

When using the comment template, please organize comments by chapter/section and reference page
numbers and line numbers.

If you have questions during the public comment process, please email Holly Lahd at hlahd@wri.org.

Submit comments as an attached MS Word file by email to Holly Lahd at hlahd@wri.org no later than
Monday, December 21st, 2009. We appreciate any effort to submit written comments before the
deadline.

Process for Revising the Draft Standard
In 2010, WRI and WBCSD, in collaboration with the Steering Committee and Technical Working Groups, will:

Revise the draft standard based on feedback received during five stakeholder workshops and the
stakeholder comment period (November 11 – December 21, 2009)

Road test the draft standard with 10-15 companies from a diversity of industry sectors and geographic
locations during January to June 2010

Revise the draft standard based on feedback received during road testing

Circulate a second draft for public comment in mid-2010

Revise the second draft based on feedback received

Publish the final standard in December 2010

Terminology: Shall, should and may
The term “shall” is used in this standard to indicate what is required in order for a GHG inventory to be in
conformance with the GHG Protocol Product Standard. The term “should” is used to indicate a recommendation,
but not a requirement. The term “may” is used to indicate an option that is permissible or al owable.



4

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
1. Introduction to the GHG Protocol
The Greenhouse Gas Protocol Initiative (GHG Protocol) is a multi-stakeholder partnership of businesses, non-
governmental organizations (NGOs), governments and others convened by the World Resources Institute (WRI),
a US based environmental NGO, and the World Business Council for Sustainable Development (WBCSD), a
Geneva-based coalition of approximately 200 international companies. Launched in 1998, the Initiative’s mission
is to develop internationally accepted greenhouse gas (GHG) emissions accounting and reporting standards and
guidelines and to promote their use by businesses, governments, NGOs and other organizations.
The GHG Protocol Initiative has previously produced the following standards and guidelines:
-
GHG Protocol Corporate Accounting and Reporting Standard (2004)
-
GHG Protocol for Project Accounting (2005)
-
GHG Protocol Land Use, Land-Use Change and Forestry Guidance for GHG Project Accounting (2006)
-
GHG Protocol Guidelines for Quantifying GHG Reductions from Grid-Connected Electricity Projects
(2007)






The GHG Protocol launched a new initiative in 2008 to develop two new standards for:


Product Life Cycle Accounting and Reporting

Corporate Scope 3 (value chain) Accounting and Reporting

2. Goal and Scope of the Product Standard
The goal of the GHG Protocol Product Standard is to support public reporting of product life cycle greenhouse
gas (GHG) emissions to help companies and other organizations reduce these emissions by making informed
choices about the products they design, manufacture, sell, purchase or use. This standard is sufficiently flexible to
support GHG quantification and reporting for many different types of products.
This standard does not in itself directly enable product comparisons, comparative assertions, or product labeling.
Valid comparison or labeling requires a greater degree of prescriptiveness than is provided in this standard, for
example through sector-specific guidance. Further, this standard is not intended to support the accounting of
GHG emission offsets or claims of carbon neutrality. This standard focuses on emissions generated during a
product’s life cycle and does not address avoided emissions or actions taken to compensate for released
emissions.




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REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
3. Key Requirements
3.1.
Overview of the Product Life Cycle Methodology
This standard is based on a process life cycle approach to product GHG accounting. Under the process life cycle
accounting approach, companies shall quantify and aggregate the emissions from each specific process within
the established boundary of the product system.
Companies shall report emissions of all Kyoto Protocol greenhouse gases from the product life cycle. These
include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbon
compounds (HFCs), and perfluorocarbon compounds (PFCs). Companies may additionally report non-Kyoto
gases as applicable.
This standard is based on an attributional approach to product GHG accounting. Companies shall use an
attributional approach to assign life cycle GHG emissions to an individual product system for the purpose of public
reporting, unless existing sector specific or program guidance stipulate the need to address indirect or
consequential emissions sources. An attributional approach to GHG emissions accounting in products provides
information about the GHG emitted directly by a product and its life cycle.

3.2.
Defining the Functional Unit
Companies shall define the unit of analysis as the functional unit of the product. Companies shall consider the
following elements when determining the functional unit:
o The function or performance characteristics provided by the product system
o Reference flow (i.e., amount of product necessary to fulfill the function and the quantity to which
assessment results will be normalized)
o Relevance to the study goal (i.e., why a particular functional unit was chosen in the context of a particular
goal)
Companies should consider the following elements if relevant:
o Product/system properties that differentiate the function being provided based on properties such as
technical quality and aesthetics
o Market segment characteristics such as geographic location, customer preferences and temporal scales

3.3.
Setting the Boundary
Processes that are attributable to the function of the product shall be included in the boundary of the product
system. These processes are directly connected over the product’s life cycle by material or energy flows, from
extraction and pre-processing of product components through to the product’s end-of-life. These processes are
referred to as foreground processes throughout this standard.
Processes that are not directly attributable to the function of a product include facility operations, corporate
activities, and capital goods. These are referred to as background processes throughout this standard.

Capital goods shall be included in the product system if deemed significant for the studied product or
product sector

Facility operations and corporate activities should be included in the product system where relevant
Significance can be proven for capital goods using a qualitative or quantitative test. Qualitative significance is
based on existing literature and/or sector specific data, while quantitative significance is based on the contribution
of capital goods to the total system impacts. Companies shall perform the qualitative significance test first. If
significance is not determined, a company should try to collect or estimate data before using the quantitative
significance test. If neither test provides sufficient evidence of the insignificance of capital goods for the studied



6

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
product or product sector, capital goods must be considered significant and shall be included in the system
boundary.
Companies shall conduct a cradle-to-grave assessment for all final products. Companies may conduct a cradle-
to-gate assessment for intermediate products when the eventual fate of a product is unknown.
3.4.
Allocation
Allocation problems exist when a process directly attributable to the studied (subject) product involves multiple
inputs and/or multiple outputs. These processes are referred to as shared processes. When faced with an
allocation problem, a company shall consider the following general principles:
o When addressing a shared process, a company shall first consider if allocation can be avoided.
o To perform allocation, a company shall adhere to the general accounting principles of completeness
(account for all emissions), transparency (clearly document how emissions are calculated), accuracy
(conduct a true accounting of the product’s GHG inventory), and consistency (apply a process similarly to
multiple outputs).
o The appropriate allocation methods shall be chosen with a preference for decisions based on natural
science.
o To avoid allocation, a company may use one of the following methods:
o Process subdivision: Avoid allocation by disaggregating shared processes.
o Direct system expansion: Avoid allocation by expanding the functional unit to include outputs (co-
products) from a shared process. To adhere to the methodological requirements of the standard, a
company shall not use the avoided burden method to avoid allocation by system expansion.
If allocation is necessary, the company shall use one of the following methods to determine an allocation factor.
The method must be selected in accordance with the general principles for solving allocation problems. In all
cases, the method used to solve the allocation problem shall be justified and documented. The following methods
can be used:
o Allocating based on the underlying (non-arbitrary) physical relationship: using the underlying relationship
of the inputs and outputs of a shared process to determine an allocation factor.
o Allocating by substitution: using substitute data (i.e. average data for the co-product from a different
production process) to determine an allocation factor. This approach is only applicable when the co-
product does not share the same underlying physically relationship as the subject product (i.e., mass and
energy outputs), and data is available that meets the data quality requirements.
o Allocating based on market value: using the market relationship between the subject product and co-
product(s) to determine an allocation factor. This approach is only applicable if the market relationship
between the subject product and the co-product(s) is fairly stable (i.e., stable price ratio regardless of
price fluctuations).
o Allocation methods based on value choices or arbitrary assumptions: If the above methods are not
applicable to the shared process, than an arbitrary assumption must be used to determine an allocation
factor.
The general principles and allocation methods described above are also applicable to recycling. A company shall
clearly report the assumptions made and justify the methodology used to allocate emissions as a result of
recycling.




7

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
3.5.
Collecting Data
Companies should establish a data management plan and complete an emission screening prior to collecting
data. A data management plan is an organizational tool to ensure all data is collected and all relevant data
information (source, type, quality) is recorded. The results from an emission screening help a company identify
and prioritize the largest potential emission sources.
Primary data shall be collected for all processes under the financial control or operational control (as defined by
the GHG Protocol Corporate Standard) of the company undertaking the product inventory. Primary data includes
activity data, emissions factors, or direct emission measurements for a specific process related to a specific
product manufactured by the reporting company or a company in its supply chain.
For all other processes, data of the highest practical quality shall be collected. Quality is based on how well the
data represents the actual process, applying the following indicators: technological, temporal, and geographical
representativeness, completeness, and precision. For processes where a company can engage suppliers to
meet data collection needs, high quality primary data is preferred. For all other data needs, the best quality
secondary data is preferred. Secondary process data relates to activity data, emissions factors or direct
emissions measurements for processes related to a specific product that are not directly measured by the
reporting company or a company in its supply chain. Secondary non-process data includes input-output data,
which is derived from environmentally extended sector-based economic models. Any remaining data gaps shall
be filled using proxy data (unmodified data based on a similar process) or extrapolated data (i.e., proxy data that
has been customized).

3.6.
Data Quality and Uncertainty Assessment
A data quality assessment shall be undertaken for all GHG emissions sources that cumulatively sum to 75% of
total product emissions, beginning with the largest emissions source. Data quality shall be evaluated using either
a descriptive or quantitative assessment based on the following metrics: technological, temporal and geographical
representativeness, completeness, and precision. A statement regarding the overall methodology
appropriateness and consistency of the inventory shall be made.
A company should assess the uncertainty of the inventory data and perform sensitivity on key emissions or data
assumptions.

3.7.
Assurance
Assurance (referred to as “verification” in the GHG Protocol Corporate Standard) is an objective assessment of
the accuracy, completeness and presentation of a reported product GHG inventory and the conformity of the
product GHG inventory to the standard. In order to state compliance with the standard, the product GHG
inventory shall be assured. The following types of assurance are permissible:
o First Party (“Self” or “Internal”) assurance – Persons from within the organization but independent of the
product GHG inventory determination process, conduct first party internal assurance;
o Third Party (”External”) assurance – Persons from a certification or assurance body independent of the
product GHG inventory determination process, conduct independent third party external assurance.
Assurance providers, whether internal or external to the organization, shall be sufficiently independent of any
involvement in the determination of the product GHG inventory or development of any declaration and have no
conflicts of interests resulting from their position in the organization, such that they can exercise objective and
impartial judgment. Although either of the above types of assurance is permitted, benefits of external assurance
are outlined in the guidance section and disclosed in the GHG inventory report.
The assurance opinion shall be expressed in the form of either reasonable (high) or limited (moderate)
assurance.



8

REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
3.8.
Reporting
A company shall publicly disclose a GHG inventory report. This report is divided into a summary and detailed
report to address the needs of different audiences: the general audience (summary), and the audience familiar
with GHG inventory accounting (detailed). The summary report shall include an introduction, the summary
template (Table 1), the process map of the subject product, and a brief discussion on how the results will be used
(i.e., to facilitate emission reductions).

Table 1: Summary Report Template
Type of Inventory
Final Product - Complete GHG Inventory (Cradle to Grave), OR
Intermediate Product - Partial GHG Inventory (Cradle to Gate)
General Information
Parameter
Description [Template Notes]
Company Name and
Contact Information

Product Name
[Material Product or Service, Brand Name if applicable]
[Brief product description including whether it is a final or intermediate
Product Description
product]
Functional Unit (study
[For Cradle to Gate assessments, the boundary of the functional unit
basis)
should be clearly stated]
Country/Region of
[for Cradle to Grave assessments]
Product Consumption
Inventory Date and
[Year inventory was finalized]
Version
[1 if first inventory, 2,3 etc. for future versions]
Study Results: Total Product GHG Inventory
Parameter
Value
Unit
Total GHG Inventory
[Value]
[gram base unit1 CO2e per Functional Unit]
Study Results: Percent of Life Cycle Stage
Value (Percent of
Stage Name
Comments
Total CO2e)
Raw Material
[Brief description of inclusions and end points for
Acquisition &
[Value]
each stage]
Preprocessing
Production & Service


Delivery
Distribution & Storage


Use


End-of-Life


Quality Assessment Information
Assurance Type
[External or Internal, Performed by Whom]
Assurance Opinion
[Limited or Reasonable]
Data Quality
[ Statement on Overall Data Quality]
Assessment
1 Gram shall be the base unit reported with a logical prefix (kg, mg, etc,), as applicable.



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REVIEW DRAFT FOR STAKEHOLDER ADVISORY GROUP
SUMMARY OF KEY REQUIREMENTS - NOVEMBER 2009
The company shall disclose whether internal assurance or external assurance was provided.
The detailed report shall include additional information on methodological assumptions, types of data used, and
any justifications made during the inventory that a company is required to disclose. The full list of reporting
requirements for the detailed report can be found in the full standard.

4. Glossary

Term
Definition
Ensure that reported GHG emissions are not consistently greater than or less than actual emissions
and that uncertainties are reduced as far as practicable. Achieve sufficient accuracy to enable users
Accuracy
to make decisions with reasonable assurance as to the reliability of the reported information. Clearly
(principle)
explain any estimates and avoid bias so that the report faithfully represents what it purports to
represent.
An objective assessment of the accuracy, completeness and presentation of a reported product GHG
Assurance
inventory and the conformity of the product GHG inventory to the Standard designed to enhance the
degree of confidence of the intended users.
Attributional
Provides information about the GHG emitted directly by a product and its life cycle. The system
Approach to GHG
boundary includes processes that are directly linked to the product by material, energy flows or
Accounting
services following a supply-chain logic.
Background
Processes that are not directly connected to the product or its components. Background processes
Processes
include facility operations, corporate activities, and capital goods.
An environmental claim regarding the superiority or equivalence of one product versus a competing
Comparative
product that performs the same function. This standard does not directly enable comparative
Assertion
assertion. Source: ISO 14040
Ensure that the GHG report covers all product life cycle emissions within the specified boundaries
Completeness
(including temporal), state clearly any life cycle stages or significant non-GHG environmental impacts
(principle)
that have been excluded and justify these exclusions.
Consequential
Provides information about the GHG emitted, directly or indirectly, as a consequence of changes in
Approach to GHG
demand for the product. This approach typically describes changes in GHG emissions levels from
Accounting
affected processes, which are identified by linking causes with effects.
Use methodologies to allow for meaningful comparisons of emissions over time. Transparently
Consistency
document any changes to the data, inventory boundary, methods, or other relevant factors in the time
(principle)
series.
Co-Products
Products produced in the product system under study but are used in other product systems.
An assessment that includes all GHG emissions in the complete life cycle of a product from the
Cradle-to-Grave
beginning of the life cycle (e.g. raw material extraction) through final disposal or end use by the end
Assessment
consumer.
The characteristics of data for satisfying stated requirements. Generally data quality characteristics
address how well the data corresponds to the time, geography and technology represented in the
Data Quality
product inventory, the precision of any direct measurements, the completeness of processes
represented in the inventory and the consistency of data across processes in the inventory.
Data Quality
Indicator used to describe individual process data in the system boundary.
Indicator



10

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