Energy Use & GHG 2021

Energy Use & Greenhouse Gas Introduction

Energy production and energy use are the largest man-made sources of air pollution and greenhouse-gas (GHG) emissions. The operational, environmental, and financial impacts of energy are key issues for facility operations. Driving energy efficiency and use of renewable energy throughout facility operations is an important area of focus for all factories.

As climate change emerges as the most severe human, environmental, and economic risk in the world, more stringent requirements and regulations may be imposed by governments. If your facility reduces your energy consumption and greenhouse gas emissions, it will help to reduce your exposure to regulatory risks or new requirements from brands. This may also create an economic advantage for your company by mitigating risk of fossil fuel and energy cost increase.

By putting in place the necessary organization and action of an energy program facilities can:

  • reduce greenhouse gas (GHG) footprint and air emissions
  • reduce costs
  • improve processes

Energy Use in Your Factory

You can reduce your greenhouse gas emissions by reducing the total amount of energy used at your facility and/or by switching to cleaner fuel sources. To understand how to improve, you first need to start by measuring your energy use and, second, use Higg to understand how your energy sources affect GHG emissions.

Your facility must track the following sources of energy that are owned or controlled by your facility. The scope covers energy sources used in the manufacturing process as well as any other type of energy sources that are not used in the process (for canteens, dormitories, vehicles, etc.) (source: https://ghgprotocol.org )

Note: Energy consumed by facilities or tenants on-site that are NOT owned or controlled by your facility should be excluded for your energy reporting in the Higg FEM.  For example, energy consumed by an onsite canteen/food service provider that is not owned or controlled by your facility should be excluded.

  • Coal
  • Natural Gas
  • Petrol
  • Diesel
  • Fuel Oil
  • Propane
  • LPG
  • LNG
  • Biomass
  • Solar Photovoltaic
  • Solar Thermal
  • Geothermal
  • Hydro
  • Micro-Hydro
  • Wind

Your facility must also track the following sources of energy that are a consequence of your operations, but occur at sources owned or controlled by another entity (source: https://ghgprotocol.org)

  • Purchased electricity
  • Purchased chilled water
  • Purchased steam
  • Purchased Renewables

Below is a list of common machines and equipment which use energy (note: this is a very small list of common industrial equipment):

  • Boiler
  • Compressed Air System
  • Motors
  • Generator
  • HVAC
  • Incinerators
  • Chiller and burner
  • Dryers
  • Lighting
  • Production Equipment
  • Office Equipment

Energy Use in Higg FEM

The Energy section in the Higg FEM serves as a method to evaluate a facility’s progress at implementing a successful energy program. While good energy management provides significant benefits, including cost savings and efficiency, it requires adequate organizational focus and resources to correctly implement and be successful while reducing impact on the environment.

The Higg Index Energy section requires you to:

  • Track all energy and fuel sources and report quantity used in the last calendar year
  • Identify which factors contribute most to energy use on site (e.g., machines, processes, or operations that use the most energy)
  • Set a normalized baseline for energy use, such as “80 MJ per unit of production in 2016”
  • Set normalized targets for energy reduction, such as “Reduce energy used per unit of production by 70% in 2025.”
  • Set an action plan with specific actions and strategies to achieve energy reduction targets
  • Demonstrate energy reductions against the baseline, such as “Last year we used 60 MJ per unit of production which is a 25% annual reduction.”

Tracking and Reporting Energy Use in Higg FEM

Accurately tracking and reporting energy use data over time provides facilities and stakeholders with detailed insight into opportunities for improvement. If data is not accurate, this limits the ability to understand the facility’s energy use footprint and identify the specific actions that will help reduce environmental impacts and drive efficiencies.

When establishing an energy tracking and reporting program, the following principles should be applied:

  • Completeness – The tracking and reporting program should include all relevant sources (as listed in the FEM). Sources should not be excluded from data tracking and reporting should be based on materiality (e.g. small quantity exceptions).
  • Accuracy – Ensure that the data input into the energy tracking program is accurate and is derived from credible sources (e.g. calibrated meters, established scientific measurement principles or engineering estimates, etc.)
  • Consistency – Use consistent methodologies to track energy data that allows for comparisons of energy use over time. If there are any changes in the tracking methods, energy sources, or other operations that impact energy use data, this should be documented.
  • Transparency – All data sources (e.g., energy bills, meter readings, etc.), assumptions used (e.g., estimation techniques), and calculation methodologies should be disclosed in data inventories and be readily verifiable via documented records and supporting evidence.
  • Data Quality Management – Quality assurance activities (internal or external) should be defined and performed on energy data as well as the processes used to collect and track data to ensure reported data is accurate. For additional guidance on managing data quality, refer to Chapter 7 of the GHG Protocol A Corporate Accounting and Reporting Standard: Managing Inventory Quality.

The above principles are adapted from The Greenhouse Gas Protocol – Chapter 1: GHG Accounting and Reporting Principles.

Calculating Greenhouse Gas (GHG) Emissions using Higg FEM

Greenhouse gases (GHGs) are gases in the Earth’s atmosphere that absorb/trap some of the Earth’s outgoing radiation, causing the atmosphere to warm up (called the ‘greenhouse effect’). This process is the main cause of the change in the earth’s climate, called ‘climate change’. Energy generation and use, transportation, use of refrigeration gases, and other activities produce greenhouse gas emissions that harm the environment. Reference IPCC: www.ipcc.ch.

In addition to environmental improvement, identifying and managing the source and amount of GHG emissions can benefit your factory in the following ways:

  • Reduce material cost associated with GHG reductions
  • Increase competitive advantage by striving for carbon neutral success
  • Get a start on future regulations on carbon and GHG emissions.
  • Through tracking and driving strategic reductions the facility is demonstrating environmental stewardship.

Your factory’s energy use generates direct and indirect GHG emissions. The GHG Protocol categorizes these emissions into three broad “scopes”:

  • Scope 1: All direct GHG emissions.
  • Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam
  • Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc. (Source: https://ghgprotocol.org)

Other References:

HKEx’s Reporting Guidance on Environmental KPIs: https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Environmental-Social-and-Governance/Exchanges-guidance-materials-on-ESG/app2_envirokpis.pdf?la=en

Once you’ve entered your factory’s energy use in Higg FEM, the tool will provide a GHG calculation for both Scope 1 (direct) and Scope 2 (indirect) emissions based on emissions factors taken from the best publicly-available, free sources.

Energy Use & GHG – Level 1

Questions
  • Energy Source
  • Does your facility track its energy use from this source?
  • What quantity of energy was used by this source during this reporting year?
  • Unit of Measure
  • Which method was used to track this energy source?
  • What was the frequency of measurement?
  • Provide any additional comments

Suggested Upload: a) Optional: an annual summary of the energy consumption for each type of energy source. Uploading utility bills is NOT required, however they should be available for the verifiers to review at the time of verification; b) Picture of the energy meters used to monitor the consumption of the main energy sources if applicable

You will receive full points if you are completely tracking all sources of energy that your facility uses.

You will receive partial points if you are completely tracking at least one of your energy sources but are not yet tracking all of your energy sources.

Higg FEM converts energy use data into common units (MJ), % of total use, and co2 equivalent.

What is the intent of the question?

The intent is for you to enter quantitative data that shows how much energy your facility is using. This question also helps you build your facility’s energy source list, which provides a clear understanding of what energy is being used, where it is being used in your factory, and how much is being used.

Measurement of energy use from all sources is the foundation of energy management and the overall sustainability program for a company. Measurement of all energy sources allows you to analyze your biggest energy drivers, detect any abnormal consumption, set energy reduction targets, and measure GHG emissions.

The purpose of completing the energy section is to identify opportunities to reduce energy use. The first step to doing that is to understand which are your largest sources of energy use. Once you know that, you will be able to prioritize reductions. For example, this question helps you understand if you should focus on reducing electricity use, or another source of energy.

Technical Guidance:

Please include all energy used within the site’s physical boundary and operations under your business control (owned, operated or directly leased). Please exclude any outsourced services or areas such as a contracted canteen or rental shop.

Energy use tracking is considered the first step in managing energy use. When establishing your energy tracking and reporting program, start by doing the following:

  • Map out business and operational processes to identify sources of energy use.
    • Note: Energy consumed by facilities or tenants on-site that are NOT owned or controlled by your facility should be excluded for your energy reporting in the Higg FEM. For example, energy consumed by an onsite canteen/food service provider that is not owned or controlled by your facility should be excluded.
  • Establish procedures to collect and track energy use data:
    • Use utility bills to determine the quantity of purchased electricity, steam and heat used.
    • Track other fuels used for onsite energy generation such as diesel in generators and coal in boilers owned or controlled by the facility.
    • Track fuels used for mobile combustion sources owned or controlled by the facility such as private cars and fork lifts.
    • Install sub-meters to track the amount of renewable energy generated, if renewable energy is generated in-house.
    • If estimation techniques are used, the calculation methodology should be clearly defined and be supported by verifiable data.
  • Record tracking data (e.g. daily, weekly, monthly consumption records) in a format that is easy to review [e.g. spreadsheet (e.g. Microsoft Excel) or similar data analytics program that allows export of data in a human readable format (e.g. Excel, csv)] and maintain relevant supporting evidence for review during verification.

Reporting Energy Data in Higg FEM

Before reporting energy data in the FEM, data quality checks should be performed to ensure that the data AND the processes used to collect and record the data are effective at producing accurate energy data.

Do:

  • Review source data (e.g. utility invoices, meter logs, etc) against aggregated totals to ensure it is accurate.
  • Compare the current year with historical data. Any significant changes (e.g. an increase or decrease of over 10%) should be attributable to known changes. If not, further investigation may be warranted.
  • Ensure the most recent and updated versions of data tracking spreadsheets are being used and that all automated calculations/formulas are correct.
  • Ensure the proper units are reported and verify any unit conversions from source data to reported data.
  • Review any assumption or estimation methodology/calculations to ensure accuracy
  • Add notes in the “Provide any additional comments” field to describe any data assumptions, estimation methodology, or other relevant comments on the data for a particular source.

Do Not:

  • Report data that is not accurate (e.g. the data source is unknown or has not been verified).
  • Report estimated data if it is not supported by verifiable and reasonably accurate estimation methodology and data (e.g. engineering calculations).

Energy FAQ

  1. What is the difference between diesel and diesel oil?
    Diesel refers to diesel used for generator or vehicle while diesel oil refers to oil used for heating/ other engineering devices.
  2. What is the difference between petrol and gasoline?
    Petrol and gasoline are the same.
  3. What is a solar photovoltaic system (Solar PV)?
    Solar photovoltaic system is a system to convert sun’s radiation into electricity supply. Therefore, solar heating system should not be considered as solar photovoltaic.
  4. What is the correct energy source category for fabric scrap?
    Fabric scrap is made of cellulose which should be considered as biomass. Since there is no specific category for fabric scrap under biomass, it can be categorized as “Biomass – Specific type not known”.
  5. How to convert steam from metric ton to the units we have on the platform?
    Steam can be reported in megajoule (MJ) according to the following formula.
    Steam (MJ) = Steam (metric ton) x 1000 (kg/ metric ton) x Specific enthalpy of steam (MJ/kg) while specific enthalpy of steam depends on the boiler pressure. (Please refer to the steam table: https://www.engineeringtoolbox.com/saturated-steam-properties-d_457.html)
    Example:
    How many megajoule is 200 metric ton of steam in 7 bar boiler equal to?
    Specific enthalpy of steam under boiler pressure of 7 bar = 2.762 MJ/kg
    Steam (MJ) = Steam (metric ton) x 1000 (kg/ metric ton) x Specific enthalpy of steam (MJ/kg)
    = 200 x 1000 x 2.762 = 552,400 MJ
 

How This Will Be Verified:

When verifying a facility’s energy data, Verifiers must review all aspects of the facility’s energy tracking program that could produce inaccuracies including:

  • The initial data collection processes and data sources (e.g., invoices, on-site meters, metering logs, etc.); and
  • The process and tools used to aggregate the data (e.g. spreadsheet calculations, unit conversions, etc.)

If any inconsistencies or errors are noted, the reported information must be corrected where possible and detailed comments should be included in the Verification Data field.

Full Points

  • Documentation Required:
  • Frequency and method of measurement for all sources of energy
  • Electricity, fuel, steam and other energy consumption records (e.g. monthly bills and annual consumption records; metering records compiled in a spreadsheet (e.g. Excel) is ok as long as the metering records are available for review as well) whose totals match the reported answers to all questions answered.
  • Meter calibration records where applicable (e.g. as per manufacturer’s specifications)
  • Estimation methodology documented where applicable
  • All energy sources at the facility are tracked in full. This means that all sources listed in the Level 1 table have complete answers in all columns that are accurate.

 

  • Interview Questions to Ask:
  • Discussion with Management:
    • Management is aware of laws and regulations, where applicable, concerning energy use, transport and GHG emissions?
    • Management provides the appropriate resources to ensure that applicable laws and regulations are maintained?
    • Is the facility meeting local requirements regarding energy consumption and documentation?
  • Key Employees:
  • Key Employees are aware of the facility’s energy data tracking program and how data quality is maintained
  • Key Employees are aware of energy use and greenhouse gas emissions permit/license requirements, where applicable?
  • Employees have access to, and understand, energy use, transport and greenhouse gas emissions procedures, where appropriate?

 

  • Inspection – Things to Physically Look For:
  • Onsite meters
  • Equipment related to energy (production or energy consuming)
    • Maintenance (appears to be well maintained?)
    • Any leaks (of steam for example?)
  • Take pictures of energy related equipment

Partial Points

  • Same requirements as for “Full Points” above for at least one energy source at the facility. This must be tracked in full.  This means that at least one (but not all) energy sources listed in the Question 1 table have complete answers in all columns and there is evidence to support all of the answers.

This question can be used to inform responses to The Sustainability Consortium’s Home and Apparel Textiles Toolkit. The Greenhouse Gas Emissions Intensity – Manufacturing Key Performance Indicator asks respondents for the greenhouse gas emissions intensity of final manufacturing facilities. The facility data can be aggregated by brands to answer TSC’s question. The Greenhouse Gas Emissions – Supply Chain Key Performance Indicator asks respondents if Scope 1 and 2 greenhouse gas emissions were reported by fabric manufacturing facilities. The facility data can be aggregated by brands to answer TSC’s question.

Energy Use & GHG – Level 2

Questions

If yes, select all sources of energy for which your facility has set a baseline.

  • Source
  • Have you set a baseline for this source?
  • Is the baseline absolute or normalized?
  • What is the baseline quantity?
  • Unit of Measure
  • Enter the baseline year
  • How was your baseline calculated?
  • Was the baseline verified?

Suggested Upload: A description of how the baseline was calculated (uploading annual consumption records is NOT required, however they should be available for the verifier to review at the time of verification).

What is the intent of the question?

In order to demonstrate improvements or energy reductions, it is important to know what your starting point is. Setting a baseline (i.e. the annual performance of a set parameter at a defined base year) enables you to have a clear reference point for ongoing energy performance tracking and target setting.

Technical Guidance:

A “baseline” is a starting point or benchmark that you can use to compare yourself against over time.

In the Higg FEM, baselines can be “absolute” (total consumption for a reporting year. e.g. 1,500,000 kWh per year) or “normalized” to a product or operational metric (e.g. 0.15 kWh per unit of production). Data normalization is recommended to account for operational fluctuations as this provides for better year-over-year comparison of data and therefore more useful, and actionable analytics.

When establishing a baseline, be sure to do the following:

  • Confirm the energy source data is stable, and sufficient to be used to determine a baseline. In the Higg FEM, a baseline should generally comprise of a full calendar year’s data.
    • Note: If your factory has undergone major structural or operational changes such as acquisition or changes in product type, in general, you should establish or reset a baseline after those changes have been completed.
  • Determine if the baseline will be Absolute or Normalized (Normalized baselines are preferred)
  • Verify the source data and normalizing metrics data is accurate.
    • Energy and production volume data from previous Higg FEM 3.0 verifications, internal or external audits conducted by qualified personnel are acceptable sources of data verification.
  • Apply the appropriate baseline metric (i.e., per year for absolute OR divide by the chosen normalizing metric 1,500,000 kWh per 1,000,000 pieces = 1.5kWh/piece)
    • Note: For energy consumption that is not related to production, other normalizing metrics should be used where appropriate (e.g. Natural gas consumption in the canteen can be normalized per meal served or per worker)

Note: If the baseline is used to evaluate performance against a target, the baseline should remain unchanged.

Reporting baseline data in Higg FEM:

Do:

  • Review source data and raw normalizing metric data (utility invoices, meter logs, production quantity, etc.) against aggregated totals used to determine the baseline(s) to ensure they are accurate. (e.g. double check monthly electricity consumption records to ensure they match the annual consumption quantities used to calculate the baseline).
  • Select the appropriate baseline type in the FEM – Absolute or Normalized.
  • Ensure the proper units are reported and verify any unit conversions from source data to reported data.
  • Enter the baseline year. This is the year the baseline data represents.
  • Provide sufficient details on how the baseline was calculated (e.g. electricity consumption was normalized per meter of fabric produced).
  • Only select Yes to the question “Was the baseline verified?” if the baseline data was fully verified in a previous Higg FEM 3.0 verifications, or by an internal or external audit conducted by qualified personnel.

Do Not:

  • Report a baseline that is not accurate (e.g. the data source is unknown or has not been verified)
  • Report a baseline that is based on insufficient data (e.g., not a full year’s data).
  • Report an estimated baseline if it is not supported by verifiable and accurate estimation methodology and data (e.g. engineering calculations).

How This Will Be Verified:

When verifying a facility’s baselines, Verifiers must review:

  • All source data (utility invoices, metering logs, production quantity) and aggregated data totals for the baseline year; and/or
  • Records of baseline data verification where available (e.g., previous Higg Verification, data quality review, internal or external audits, etc.)

If any inconsistencies or errors are noted, the reported information must be corrected where possible and detailed comments should be included in the Verification Data field.

Yes

  • Documentation Required:
  • Description/Methodology showing how the baseline was calculated.
  • Documentation that shows the baseline matches consumption records for the year the baseline was set.
  • Ability to demonstrate how baseline data was validated (e.g., used Higg FEM 3.0 verified data, used internal/external validation process)
  • Interview Questions to Ask:
  • Discussion with the team responsible for managing the metrics. The team must clearly explain and demonstrate how baseline data was calculated and validated (e.g., used Higg FEM 3.0 verified data, used internal validation process, external audit, etc.)

Upload the methodology for identifying the highest energy use factors

What are the highest energy use factors at your facility?

These can be any factors in production such as machines, processes, or sections

Suggested Uploads: a) Ranking of processes, services, or operations that consume the most energy (with energy consumption values); b) Copy of an energy audit conducted by an internal or external energy management specialist (if available)

It is important to understand what influences energy use the most in your facility. This allows you to strategically target those factors in order to improve energy efficiency and/or greenhouse gas emissions.

Answer Yes only if you have documented records and methodology to identify the highest factors of energy use on-site (e.g., processes, machines, operations, etc.).

What is the intent of the question?

The intent is to have the facility complete an entire-facility analysis to evaluate the amount and sources of energy in all places where the energy is used (i.e. processes, lighting, HVAC, boiler, etc.). The intent of this question is to have the facility demonstrate they strategically prioritize operations or processes with the highest energy consumption for energy efficiency programs or with plans to replace the energy source with renewable energy.

 

For sustainability efforts to mature, a facility must identify and rank its largest energy consuming operation or processes within the facility boundary. Once a facility has an understanding of what operations or processes consume the most energy, it can strategically reduce the energy consumption by prioritizing and targeting those operations or processes, or replacing the energy source with renewable energy. A facility must be able to measure uses before they can be effectively managed.

Technical Guidance:

A facility can evaluate the most energy consuming processes and operations based on mapping out its production processes, together with machinery list, associated energy use parameters, energy sources (i.e. fuel oil, natural gas, electricity, etc.) and energy usage data. Below are common operations or processes which influence energy use:

  • Boilers and generators
  • Compressed air system
  • Motors
  • Old or inefficient equipment
  • Equipment location

Here are some ways to get started:

  • Identifying individual machines that consume energy by creating a machinery list
  • Analyzing the power ratings of equipment multiplied by the hours of operation to estimate energy use
  • Installing electronic devices to track energy usage over time (e.g., data loggers, data recorders, or sub-meters)
  • Hiring a certified professional energy engineer to conduct an energy assessment
  • Consolidate the energy consumption per manufacturing process/ machine type and sort them from highest consumption to lowest consumption

Any of the options listed above on how to get started in identifying your highest energy consuming operations or processes are acceptable.

How This Will Be Verified:

Yes

  • Documentation Required:

(Provide at least one complete and up-to-date document such as):

  • Records of onsite energy influences (e.g. list of machines and energy ratings/consumption)
    • Recent energy audits conducted by a qualified energy auditor (internal or external)
    • Consumption records accurately analyzed, and operations or processes categorized from highest consumption to lowest
    • Capitalization plans to replace old equipment for new energy-efficient equipment

 

  • Interview Questions to Ask:
    • Understanding of energy ratings of equipment
    • Relevant employees have a general understanding of how they, and their site’s activities and operations, can impact energy use and greenhouse gas emissions

 

  • Inspection – Things to Physically Look For:
    • Equipment used in the factory
    • Presence of data loggers to track energy use over time
    • Other energy sources not listed in energy record list
  • Source
  • Have you set a target for this source?
  • What is your target for change in energy use from this source? (Enter a negative percentage for a reduction target, and a positive percentage for an increase target.)
  • Unit of Measure
  • Enter the target year
  • Is this a normalized or absolute target?
  • Describe the measures planned to achieve this target (how you will achieve the target)

Suggested upload: consolidated targets for different energy sources

You will receive Full Points if you set targets for energy sources that make up 80% or more of your total energy use.

You will receive Partial Points if you set targets for energy sources that make up 50-79% of your total energy use. This is to reward you for aiming to improve your most significant sources of energy use which will maximize environmental impact.

Please Note: Full or Partial points are automatically calculated based on which sources you report having an improvement target for.

Make sure to enter a negative percentage for a reduction target (e.g. -5 for a 5% reduction), and a positive percentage for an increased usage target (e.g. 5 for a 5% increase in usage).  If you switch your energy sources from one to another (e.g. replacing electricity with solar PV), please set a positive target for solar PV to indicate you utilize more energy generated from solar PV and set a negative target for electricity to indicate you target to use less of this source.

What is the intent of the question?

For facilities to have established at least one energy reduction target for your facility.

Sustainable companies continually work towards minimizing their environmental impacts. Now that you know how much energy your facility uses (your “baseline”), and your greatest drivers of energy use, you are ready to set targets to reduce your energy use.

Targets can be long-term or short-term (Short-term = less than 3 years, Long-term = more than 3 years). Once set, progress should be reviewed at least quarterly to ensure adjustments are made as needed to stay on track to realize success.

Technical Guidance:

A target can use absolute or normalized metrics to drive quantifiable improvements by a set date compared to the baseline. For Higg FEM, reduction targets may be normalized to the annual volume unit (selected in Site Info section: Annual volume unit) or another appropriate operational metric. A normalized target shows you when progress is real, rather than being a result of business changes such as reductions in production. An example of a normalized target is kWh of energy used for the production of one kilogram of sellable product (kWh/kg).

The FEM requires that formal targets be set in order to be able to answer Yes to this question. When establishing formal improvement targets, be sure to do the following:

  • Base the target on a formal evaluation of improvement opportunities and actions (e.g. equipment replacement or upgrades) to calculate the amount of energy that can be reduced.
    • For example: Setting a target based on an evaluation of a boiler replacement that is expected to provide 10% reduction in annual energy consumption per piece that was calculated based on a formal review of the boiler manufacturer’s specifications and the expected operating load.
  • Define the exact target quantity, expressed as a percent (e.g. reduce normalized electricity consumption per piece by 5%). This must be based on a formal evaluation as noted above.
  • Determine if the target will be Absolute or Normalized to a production or operating metric.
  • Define the start date (i.e., “baseline”) of the target.
  • Define the end date of the target, meaning the intended completion date of the required improvements.
  • Define the appropriate measurement units.
  • Establish procedures to review the target. This review should include an evaluation of the actions taken and progress on reaching the defined target. Quarterly reviews are recommended.
  • Ensure the target is relevant to reducing the site’s energy use (e.g. focuses on the most significant energy use areas at the site)

Reporting Targets in Higg FEM:

Do:

  • Review the target to ensure all aspects noted above are covered and that the information is accurate.
  • Enter the targeted reduction or improvement as a percentage. Make sure to enter a negative percentage for a reduction target (e.g. -5 for a 5% reduction), and a positive percentage for an increased usage target (e.g. 5 for a 5% increase in usage).
  • Select the appropriate target type in the FEM – Absolute or Normalized.
  • Provide sufficient details on how the target will be met in the “Describe the measures planned to achieve this target:” field (e.g. Achieve a 3% reduction in normalized electricity consumption by replacing 500 T8 lights with LED lights).

 

Do Not:

  • Report a target that is not accurate (e.g. the data source is unknown or has not been verified)
  • Report a target that is based on insufficient data. (e.g. a reduction target that is not based on a formal evaluation of options such as equipment upgrades to meet the stated target OR actions to meet the target have not been defined.)
  • Report an estimated target if it is not supported by verifiable and accurate estimation methodology and data (e.g. engineering calculations).

How This Will Be Verified:

When verifying a facility’s targets, Verifiers must review:

  • All supporting evidence (e.g. calculations, energy use and baselines, new/proposed equipment specifications, etc) to verify target is based on a formal evaluation of improvement opportunities.
  • Facility operations in relation to its energy sources and use to ensure targets and opportunities evaluated are relevant to the site’s energy use.

 

If any inconsistencies or errors are noted, the reported information must be corrected where possible and detailed comments should be included in the Verification Data field.

Full Points

  • Documentation Required:
    • Supporting documentation that demonstrate targets are based on a formal evaluation of reductions/improvement opportunities (e.g. calculations, energy use/GHG data and baselines, new/proposed equipment specifications, etc)
    • Supporting methodology and calculations to show how the target(s) was calculated
    • List of measures/actions to be taken to achieve the target
    • Target communicated to the relevant employees and linked to the major energy usage of the facility identified in Question 1.
      • Communication methods may include: Meeting, bulletin board posting, newsletter release, any other form of written communication to employees which are involved with the tasks as they relate to energy usage in the facility.
    • Interview Questions to Ask:
      • Discussion with the team responsible for managing the targets. The team must clearly explain and demonstrate how the target was determined (e.g. based on calculated reductions from evaluations of improvement opportunities) and how the target is monitored and reviewed.
      • Management actively promotes or endorses proactive energy conservation.
      • Management is driving continuous improvement and reviewing on-site energy reduction targets on an annual basis.
      • Energy consumption and greenhouse gas emissions data is made available to relevant internal and/or external stakeholders in order to drive accountability for achieving targets.

Partial Points

  • Same requirements as for “Yes” answer but for sources (or one source) totalling 79% or less of energy use (this data is found in the % contribution calculation in Question 1)

Example of how points are awarded for this question:

If a facility’s energy sources and use were as follows:

  • 80% of energy used is from Purchased Electricity;
  • 5% is from diesel fuel for back-up generators; and
  • 5% is from LPG used in the Canteen

To achieve full points, the facility would need to have targets that (at minimum) address purchased electricity because this source represents 80% of the facility’s total energy use.

If targets were set for diesel fuel and/or LPG only, the facility can still select Yes to the main question for setting targets, however no points would be awarded as these sources make up less than 50% of the facility’s total energy use.

Note that the targeted or actual energy reduction amounts (i.e. in kWh) are not used in determining the points awarded. 

The goal of this is to reward facilities for aiming to reduce the most significant sources of energy use and GHG emissions onsite which will maximize reductions in environmental impact.

  • Enter the base year
  • What is your target for reducing your facility’s overall GHG emissions? (Enter a negative percentage for a reduction target.)
  • Unit of Measure
  • Enter the target year
  • Is this a normalized or absolute target?
  • Describe the measures planned to achieve this target (how you will achieve the target)

Suggested upload: consolidated targets of different activities that would reduce GHG emissions

This question is not scored in both 2020 Higg FEM and 2021 Higg FEM reporting year. Score may be applied in future reporting years.

Make sure to enter a negative percentage for a reduction target (e.g. -5 for a 5% reduction).

What is the intent of the question?

Sustainable companies continually work towards minimizing their environmental impacts. Now that you know how much GHG emissions your facility releases (your “baseline”), and your greatest drivers of energy use in Energy Question 1, you are ready to set targets to reduce your overall GHG emissions.

Targets can be long-term or short-term (Short-term = less than 3 years, Long-term = more than 3 years). Once set, progress should be reviewed at least quarterly to ensure adjustments are made as needed to stay on track to realize success.

Technical Guidance:

A target can use absolute or normalized metrics to drive quantifiable improvements by a set date compared to the baseline. For Higg FEM, reduction targets may be normalized to the annual volume unit (selected in Site Info section: Annual volume unit) or another appropriate operational metric. A normalized target shows you when progress is real, rather than being a result of business changes such as reductions in production. An example of a normalized target is kgCO2e released during production of one kilogram of sellable product (kg CO2e/unit).

The FEM requires that formal targets be set in order to be able to answer Yes to this question. When establishing formal improvement targets, be sure to do the following:

  • Base the target on a formal evaluation of improvement opportunities and actions (e.g. switching to cleaner fuels).
    • For example: Setting a target based on an evaluation of a boiler replacement that is expected to provide 10% reduction in annual GHG emission that was calculated based on a formal review of the boiler manufacturer’s specifications and the expected operating load.
  • Define the exact target quantity, expressed as a percent (e.g. reduce normalized GHG emissions (kgCO2e/unit) by 4%). This must be based on a formal evaluation as noted above.
  • Determine if the target will be Absolute or Normalized to a production or operating metric.
  • Define the start date (i.e., “baseline”) of the target.
  • Define the end date of the target, meaning the intended completion date of the required improvements.
  • Define the appropriate measurement units.
  • Establish procedures to review the target. This review should include an evaluation of the actions taken and progress on reaching the defined target. Quarterly reviews are recommended.
  • Ensure the target is relevant to reducing the site’s overall GHG emissions (e.g. focuses on the highest GHG emissions areas at the site)

Reporting Targets in Higg FEM:

Do:

  • Review the target to ensure all aspects noted above are covered and that the information is accurate.
  • Enter the targeted reduction or improvement as a percentage. Make sure to enter a negative percentage for a reduction target (e.g. -5 for a 5% reduction).
  • Select the appropriate target type in the FEM – Absolute or Normalized.
  • Provide sufficient details on how the target will be met in the “Describe the measures planned to achieve this target:” field (e.g. Reduce normalized GHG emissions (kgCO2e/unit) by 4% by switching to natural gas-fired boilers).

Do Not:

  • Report a target that is not accurate (e.g. the data source is unknown or has not been verified)
  • Report a target that is based on insufficient data. (e.g. a reduction target that is not based on a formal evaluation of options such as equipment upgrades/switching fuel sources to meet the stated target OR actions to meet the target have not been defined.)
  • Report an estimated target if it is not supported by verifiable and accurate estimation methodology and data (e.g. engineering calculations).

How This Will Be Verified:

When verifying a facility’s GHG reduction targets, Verifiers must review:

  • All supporting evidence (e.g. calculations, GHG inventories and baselines, new/proposed equipment specifications, etc) to verify target is based on a formal evaluation of improvement opportunities.
  • Facility operations in relation to its GHG emissions to ensure targets and opportunities evaluated are relevant to the site’s GHG emissions.

 

If any inconsistencies or errors are noted, the reported information must be corrected where possible and detailed comments should be included in the Verification Data field.

Yes

  • Documentation Required:
    • Supporting documentation that demonstrate targets are based on a formal evaluation of reductions/improvement opportunities (e.g. calculations, energy use/GHG data and baselines, new/proposed equipment specifications, etc)
    • Supporting methodology and calculations to show how the target(s) was calculated
    • List of measures/actions to be taken to achieve the target

 

  • Interview Questions to Ask:
    • Discussion with the team responsible for managing the targets. The team must clearly explain and demonstrate how the target was determined (e.g. based on calculated reductions from evaluations of improvement opportunities) and how the target is monitored and reviewed.
    • Management actively promotes or endorses proactive GHG reduction.
    • Management is driving continuous improvement and reviewing emission targets on an annual basis.
    • Greenhouse Gas emissions data is made available to relevant internal and/or external stakeholders in order to drive accountability for achieving targets.

Upload a copy of the plan

Improvements may be made by reducing energy use or improving GHG emissions by replacing existing energy sources with renewable sources.

Answer Yes if you have an implementation plan in place that demonstrates you are taking action to achieve your targeted reductions.

Answer Partial Yes if you have a plan but have not started on all action items.

You may download a sample implementation plan here

What is the intent of the question?

The intent is for your facility to create an action plan for reducing energy use and/or GHG emissions prioritizing by the highest energy consuming processes identified in Question 3.

Target-setting is an important step in systematically managing energy use, but your site must take action to make reductions. Having an implementation plan demonstrates the action you are taking to achieve your targeted reductions. Some facilities may have an implementation plan without having set targets.

Technical Guidance:

This question is identifying how the facility supports its target with clear actions. This is an opportunity to document all business processes for energy reduction projects planned or happening at the facility.

Steps for action should include:

  1. Identify energy saving opportunities through internal assessment by qualified personnel or third-party energy assessment
  2. Evaluate energy saving alternatives and calculate return on investment
  3. Approve funds/budget for chosen solution
  4. Implement the solution and realize reductions
  5. Conduct regular review on the action plan to check progress

How to create an implementation plan?

Management commitment and employee awareness and participation are needed to ensure improvement opportunities can be identified, solutions can be proposed, and changes can be made using capital or expense dollars if necessary, to successfully implement proposed solutions. Often this can involve third party consultation, literature and technology research, design firms, and pilot testing among many other potential paths toward installation of solutions. All activity related to meeting targets should be part of an implementation plan to ensure organized and coordinated progress steps take place from the start.

How to report Energy Recovery?

Energy recovery (or reusing waste heat) is a practice or action that reduces the need for energy that you’ve already consumed. If you practice energy recovery, please list it in your implementation plan to ensure your efficiency efforts are called out.

How to reduce GHG Emissions?

In addition to reporting energy efficiency actions, you can also report actions which contribute to GHG reduction. For example, if your facility has switched to lower carbon energy sources or has taken other measures to reduce GHG emissions besides reducing energy use, you can also report in your action plan.

Where to go for more info:

How This Will Be Verified:

Yes

  • Documentation Required:
  • Energy reduction plan listing specific projects, target reductions, dates, and progress that covers 80% or more of total energy use and/or
    • Energy audit or assessment done by a qualified energy auditor (internal or external) identifying energy reduction opportunities and implementation dates. A qualified energy auditor should be trained / experienced with the ISO 50002:2014 standard related to Energy auditing.

 

  • Interview Questions to Ask:
    • Management can articulate the plan including projects being implemented, their completion status, and their associated benefits

 

  • Inspection – Things to Physically Look For:
    • Projects identified in the plan that are completed or in progress

Partial Yes

  • Same requirements as for “Yes” answer but for sources (or one source) totalling 50-79% of total energy use
  • Source
  • Has your facility improved energy consumption for this source compared with its baseline?
  • Select a baseline year
  • Indicate your facility’s change in energy use from this source (quantity, unit of measure, Percent Change)
  • Is this normalized or absolute?
  • Describe the strategies used to achieve this improvement

Suggested Upload: Energy tracking reports showing reductions for energy sources from last calendar year. Uploading utility bills is NOT required, however they should be available for the verifier to review at the time of verification.

You will receive full points if you made reductions in the last calendar year for energy sources that make up 80% or more of your total energy use.

You will receive partial points if you made reductions in the last calendar year for energy sources that make up 50-79% of your total energy use. This is to reward you for reducing your greatest sources of energy use which will maximize environmental impact.

Please select No as your answer option for that source if you have no reductions in the last calendar year or are unable to state what your reductions are for a source.

What is the intent of the question?

Taking action to reduce impacts on site is the primary important goal for this assessment.

Sustainability is a journey of continuous improvement. Success is the result of extensive work involved in tracking, setting targets, and performing to implementation plans to meet targets. This question provides an opportunity to report quantifiable energy conservation success for the reporting year. By tracking success over the reporting year, a facility proves through results the commitment made towards sustainability.

Technical Guidance:

Improvements can be absolute or normalized, however it is recommended that you show normalized reductions such as “electricity used was reduced by 0.015 kWh/unit in the reporting year.” This is because normalized metrics show real improvement rather than reductions from business changes such as reduced production.

The FEM requires that year over year improvements be demonstrated in order to be able to answer Yes to this question. When evaluating your energy improvements, be sure to do the following:

  • Review the energy source data and aggregated total to ensure the data and any automated calculations are accurate.
  • Review the actions taken to make improvements and determine if they have resulted in measurable improvements by comparing the data with historical energy use data to determine the improvement quantity. Note: Historical data accuracy should also be verified.
    • For example: Optimizing the facility’s compressed air system and reducing the operating pressure by 5psi produced a 5.3% year over year reduction in energy consumed by air compressors on-site. This was measured by the sub-meters installed in compressor rooms.

Reporting Improvements in Higg FEM:

Do:

  • Review the improvement data to ensure all aspects noted above are covered and that the information is accurate.
  • Enter the improvement quantity either as an absolute or normalized value. This is the year over year change in energy use for the source. (e.g. previous year’s consumption – reporting year consumption = the change in energy use) Make sure to enter a negative number for a reduction (e.g. -0.05 for a normalized reduction of 0.05 kWh/unit) and a positive number for an increase (e.g.  03 for a normalized increase in renewable energy use of  0.03 kWh/unit)
  • Select the appropriate units for the improvement. (If the appropriate units are not available, list the units in the “Describe the strategies used to achieve this improvement:” field)
  • Input the percent (%) change in the energy use of the source from the previous year. Make sure to enter a negative percentage for a reduction (e.g. -5 for a 5% reduction), and a positive percentage for increased usage (e.g. 5 for a 5% increase in usage).
  • Provide sufficient details in the “Describe the strategies used to achieve this improvement:” field (e.g. Normalized electricity consumption was reduced by optimizing the facility’s compressed air system).

 

Do Not:

  • Report improvements that are not accurate (e.g. the data source is unknown or has not been verified)
  • Report improvement that were not achieved in the FEM reporting year (e.g. historical improvements achieved more than 1 year ago should not be reported)
  • Report an improvement that is absolute and relates to a decrease in production or reduced facility operations. This is why data normalization is important.
  • Report an improvement that is based on insufficient data. (e.g. an overall reduction was achieved but this was not related to measurable or defined actions taken to achieve the reduction). This is particularly important when the improvements are marginal (e.g. less that 1-2%) and possibly attributable to measurement/ tracking errors and/or operational variability.

NOTE: This question does NOT provide scoring based on the actual % or quantity of improvement because a facility may be working on the last 5-10% of energy efficiency which is hard to make up. We don’t want to falsely reward beginners and give fewer points to leaders

How This Will Be Verified:

When verifying a facility’s improvements, Verifiers must review:

  • All supporting evidence (e.g. energy use data and baselines, etc.) to verify the reported improvement quantity is accurate and attributable to measurable actions taken to improve energy use.
  • The implemented changes or actions taken to achieve the improvements.

 

If any inconsistencies or errors are noted, the reported information must be corrected where possible and detailed comments should be included in the Verification Data field.

Full Points

  • Documentation Required:
  • Energy tracking reports and consumption records showing reductions for energy sources that make up more than 80% of your total energy use
  • Evidence of new equipment purchases or efficiency improvements that demonstrate that energy reductions weren’t made solely from a decline in production, or number of employees, or change in processes.

 

  • Interview Questions to Ask:
    • Discussion with the team responsible for managing energy use. The team must clearly explain and demonstrate how the improvement was achieved (e.g. what actions were taken, and how this change was measured and calculated).
    • Management are proactively driving continuous improvement reviewing energy consumption reduction targets on a regular basis?

 

  • Inspection – Things to Physically Look For:
    • Progress against the components of the project plan (e.g. lighting or equipment replacement)
    • Rebates received from energy efficiency projects (if applicable)
    • Awards or certificates for energy efficiency or renewable energy achievements (e.g. green building certifications, Energy Star certification, etc.)

Partial Points

  • Same requirements as for “yes” above but for energy sources (or one source) that make up less than 79% of your total energy use

Energy Use & GHG – Level 3

Questions

Report your facility’s annual Scope 3 GHG emissions in co2e here

Describe your Scope 3 calculation here

Suggested Upload: documentation on calculation of scope 3 GHG emissions in the reporting year

This question is not scored. The GHG Protocol categorizes emissions into three broad scopes:

  • Scope 1: All direct GHG emissions. (this was covered in Level 1 energy tracking)
  • Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam. (this was covered in Level 1 energy tracking)
  • Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc. (Source: https://ghgprotocol.org )

Calculating Scope 3 emissions for your facility or business is an advanced practice that can be noted in this question. However, this question is unscored because Higg only gives Level 3 points for taking action that improves environmental impact directly. Calculating Scope 3 emissions can provide useful insights and/or support reporting, but it does not guarantee any environmental improvement has occurred.

What is the intent of the question?

Calculating Scope 3 emissions for factory operations is particularly important for the manufacturing industry because it provides insights on the environmental impact associated with the manufacturing and consumption of the product, both upstream and downstream operations. All upstream and downstream business activities (except in-house manufacturing) could be captured to calculate the Scope 3 footprint.

Technical Guidance:

GHG Protocol Corporate Value Chain (Scope 3) Standard allows companies to assess the emission impact of its entire value chain. The Scope 3 standard focuses on the following:

  • Upstream emissions which are indirect GHG emissions related to purchased or acquired goods and services.
  • Downstream emissions which are indirect GHG emissions related to sold goods and services.

In the Standard, upstream and downstream sources are further subdivided into 15 main categories as follows:

Upstream Scope 3 Emission Sources

1. Purchased goods and services

2. Capital goods

3. Fuel- and energy-related activities

(not included in scope 1 or scope 2)

4. Upstream transportation and distribution

5. Waste generated in operations

6. Business travel

7. Employee commuting

8. Upstream leased assets

Downstream Scope 3 Emission Sources

9. Downstream transportation and distribution

10. Processing of sold products

11. Use of sold products

12. End-of-life treatment of sold products

13. Downstream leased assets

14. Franchises

15. Investments

The GHG Protocol Scope 3 Evaluator (http://www.ghgprotocol.org/scope-3-evaluator ) is a tool that can be used to help identify and estimate GHG emissions from Scope 3 Sources.

In order to be able to answer Yes to this question, Scope 3 GHG must be calculated and reported in accordance with the Corporate Value Chain (Scope 3) Standard.  This includes:

  • Calculating GHG emissions from all Scope 3 emissions sources (as defined by Chapter 5 & 6 of the Standard)
  • Scope 3 emissions are reported in accordance with the requirements defined in Chapter 11 of the Standard including a list of scope 3 activities excluded from the reporting with justification for their exclusion.

How This Will Be Verified:

When verifying a facility’s Scope 3 GHG emission reporting, Verifiers must review:

  • The reporting methodology and scope to ensure that it aligns with the requirements outlined in the Corporate Value Chain (Scope 3) Standard. This includes:
    • The minimum reporting boundaries/requirements for scope 3 sources and categories
    • Required documentation for any excluded scope 3 categories or activities excluded from the inventory that justifies their exclusion.

Yes

  • Documentation Required:
  • Records of sources for calculating Scope 3 GHG emissions in the last calendar year
  • Supporting evidence to demonstrate GHG emissions from all relevant Scope 3 emissions sources have been calculated (as defined by Chapter 5 of the Standard)
    • Note: Basic reporting of only a select number of scope 3 sources without following the reporting requirements outlined in Chapter 11 of the Standard does not meet the expectations for a Yes Answer (e.g. informal tracking/reporting of emissions from 1 or 2 sources of Scope 3 emissions)

 

  • Interview Questions to Ask:
  • Management understands the methodology and requirement for calculating Scope 3 GHG emissions
  • Emissions have been reported through the Carbon Disclosure Project or other external reporting (optional)

If No, Is your facility preparing to set a Science-Based Target according to the SBTi?

Suggested Upload: documentation to show you have set a Science-Based Target according to the SBTi in the reporting year

This question is not scored in both 2020 Higg FEM and 2021 Higg FEM reporting year. Score may be applied in future reporting years.

What is the intent of the question?

The intent of this question is for companies to demonstrate that they have established science-based greenhouse gas (GHG) targets that align with the Science Based Targets Initiative (SBTi). https://sciencebasedtargets.org/

Technical Guidance:

GHG Targets are considered “science-based” if they align with the latest climate science and are designed to meet the goals of the Paris Agreement which seeks to limit GHG emissions and global warming.

To be able to answer Yes to this question, your company’s targets must align with the SBTi’s requirements which includes:

  • Company commitment to setting Science-Based Targets in line with the SBTi. Formal commitment to the SBTi is required (e.g. submitting the commitment letter and paying the applicable fees)
  • Setting your company’s GHG target and having it validated and approved by the SBTi.

Full details on what is required to set a Science-Based Target can be found here: https://sciencebasedtargets.org/step-by-step-guide/

If your company has committed to the SBTi but has not yet established or submitted a target for approval, or if your target is under review, you should answer Yes to the question “Is your facility preparing to set a Science-Based Target according to the SBTi?”

Information on companies who have committed and set targets that are validated and approved by the SBTi can be found here:  https://sciencebasedtargets.org/companies-taking-action/

How This Will Be Verified:

Yes

  • Documentation Required:
  • Documentation to show you have set a Science-Based Target according to the SBTi in the reporting year.
  • The company’s target is listed on the SBTi website. This must indicate the company’s target is set (e.g. company status is listed as “Target Set”) https://sciencebasedtargets.org/companies-taking-action/

 

Note: If the company has submitted a commitment letter and paid the applicable fees (i.e. the company’s status on the SBTi website is listed as “Committed”), but has not yet established or submitted a target for approval, or if the target is under review. The answer to the question “Is your facility preparing to set a Science-Based Target according to the SBTi?” should be Yes.

 

  • Interview Questions to Ask:
  • Discussion with the team responsible for managing the targets. The team must clearly explain and demonstrate how the target was determined and how the target is monitored and reviewed.
  • Management actively promotes or endorses proactive GHG reduction.
  • Management is driving continuous improvement and reviewing emission targets on an annual basis.
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