Businesses are playing crucial role in CO2 reduction. Image: William Warby / Unsplash
This is a famous quote by Peter F. Drucker, an Austrian-American consultant, educator, and author who contributed to modern businesses' philosophical and practical foundations.
Why should companies care about measuring the carbon footprint? A simple answer would be that measuring carbon footprint is starting point in CO2 reduction.
Following my previous blog post on CSRD (Corporate Sustainability Reporting Directive), one of the disclosures in CSRD is company climate change mitigation reporting. Reporting requires measuring the progress of the company's carbon footprint emissions reduction targets in 2030 and 2050. A carbon footprint measures are the total Greenhouse Gas (GHG) emissions caused directly and indirectly by a person, organisation, event, or product (The Carbon Trust, 2022). Furthermore, the Greenhouse Gas Protocol (GHG Protocol) is an accounting tool organisations and governments adopt to identify, quantify, and manage their GHG emissions. Protocol is the world’s most widely used GHG accounting standard (ibid).
Primary, GHG helps the company to understand its key emission sources and the opportunities for reduction. With GHG, the company can identify the initial targets, measure its progress, and develop a carbon reduction plan (e.g., energy savings (The Carbon Trust, 2022). Besides meeting the mandatory reporting requirements of climate change, companies that measure their carbon footprint increase brand value, are more attractive to potential customers and investors and are, with carbon emissions data, more transparent towards businesses, customers, and investors. Lastly, companies can use data to manage long-term business risks and track emissions reduction targets yearly. Targets should be scientific-evidence-based with a visibly defined pathway for GHG emissions reduction, decreasing climate change impacts and increasing business resistance.
We distinguish two types of footprints:
1. Organisational carbon footprint measuring the GHG emissions from the diverse activities in the company's industrial processes, but also the energy used in buildings, vehicles; and
2. Product carbon footprint measuring the GHG emissions throughout the product/services life cycle from the extraction of raw materials, manufacturing, usage, reuse, recycling, or disposal.
Before discussing the organisational carbon footprint calculation process, let us briefly discuss the GHG Protocol standard.
GHG Protocol with visualised Scope 1, Scope 2 and Scope 3. Image: The Carbon Trust (2022).
Scope 1 Direct emissions from activities under the organisation’s control, like manufacturing and process emissions and company vehicles.
Scope 2 Indirect emissions from any electricity, heat or steam company purchase and use. Although the company does not directly control the emissions, using the energy company is indirectly responsible for CO2 release. Footprint reduction can be made using electricity from regenerative resources in the product/service life cycle.
Usually, Scope 1 and 2 are more manageable for companies to undertake but more challenging for companies in Scope 3.
Scope 3 Other indirect emissions from outside the company’s direct control. For example, the company purchased goods (materials) and services, employee commuting and business travel, outsourced transportation, waste disposal and water consumption.
While preparing material for this blog, I came across a keynote presentation at Next Textile 2021 supply chain by Elaine Gardiner, Head of Sustainability Haglöfs, explaining the challenges that Haglöfs is facing to reduce CO2 emissions in their supply chain. Companies are required to report organisational footprints in Scope 1 and 2 emissions through GHG Protocol, while Scope 3 is more flexible. If your company is not reporting emissions yet, it is recommended to start doing it now, as here lie the commonly highest CO2 emissions.
This blog focus on the process of how calculating the organisational carbon footprint only. The Carbon Trust (2022) advises defining the methodology and robust approach to calculate company carbon emissions first. It is recommended to use the standard Greenhouse Gas Protocol; however, they exist several others ISO standards. Then, define clear organisational parts of measurements in the organisation and control approach. Organisational boundaries (for example, branches and rented assets) will determine the scopes you will consider (Scope 3), as different business models suit diverse footprinting methods in collecting the most relevant data. Third, manage and organise data (mileage, kWh, MJ); for scope 3, you must contact various suppliers to get accurate data. At this stage is also significant to recognise any data gaps and assumptions. Fourth, apply emission factors (tonnes of CO2) with the data collected multiplied by standard emission factors. The fifth step requires verifying and certifying findings by a third party, which is valuable, especially for investors, customers, and stakeholders. Last, one of the most important steps is to develop a plan for emission reduction, which is why measuring the company footprint is crucial in reducing emissions and removing GHG. Today, we need serious and ambitious actions where everyone needs to play their part.
Last, when measuring and reducing the carbon footprint, companies have to report and publish independently verified results internally and externally to grow ownership of results with employees, customers, stakeholders, and investors crucial for the company's CO2 emission reduction. Communication of organisational carbon footprint results requires transparency and consistency over the years while reporting organisational structure changes.
Starting to report a company's footprint emissions by adopting GHG Protocol can be a valuable practice for a company to adopt towards Corporate Sustainability Reporting Directive when this becomes obligatory.
References
- Haglöfs, (2022) Our climate commitment, available at https://www.haglofs.com/en/explore-haglofs/sustainability/climate
- Sustain Life (2022) Calculating scope 3 supply chain emissions from purchased goods & services | Recorded webinar, available at https://www.youtube.com/watch?v=HlZyCFov-Oc&list=PLIe24cfJlEM_7WQP5M0cUeyTkTnacH_gO&index=5
- The Carbon Trust (2022) A guide to carbon footprinting for businesses, https://ctprodstorageaccountp.blob.core.windows.net/prod-drupal-files/documents/resource/restricted/footprint-business-guide-compressed4.pdf
- Tex! By marketplace Borås (2022) Next Textile 2021 Supply Chain:ge - Elaine Gardiner Keynote speaker - Head of Sustainability Haglöfs available at https://www.youtube.com/watch?v=CKS7Az2kNc8
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