Calculating a company’s carbon footprint is an important step towards understanding and reducing its environmental impact. With rising awareness of climate change, measuring carbon emissions enables organizations to set emission reduction targets and implement strategies to meet sustainability goals.
This comprehensive guide examines key considerations when calculating a corporate carbon footprint and provides methodologies to quantify greenhouse gas (GHG) emissions accurately.
Overview of Carbon Footprinting
A carbon footprint measures the total GHG emissions caused directly and indirectly by an organization’s activities. It is expressed as a weight of carbon dioxide equivalent (CO2e) emitted. GHG emissions result from several sources:
Energy use from burning fossil fuels for electricity, heating, cooling, manufacturing processes etc. generates substantial emissions. Transportation activities like business travel, product distribution, employee commuting also contribute a large share of emissions. Waste disposal through landfilling, wastewater treatment and other methods leads to GHG release. Extracting, refining and processing raw materials has an emissions impact. Land use changes such as clearing land for offices, factories or materials carries a footprint.
Carbon footprinting enables companies to identify major emission sources, set reduction targets and track performance over time. It is key to managing climate impacts and risks in line with climate goals and regulations.
Uses of Corporate Carbon Footprints
Corporate carbon footprints serve several important functions:
- Sustainability reporting – Disclosing emissions data demonstrates commitment to reducing environmental footprint. This boosts brand reputation.
- Emissions auditing – Gaining detailed understanding of emissions profile helps identify focus areas to lower impacts.
- Regulatory compliance – Quantifying emissions aids compliance with carbon tax and emissions trading schemes in regulated markets.
- Supply chain engagement – Encouraging suppliers to measure and reduce their emissions can be done through procurement policies.
- Carbon neutrality – Residual emissions can be offset by supporting renewable energy and reforestation projects globally.
- Product carbon labeling – Calculating emissions of products and services allows consumers to make informed choices.
Key Steps to Calculate Carbon Footprint
Following these main steps allows a company to accurately quantify their GHG emissions:
Firstly, the goals and scope of the footprinting exercise must be established. Deciding the purpose and stakeholders who will use the results determines the level of detail required. Organizational and operational boundaries should be chosen – will it cover just core operations or the full value chain? The major GHG emissions to include are CO2, methane, nitrous oxide, refrigerants and industrial gases. The base year, reporting periods and timeline for assessments should align with business planning cycles.
Secondly, activity data relating to all sources of emissions within the defined scope must be collected. This involves obtaining primary data on energies used, materials consumed, waste generated and business travel. Data can be captured from utility bills, meter readings, travel logs and other sources. Suppliers may need to be engaged for supply chain emissions information. All data should be centralized into a sustainability platform for consistency.
Next, appropriate emissions factors are applied to the activity data to convert it into CO2e emissions. Factors vary by energy source, geographic location and time as scientific assessments improve. Using accurate, up-to-date emissions factors for each activity type is crucial – country or region-specific factors account for electricity generation mix. Reputable sources like EPA and IPCC provide benchmark factors.
The emissions factors are then multiplied by the activity data to calculate total emissions for each scope and source. The CO2e emissions are aggregated to give the total carbon footprint. Any uncertainties, assumptions and exclusions should be assessed. Both location-based and market-based emissions reporting should be accurate.
Finally, outcomes must be reported and used effectively. The total footprint and major hotspots are presented to senior management and published in sustainability reports demonstrating climate commitment. Science-based emission targets can be set, investments made in low carbon solutions and employees engaged through education and carbon reduction initiatives.
Setting Organizational Boundaries
An important step is defining which operations and facilities to include within the organizational boundary for emissions reporting.
The operational control approach includes 100% of emissions from operations over which the company has control. This reflects the full footprint of business activities.
The equity share approach accounts for emissions from operations according to the company’s percentage ownership share. This is suitable for joint ventures.
The financial control approach incorporates emissions based on the company’s percentage financial investment in the operation.
Choosing the approach that best represents the full impacts of operations is key, based on influence over joint ventures.
Choosing Operational Scopes
The Greenhouse Gas Protocol defines 3 emissions scopes to categorize direct and indirect emissions:
Scope 1 – Direct Emissions
Scope 1 covers emissions from sources owned or controlled by the company. This includes:
- Combustion of fuels in company facilities, vehicles and equipment.
- Manufacturing processes and chemical reactions.
- Leakages of refrigerants from air conditioning and refrigeration systems.
Scope 2 – Indirect Emissions
Scope 2 accounts for emissions from purchased electricity, steam, heating and cooling. Examples:
- Electricity purchased from the grid for corporate offices, shops, factories.
- Imported steam or heat used for on-site industrial processes.
- Grid transmission and distribution losses.
Scope 3 – Other Indirect Emissions
Scope 3 represents all other indirect emissions across the value chain including:
- Extraction of purchased materials and fuels.
- Transportation of goods and business travel.
- Product distribution, storage, use and disposal.
- Outsourced waste disposal and treatment.
- Employee commuting and remote working.
- Investments, franchises and leased assets.
For a complete carbon footprint, all three scopes should be included, prioritizing the largest and most relevant scope 3 sources.
Collecting Emissions Data
Compiling accurate and complete emissions data can be challenging. Strategies include:
- Energy use – Review utility bills, meter readings, fuel purchase receipts to get consumption data.
- Corporate travel – Travel agents can provide flight distances and rental car usage. Collect mileage for fleet vehicles.
- Logistics – Record tonnage and mileage data for product transportation.
- Waste – Quantify waste streams and disposal methods via contractors.
- Materials – Calculate quantities from purchasing or stocktake records.
- Supply chain – Survey key suppliers on emissions using questionnaires.
Centralizing data collection in a dedicated platform ensures consistency.
Where primary data is uncertain, reasonable estimates can be made by:
- Extrapolating from past trends and averages.
- Scaling up samples to total amounts.
- Benchmarking against industry metrics.
- Modeling based on operational proxies like production volumes.
Any estimations and exclusions should be documented clearly.
Applying Emissions Factors
Emissions factors enable the translation of activity data into carbon equivalents based on scientific compositions and impacts.
Factors vary by energy source, location (to reflect regional electricity mix), and time as research improves.
Using the most recent, reputable emissions factors for the company’s geographies is critical. Recommended data sources include:
- EPA Emissions Factors Database – US national averages.
- UK Government Conversion Factors – Detailed UK-specific factors.
- International Energy Agency – Electricity factors for OECD and non-OECD countries.
- Intergovernmental Panel on Climate Change – Global benchmark factors.
Location-based factors reflect average grid emissions. Market-based factors account for specific low carbon electricity purchases like renewables.
Calculating Gross Emissions
With the activity data and emissions factors assembled, Scope 1 and 2 calculations are:
Activity Data x Emissions Factor = Emissions
For example:
- Electricity: 200,000 kWh used x 0.55 kgCO2e/kWh = 110,000 kgCO2e
- Diesel: 5,000 liters combusted x 2.68 kgCO2e/liter = 13,400 kgCO2e
Emissions from all sources are summed to give total gross Scope 1 and 2 footprints.
For Scope 3, emissions factors or intensity ratios are applied to relevant activity metrics like:
- Business travel emissions per passenger kilometer
- Supply chain footprints per unit of material or product
- Waste emissions per ton by disposal method
These are multiplied by activity quantities and aggregated across the value chain.
Using consistent metric tons (tCO2e) enables easy comparison, tracking and offsetting.
Managing Uncertainty
Uncertainty can stem from:
- Data gaps like missing records or estimations.
- Sampling limitations when extrapolating limited measurements.
- Emissions factors having conversion uncertainties.
- Boundary exclusions of minor sources.
- Methodology constraints.
Documenting assumptions and assessing result variability improves accuracy. Sensitivity analysis or more granular data collection can reduce high uncertainty.
Reporting Emissions Outcomes
Outcomes should be communicated internally and externally through:
- Annual sustainability reports demonstrating performance against targets.
- Responses to carbon disclosure platforms like CDP and DJSI.
- Product labeling schemes informing consumers.
- Regulatory emissions submissions.
Publishing inventories provides transparency and accountability. Presenting the major sources and reduction opportunities engages management and employees.
Setting Science-Based Emission Targets
Carbon footprinting enables target setting aligned with climate science and the Paris Agreement:
- Limiting warming below 1.5°C from pre-industrial levels.
- Reducing emissions at the pace and scale required to meet climate goals.
- Using recognized methodologies.
Approaches include:
- Sectoral decarbonization – Reduce emissions intensity in line with industry roadmaps.
- Convergence – Lower footprint to specified intensity over time.
- Economic intensity – Cut emissions per unit of economic output.
- Supply chain engagement – Drive supplier reductions.
Joining initiatives like the Science Based Targets campaign allows validated, reported progress against science-based targets.
Offsetting Residual Emissions
After reducing operational emissions, remaining unavoidable emissions can be offset through:
- Forestry projects financing tree planting and forest restoration to sequester CO2.
- Renewable energy by purchasing credits supporting wind, solar, hydro projects.
- Carbon credits by purchasing and retiring certified credits from emissions-reducing projects globally.
Credible offset programs should be chosen and credits retired following carbon footprint verification. Offsetting enables carbon neutrality claims.
Conclusion
Measuring and reporting corporate carbon footprints is vital for environmental sustainability management. This guide has outlined internationally recognized methodologies to accurately quantify GHG emissions. By calculating emissions baselines and hotspots, companies can implement reductions, engage staff and demonstrate climate leadership.
