If there’s one noticeable trend that businesses should be aware of, it’s this: consumers and stakeholders are becoming increasingly more vigilant and conscious about their environmental impact. This finding is supported by a global survey by the IBM Institute for Business Value, where 71% of employment-seekers have claimed to prefer working with companies with green and environmentally-friendly initiatives.

In a similar vein, this demand for eco-friendliness extends to the consumer level, with customers willing to pay a slight premium for products that have eco-friendly certification even during periods of global inflation.

Given the fact that various stakeholders lean towards supporting environmentally friendly initiatives, tracking one’s business carbon footprint is something that should be reinforced within one’s company culture.

Tracking your company’s carbon emissions may seem difficult at first glance, but it is manageable when approached the right way. If you’re keen to learn more about getting a better grasp of your company’s carbon emissions, then you’re in the right place.

We’ll touch base on the significance of carbon footprint measurements, the different ways companies may be contributing to emissions in the environment, and ways in which your company can measure its emissions accurately.

Let’s jump right into it!

Why Carbon Footprint Matters for Your Business

Before getting into the inner workings of carbon footprint and how your company can track them, it’s critical to first understand why this is something your firm should track in the first place.

Managing your carbon footprint is vital for several reasons. The primary reason for learning about it is that it gives your company an accurate and traceable picture of your greenhouse emissions. 

With this knowledge, which you can easily extract from carbon emissions accounting software, you can make strategic decisions to reduce emission-causing activities. You can also forward this information to key stakeholders when you want to advocate for your business.

Having a low carbon footprint is generally appealing to stakeholders in various forms. 

For one, government bodies typically uphold standardised environmental regulations and sustainability benchmarks that businesses must meet. Companies that proactively manage their emissions are better positioned to comply with these requirements and avoid penalties in the process.

Beyond that, carbon emissions that fall within safe benchmarks also improve a company’s ESG standing. This can appeal to investors and eco-conscious customers who primarily prefer partnering with sustainability-focused businesses. 

And finally, watching your company’s carbon footprint also helps curb the heavy load of harmful emissions that drive global warming. This helps improve the air and environment of your local community, which keeps the community active and engaged with its local economy.

With all these in mind, it’s paramount for businesses to manage their carbon emissions strategically to ensure that they remain competitive and reputable in their respective industry. This, of course, starts with knowing about the potential emission channels where they occur, as well as the types that exist.

Types of Carbon Emissions

In essence, carbon emissions refer to greenhouse gases, or gases that contribute to climate change and global warming. There are a few notable carbon emissions that businesses need to account for. Here are some of them:

• Carbon dioxide (CO₂): Regarded as one of the most prevalent carbon footprint markers, carbon dioxide is a type of greenhouse gas that’s emitted through the burning of fossil fuels. It’s a typical byproduct of deforestation and industrial manufacturing industries, and it remains in the air for hundreds of years, contributing to trapped heat.
• Methane (CH₄): Another greenhouse gas that arguably has a graver impact than carbon dioxide is methane. This greenhouse gas has a shorter atmospheric lifespan but can be dangerous to inhale in large quantities in a concentrated area. It’s a byproduct of landfills, wastewater treatment systems, and agricultural activities.
• Nitrous Oxide (N₂O): Nitrous oxide contributes to global warming just like the other two gases, and its impact is greater than carbon dioxide on a per unit level. This gas is generated from fuel combustion, industrial chemical production, and sewage treatment.
• Fluorinated Gases: Fluorinated gases are synthetic gases often emitted by air-conditioning units, refrigeration systems, and electronics manufacturing. Even a small leak can have a big impact on a company’s overall carbon footprint.

Because each of these gases varies in heat-trapping ability, emissions are typically measured in carbon dioxide equivalent (CO₂e). This metric helps convert greenhouse gases into a comparable unit, making it easier for businesses to assess and manage their climate impact more accurately.

The Basis of Classifying Greenhouse Gases

Besides the chemical compounds that the company emits throughout its operations across the supply chain process, many companies abide by the framework set by the Greenhouse Gas Protocol in categorising different greenhouse gases.

Under this framework, emissions are grouped into categories known as scopes. Rather than classifying gases by their chemical type, scopes classify emissions based on where they originate and how much control a company has over them.

There are three categories of scopes, and they are as follows: 

Scope 1: Direct Emissions

The first scope of carbon emissions is direct emissions. These are the emissions that your company owns or has control over. They’re typically generated on-site.

For example, fuel burned from company-owned vehicles can be tracked and therefore fall under this scope. Another example is gas that’s been burned and used in manufacturing equipment within the site grounds. Refrigerant leaks from owned cooling systems within your company premises also fall under this scope.

Scope 2: Indirect Energy Emissions

Scope 2 emissions refer to indirect greenhouse gas emissions generated by the company. The company doesn’t produce these emissions directly, but they contribute to carbon emissions and are a result of energy use.

For instance, electricity and temperature-regulating systems used to power office equipment and lighting contribute to Scope 2 emissions if that electricity is generated from fossil fuels like coal or natural gas. The same applies to purchased HVAC systems.

These emissions are significant because all types of businesses require energy to operate. 

Scope 3: Value Chain Emissions

Scope 3 emissions refer to all other indirect greenhouse gas emissions that occur across a company’s entire value chain. 

Unlike Scope 1 and Scope 2, these emissions are not produced directly by the company nor from the energy it purchases, but they are still a consequence of its business activities.

These emissions are typically the most complex to measure and often the largest chunk of one’s carbon emissions. 

Scope 3 emissions can be further categorised into two types: upstream and downstream emissions. Upstream emissions refer to emissions made before the product reaches the company, whereas downstream emissions occur after it leaves.

Scope 3 emissions are emissions that your company doesn’t have direct control over. However, you influence them through the decisions you make—such as which suppliers you partner with, how products are designed, what materials are sourced, and how goods are transported and distributed.

How to Measure Your Company’s Carbon Footprint

Now that you’re aware of the different carbon emission types and scopes, the next step is to implement them into your company’s own mission towards sustainability. 

There are several ways you can go about measuring your company’s carbon footprint. Below is a step-by-step guide on how you can optimally set up your carbon footprint measurement plan for accurately assessing your business’s carbon emission status.

Let’s jump right into it!

1) Define Your Organisational Boundaries

The first step you must take before calculating your company’s carbon footprint is getting a good grasp of your organisational boundaries in the first place.

Identify which parts of your business operations will be included in your carbon footprint assessment. Will you be taking into account just your single branch in the main headquarters, or all branches nationwide? Are you including only factories and industrial sites, or also offices? Are subsidiary companies a part of the mix?

Setting clear organisational boundaries helps ensure that your reports are consistent and definable. This makes it easier to generate future reports and track the rise or fall of specific emission sources in the future. 

2) Identify Emission Sources

The next step is to identify your emission sources and give them a name and classification. This is essential for mapping out the entire chain of operations and pinpointing exactly where carbon emissions may be generated.

Knowledge of scopes 1, 2, and 3 is essential at this stage, as they help organise emissions based on level of control and ownership. This structure allows your company to make a comprehensive inventory of your company’s complete operational carbon footprint. 

As such, keep tabs on potential emission sources that your company may generate. You don’t have to count or measure them just yet; simply knowing about them and using them for future documentation is enough to set the stage for future report generation on your company’s carbon footprint.

3) Collect Activity Data

The next step is a straightforward one: and that’s to gather the actual data tied to these emission-generating activities.

When it comes to measuring these data points, you need to have consistent and quantifiable records of your company’s carbon emissions and electric consumption. This isn’t standardised immediately; rather, they can come in various forms.

For instance, your electricity bill shows kilowatt-hour (kWh) usage. Fuel purchases for cars and company vehicles tend to come with receipts indicating litres consumed. Generators will have runtime logs. Business travel, procurement, and logistics records also come with mileage and flight distances that have emission-generating activities.

In any case, having a detailed list of your company’s various carbon emissions across all scopes is a good way to know which data points to track and input in your carbon footprint calculations. 

Tracking these metrics and putting them in a centralised dashboard makes it easier for you to make future annual audits; so, do try to standardise this process to make future carbon emission tracking easier.

4) Convert Data into CO₂e

After collecting your carbon data, the next step is to convert these figures into their respective CO₂e, or carbon dioxide equivalent. 

This standard unit helps keep measuring various GHGs consistent, not just for your company’s internal tracking, but also for investors and regulators to look into as well.

It doesn’t need to be said that different gases have different impacts on the environment and overall operation costs. Each business may produce a unique mix of greenhouse gases, as well as varying emission volumes, depending on the nature and scale of its operations.

For instance, manufacturing and agricultural companies will naturally produce more methane and carbon dioxide than corporate offices. Having a single metric to consistently measure all emissions allows companies to consolidate their data into one baseline figure. This makes comparisons more straightforward and sustainability reporting more accurate.

5) Analyse and Identify High-Impact Areas

Once your emissions have been converted into CO₂e, the next step is to analyse the data and determine your biggest contributors to high emissions.

From this report, you could determine which areas of your operations are the highest contributors to carbon emissions. For instance, you could determine which part of the operations is contributing to the majority of your Scope 2 emissions, whether that’s electric grid reliance or transportation. From there, you can plan your next move accordingly.

You may also find out that certain partners and suppliers contribute disproportionately to your footprint, heavily increasing your carbon emissions without providing a corresponding value in return. By identifying such cases, you can take corrective action to ensure that your sustainability efforts are efficient and measured.

7) Continue Refining Benchmarks and Reduction Targets

Your initial analysis serves as a baseline understanding of your company’s carbon footprint contribution. With this figure, you can see whether the number is hitting your company’s sustainability goals or falling behind. 

If it’s falling behind, you can take proactive action to ensure that you can reach your sustainability targets when the next period comes around. Remember, carbon management should be treated as a continuous improvement process rather than a one-time calculation. 

The strategy you can employ to align operations with your goals can vary. You could consider transitioning to renewable energy providers, or you could consider encouraging remote work to reduce transport emissions. You may also consider swapping current equipment for cleaner technologies.

In any case, it’s vital to revisit your benchmarks and reduction targets to ensure that your emissions stay level and within regulatory standards. With the world leaning towards a higher emphasis on sustainable practice, it’s crucial that you ride the trend and remain proactive in keeping your operations as clean and green as possible.

We hope that we’ve helped you understand carbon footprint in a deeper light and what it can do to impact your company. All the best in upholding your sustainability initiatives!

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.