An organisational carbon footprint is an essential component on the journey towards net-zero and is the first building block towards any sustainability strategy.
A carbon footprint can also provide an initial climate risk and opportunities assessment by identifying emissions hotspots across your value chain. Companies all over the world measure and report their carbon footprint to their stakeholders and use the findings to inform their sustainability actions.
However, for companies at the beginning of this journey, this may seem like a daunting prospect, and you likely have some questions about how to kick off the process.
Motivations for Calculating Emissions
Background – Emission Scopes
When calculating and reporting footprints, emissions are typically categorised into “Scopes”. These Scopes identify the location within your value-chain that the emission generating activity occurs.
- Scope 1 – direct emissions occurring from sources owned or controlled by an organisation. Examples are fuel and vehicle use and refrigerant losses
- Scope 2 – indirect emissions associated with the purchase of electricity, steam, heat, or cooling
- Scope 3 – indirect emissions associated with activities occurring across a company’s value chain – outside of its direct influence. This covers a variety of activities. For more information download our Scope 3 Factsheet.
Where do I begin?
Starting out, you will need to understand what needs to be included and set the boundaries of your footprint. The guidance presented below aligns to the GHG Protocol standards, although other routes are available – see our separate guidance on footprint standards.
Most companies approaching emissions calculations for the first time will focus attention on establishing their Scope 1 and 2 footprint before addressing value chain (Scope 3) emissions. The below process will focus on Scope 1 and 2 emissions accounting, as defined by the GHG Protocol in the Corporate Accounting and Reporting Standard.
Note – identifying and calculating Scope 3 emissions remains crucial and often accounts for a significant proportion of a company’s overall impact – sometimes up to 90%. Data collection for Scope 3 emissions involves multiple stakeholders and data sources and so this can be more challenging. For more information on Scope 3 accounting, see Plan for Zero: Scope 3.
Measurements should include 100% of Scope 1 direct and Scope 2 indirect emissions from your own operations (access our glossary for more detailed definitions). Calculating emissions follows a 3-step process:
Setting your Boundary
Before jumping into the calculation, you must first establish what operations should fall under the scope of your carbon footprint. In setting an organisational boundary, a company selects and consistently applies an approach for consolidating its GHG emissions.
You can report emissions data according to either an equity share or control approach.
Equity Share – reflects economic interest. Under this approach, companies account for emissions from activities according to its share of equity in that operation.
Control Approach – company accounts for all emissions from activities over which it has control. Control may be defined as either financial or operational control:
- Financial Control – a company has financial control over the operation if it has the ability to direct the financial and operating policies of the activity with a view to gaining economic benefits
- Operational Control – a company has operational control over an activity if it or one of its subsidiaries has the full capacity to implement its working policies at the business.
Setting your boundary may seem like a complex decision. For more complex structures, the boundary and emissions may differ depending on the approach taken. However, for companies with simple corporate structure without joint operations, the boundary will likely be the same whichever approach is used.
The key aspect here when choosing is to consistently apply the approach to ensure meaningful comparison of emissions over time.
Collecting Data and Calculating Emissions
Whilst the source and intensity of emissions generating activities differ, the calculation will typically follow the same structure:
Activity data refers to a quantitative measure of the activities carried out within your operation. Typical examples are:
Energy Consumption – electricity and fuels used by your organisation. Facilities teams usually have access to this information. Finance or procurement will also have access through invoices.
Vehicle Use – companies should account for emissions from company-owned vehicles. The distinction of company-owned here is crucial – emissions from vehicles not owned by the organisation should be accounted for as value-chain emissions within Scope 3. This data could be in the form of mileage claims or direct fuel use.
Fugitive Gases – emissions occurring due to leaks of greenhouse gases from your equipment or processes. Common examples are refrigerants used in air conditioning or coolers that often have high climate impact.
An emission factor reflects the emissions intensity of an operation or activity. An appropriate emission factor will need to be selected to link each of your activities to their associated emissions.
Various databases are available for companies to identify the intensity and subsequent emissions of their activities. Some require a license fee for use, whilst others are publicly available and free to use – for example the US EPA and the UK Department for Business, Energy & Industrial Strategy (BEIS) both publish emission factors for public use.
With an urgent need to limit global warming to 1.5°C and a closing window to act, it is inevitable that businesses will find themselves under increasing pressure to be transparent about their full climate impact, to take action and to find innovative solutions. By calculating a carbon footprint, businesses can identify the best strategic approach to reducing emissions and setting robust targets. It enables you to start your journey towards the net-zero transition and prepare for the demands and opportunities this will bring.