Learning how to calculate a business carbon footprint has never been more important. Thanks to the three scopes from the Greenhouse Gas Protocol and an increasing understanding of what steps we can take to combat climate change, it’s also never been more manageable.
This guide helps you understand how to calculate a business carbon footprint using the Greenhouse Gas Protocol. We’ll discuss why the need for corporations of all sizes to reduce their emissions is so great and cover the best methods for identifying which areas of your business could reduce emissions. Finally, we’ll offer actionable solutions for how your business can reduce its carbon footprint directly and indirectly.
Why a Business Needs to Reduce Its Carbon Footprint
As real-time evidence of the damage from climate change stacks up, corporations need to be on the front line for two reasons:
- Corporations are responsible for a staggering proportion of greenhouse gas emissions. A 2017 study found that just 100 companies produced 71% of global emissions. While your company’s carbon footprint is likely a bare fraction of the emissions that come from these giants, it’s increasingly vital for businesses of all sizes to follow the same model for reducing their environmental impact.
- Businesses can’t flourish in a world ravaged by climate change. It’s in every company’s best interests to adopt measures to reduce their emissions and proactively counter the damage through actionable methods like funding reforestation projects.
Moreover, consumers increasingly consider a business’s environmental impact when making buying decisions. Consumers understand that their engagement with corporations affects their personal carbon footprint. So, when you know how to calculate a business carbon footprint and act on this information, you become more attractive to consumers.
To bring things full circle, the increase in revenue that these customers bring can help offset the costs of your sustainability strategy (see below).
How to Calculate a Business Carbon Footprint: The 3 Scopes
The Greenhouse Gas Protocol sets the standards for how to calculate a business carbon footprint. It provides three scopes to help you break down your company’s emissions and identify areas of concern.
Greenhouse Gas Protocol Scope 1
Scope 1 covers direct emissions, meaning areas that your company owns or controls. It could describe a range of sources, such as:
- Dedicated factory production — if your company is solely responsible for a manufacturing plant, emissions from this area are your direct responsibility.
- Equipment that your business solely owns or operates (vehicles, cranes, bulldozers, etc. )
Greenhouse Gas Protocol Scope 2
Scope 2 describes the impact of the electricity and energy your company uses for areas like heating and cooling. As these emissions are produced indirectly, they are considered separate from Scope 1.
Greenhouse Gas Protocol Scope 3
Scope 3 represents the largest part of a business’s carbon footprint because it covers all indirect emissions related to the value chain. It covers the carbon footprint generated by your suppliers on your behalf and the footprint generated by your customers when using your product. Scope 3 also includes areas such as business travel using transport not owned by the company and waste disposal.
How to Identify Which Areas of Your Business Can Reduce Carbon Emissions
While the three scopes provide a detailed framework for learning how to calculate a business carbon footprint, they can be difficult to understand. You shouldn’t worry too much about it because the best way to identify which areas of your business could benefit from reduced emissions is to work with an expert consultant.
Carbon dioxide calculations aren’t always straightforward, and by trying to do everything yourself, you run the risk of “double-reporting.” For instance, you might end up identifying a power source as both a Scope 1 and Scope 2 priority. Unless you’re well-versed in CO2 calculations, your role should instead be to develop an action plan based on the information presented by an expert analyst.
How to Calculate a Business Carbon Footprint: Making Sense of Data
Hiring an expert to audit your company’s emissions is the best method for how to calculate a business carbon footprint. You’ll need to provide information covering all the scopes, including details of your suppliers and the means of transport used to move goods in the supply chain.
The consultant can render this data into a picture of where your company has the most impact in terms of CO2 emissions. To create an actionable plan, you should:
- Note the areas of your operation that contribute the most to your business’s carbon footprint. It may include emissions due to transporting goods, production, or your company’s energy bills.
- Determine which of these areas you have the most control over. Analyze whether you can move production to a closer location to reduce the impact of transport or whether you can source energy from fossil fuel alternatives. Some areas are easier to control than others, so it’s important to learn which you should prioritize.
- In a separate list, make a note of areas that may have a smaller carbon footprint than your main operation. You can find simple solutions to these areas while still making a difference. For instance, you can refrain from flying employees out to non-essential conferences.
- Work with your consultant to find whether you can find actionable, direct solutions to the areas of the greatest concern. Suppose it’s hard to identify how you can make operational changes without causing significant change to your business. In that case, you may wish to consider non-operational methods to reduce your carbon footprint (see below).
Setting Up a Sustainability Strategy
While there may be a couple of areas that you can immediately change, it’s important to view reducing your business’s carbon emissions as a long-term project. You should ensure that you can align continuous reduction with your business goals — enter your company’s sustainability strategy.
Sustainability refers to your business’s continuing success as well as making your business more environmentally sustainable. As such, long-term planning is essential. Operational changes may take several years to enact in a way that doesn’t disrupt the value chain, so you need to examine sustainable alternatives to your current setup and devise a transition plan.
For example, you may currently rely on a supplier that has a massive impact on your business’s carbon footprint, according to Scope 3. However, transitioning away from this supplier could be difficult because no other suppliers are producing what your business needs at an affordable price.
You would need to devise a long-term strategy for transitioning to a more environmentally friendly supplier. You may have to make tough decisions like finding extra money to work with a slightly more expensive supplier. However, by working towards this long-term climate goal for your company, you can gradually adapt your operation.
Alternatively, you may be able to work with your current supplier to improve the sustainability of the entire supply chain. Remember that companies in every industry are figuring out how to calculate a business carbon footprint. Working with suppliers and distributors to find environmentally sound solutions will benefit all partners.
Finding Non-Operational Ways to Reduce Emissions
An important part of your sustainability strategy should involve finding ways to reduce your carbon footprint indirectly. Non-operational methods can include:
- Funding reforestation projects to offset your carbon output
- Investing in companies developing sustainable energy solutions
- Funding clean-up projects to reduce environmental damage to crucial ecosystems
These methods should factor into a company’s sustainability strategy regardless of your plans for changes. Non-operational investments in counteracting global warming take hold quickly and easily compared to the slow changes you can make within your company’s infrastructure. You can demonstrate swift progress to stakeholders and consumers and provide more time to develop an actionable strategy for making your company more energy-efficient.
Actionable Ways for a Business to Reduce Its Carbon Footprint
Every corporation has different needs and goals, and there’s no one-size-fits-all solution. Each company has to learn how to calculate a business carbon footprint on its own terms and form a bespoke sustainable strategy.
However, there are some common areas that most businesses can address to reduce emissions. We list some of the most practical ideas below.
We’re accustomed to hearing horror stories about deforestation in the Amazon, which in 2020 was 182% higher than the pre-established target. In California, Australia, and Siberia, wildfires destroy massive amounts of vegetation that act as a carbon sink for the planet.
While local communities need to adopt prevention strategies, your business can get involved through reforestation efforts.
By buying trees and funding reforestation projects, your business can significantly reduce its carbon footprint in real terms. It’s also very cost-effective compared to many operational methods of cutting emissions. Once you’ve learned how to calculate a business carbon footprint, it becomes clear that reforestation is one of the easiest, quickest, and most affordable ways to make your company more environmentally friendly.
Working With Suppliers
The impact that your suppliers’ emission level has on your carbon footprint can present a headache. Finding a new supplier takes time and can lead to increased costs. An actionable solution is to work proactively with your supplier to reduce emissions in the value chain together, setting mutual goals and negotiating more eco-friendly ways of producing and transporting materials.
This long-term project can seem daunting, but your suppliers know as well as you do that consumers are increasingly invested in sustainable products. Creating a more energy-efficient supply chain will give you a competitive edge over companies taking a less proactive approach.
Remember that your customers are willing to pay more for sustainable goods and services. The increased revenue help fund your suppliers’ strategy for reducing emissions as well as yours.
Using Green Energy
Transitioning to an environmentally friendly energy source is one of the main ways a business can reduce its carbon footprint. The majority of energy used by U.S. companies is still provided by corporations that use fossil fuel combustion, which has a greater environmental impact than any other sector.
A major reason that fossil fuel is still such a popular choice is affordability. However, green energy for businesses is consistently becoming cheaper, and making the transition will dramatically reduce your company’s carbon footprint.
Reducing Air Miles
One of the easiest ways to cut your company’s emissions is to stop using air travel wherever necessary. While flying to meet clients may sometimes be unavoidable, you can include a reassessment of what qualifies as “essential” or “non-essential” air travel in your sustainability strategy.
It’s worth noting that business travel accounts for around 75% of airlines’ profits, which means that companies deciding to use air travel less could leverage airlines to invest more heavily in environmentally sound solutions. While it is a more indirect contribution to reducing emissions, every change is important.
The Bottom Line — How to Calculate a Business Carbon Footprint
Knowing how to calculate a business carbon footprint means using expert advice to make sense of the data and developing an actionable plan. Build your sustainability strategy through operational changes and non-operational investments such as reforestation today.