Carbon dioxide makes up 80% of the greenhouse gases, acting as a barrier in our atmosphere, trapping heat and causing the temperature on our planet to rise. When that happens then our systems collapse. Net zero recognises that we need to reduce our emissions to a point where we no longer increase the concentration of greenhouse gasses in our atmosphere. The business case for measuring and managing your company’s carbon emissions has never been stronger.
A carbon footprint is the total greenhouse gas (GHG) emissions caused directly and indirectly by an individual, organisation, event, or product and is expressed as a carbon dioxide equivalent (CO2e).
Quantifying GHG emissions is an essential component of the journey towards net zero. Measuring your carbon footprint will help you understand what your organisation’s key emission sources are, how your organisation contributes to global emissions, and what opportunities you have to reduce your emissions. You can then develop a carbon reduction plan, identifying ways to reduce your carbon footprint and limit emissions from future activities – and then measure what progress you have made.
Reporting on your carbon footprint
For some organisations, reporting their carbon footprint is a mandatory requirement. In the UK all quoted companies are required to report their annual greenhouse gas (GHG) emissions in their directors’ report.
Quoted companies are those that are UK incorporated and whose equity share capital is officially listed on the main market of the London Stock Exchange, or is officially listed in a European Economic Area, or is admitted to dealing on either the New York Stock Exchange or NASDAQ.
Benefits of measuring your carbon footprint
Calculating your carbon footprint shouldn’t be seen only as a compliance effort. Measuring and disclosing your emissions profile can bring a variety of benefits to your business.
|Internal Drivers||External Drivers|
|To reduce cost: |
Energy savings, cost savings, material savings, waste reduction, optimise supply chain, identify areas for eco-design assess product options
|To comply: |
Compliance with existing legislation, local and national schemes, such as the Carbon Disclosure Project (CDP)
|To manage future risk:|
Future supply, costs, demand, legislation. Legislation trends, carbon taxes
|To influence: |
To involve customers and suppliers, investors, NGOs and government in recognising your efforts in sustainability. Carbon footprint reporting is a key part of many companies’ Corporate Social Responsibility (CSR) programmes.
Understanding your carbon footprint
Every business leader must know what to consider as part of their company’s carbon footprint. We tend to think about facilities, the energy use, and perhaps the fleet but these only account for a part of a company’s total carbon footprint.
When reporting under the GHG Protocol*, organisations can measure the emissions directly or indirectly associated with a product or service, or those associated with their overall activities.
- Operational footprint: Scopes 1&2
- Supply chain footprint: Scope 3
- Product carbon footprint
*The Greenhouse Gas Protocol (GHG Protocol) is an accounting tool used by organisations and governments to understand, quantify and manage their greenhouse gas emissions. It provides the world’s most widely used greenhouse gas accounting standards.
The operational footprint measures the GHG emissions from all the activities across the organisation, including energy used in buildings, industrial processes and company vehicles.
Included in an organisational carbon footprint are your Scope 1 and Scope 2 emissions.
- Scope 1: Direct emissions that result from activities within your organisation’s control. This might include on-site fuel combustion, manufacturing and process emissions, refrigerant losses and company vehicles.
- Scope 2: Indirect emissions from any electricity, heat or steam you purchase and use. Although you’re not directly in control of the emissions, by using the energy you are indirectly responsible for the release of CO2.
The operational footprint is somewhat easier to manage. For instance, by switching to renewable energy, or to an electric fleet.
Supply chain footprint
A supply chain carbon footprint measures the carbon impacts of the raw materials and services that are purchased by an organisation in order to deliver its service(s) and/or product(s).
Further examples of Scope 3 emissions include purchased goods and services, use of sold goods, employee commuting and business travel, outsourced transportation, waste disposal and water consumption. Often, scope 3 emissions make up the majority of a company’s carbon footprint.
When reporting under the GHG Protocol, it’s always mandatory to disclose emissions from Scope 1 and 2, whilst Scope 3 remains voluntary, although increasingly necessary. However, mandatory reporting regulations are increasingly asking companies to report on their Scope 3, as it provides a more accurate overview of the emission profile associated with a certain company.
Product carbon footprint
A product's carbon footprint measures the GHG emissions over the whole life of a product (goods or services), from the extraction of raw materials and manufacturing right through to its use and final re-use, recycling or disposal.
Pukka, the tea brand, reports that 49% of emissions come in the ‘use-phase’, from boiling the kettle.
Carbon footprint reporting challenges
Boundary setting is crucial to accurately report on a company’s emissions. Whilst setting boundaries, companies should consider:
- Their reporting period and baseline year
- Their organisational boundaries: which legal entities of an organisation should be included in the reporting? What’s the right control approach to defining such boundaries?
- Their operational boundaries: which assets and emissions categories are included in the scope of the carbon footprint?
Failure to set the correct boundaries could lead to failure to meet frameworks and reporting requirements, resulting in failing third-party audits or other legal compliance issues.
Collecting data and selecting a suitable calculation approach
The second big hurdle comes with data. Your carbon footprint accuracy depends on the quality of the data you collect. Are your data based on spend or on consumption? Which emissions factor should you use?
When data is not available, how will you estimate what is missing? Making an educated guess is not enough – your approach needs to be robust and consistent.
What does a good carbon footprint look like?
The GHG Protocol has identified a series of principles, often derived from financial accounting and reporting, that should underpin and guide all GHG accounting and reporting:
- Relevance: the report has the necessary information to inform decision making. Ask yourself why you are measuring the footprint – is it to be used internally to analyse the supply chain or publicly disclosed?
- Completeness: all emissions within the reporting boundary should be accounted for.
- Consistency: to provide data that are comparable over time and internally consistent, organisations should be consistent in their application of calculation methodologies, accounting approaches, and boundary setting.
- Transparency: information on limitations, processes, and procedures, should be available, factual and well documented in a coherent manner.
- Accuracy: data should be accurate enough to credibly underpin decisions.
How we can help
Our approach to carbon footprint has been perfectioned over 13 years to help our clients make the most of their GHG reporting. Our team of experts will support you each step of the way. Whether it’s devising a reduction roadmap or helping you comply with TCFD requirements, our team can help you on your journey:
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I was impressed with the thoroughness and level of detail that our data set was analysed in. Presenting an extensive data set in an easy to use format was of great value in communicating the outcome of the work internally, and prioritising areas of the supply chain for future action.
Alan Sweeting, Global Health, Safety and Environment Senior Manager, Allen & Overy LLP
Avieco supported us in collating and organising data to develop a robust risk assessment process. They have been easy to work with, responsive to our requirements and pragmatic in their solutions.
Gijs Voskuilen, Head of Corporate Responsibility, Bunzl
Avieco has been the preferred environmental consultant since the beginning of our journey to become a sustainable company. Dentsu Aegis has worked with Avieco’s experts on various areas, such as carbon footprint reporting and assurance support, and recently also advised us how to switch our global network to renewable electricity. The team’s expertise on environmental sustainability is impressive, and the work delivered is always of highest standard.
Lars Holm, Global Senior Manager CSR, Dentsu Aegis Network
Avieco informatively led us through the processes needed to reduce our carbon footprint. With their clear and concise advice we have been able to effectively reduce our energy and waste levels. Avieco made the complex notion of energy efficiency into a manageable and achievable reality
Nigel Pink, Group Engineering Manager, Dominos UK & Ireland Ltd
Avieco delivered exactly the workshop we needed to get our sustainability team and regional leads on the same page when it comes to ‘market-based’ reporting. It’s a challenging area to tackle for a global business – particularly when we operate in a number of markets where there is little or no choice in terms of energy purchasing. Avieco has given us the knowledge and tools to ensure we get our disclosures right – they really exceeded my expectations for what we could achieve in one afternoon!
Dr Julia Rowe, Group Sustainability Advisor, Johnson Matthey
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