Carbon footprint: what does it mean for businesses?

Climate change remains the most important challenge for our generation and businesses face the challenge of setting meaningful targets that provide clear incentives to mitigating the effects of global warming. According to the World Meteorological Organisation (WMO),[1] the most relevant consequences of global warming are:

  • Increase of frequency and intensity of natural disasters.
  • Low air quality and health issues for people living in urban environments.
  • Scarcity of natural resources and variability of weather conditions.

Evidently, these have a massive impact on the economy and the wellbeing of communities around the world. The UN Environment Programme estimated that the cost for adaptation and resilience to climate change amounts to $140-300 billion USD per year until 2030. This illustrates the economic value, both directly and indirectly, of the climate emergency and the threat to all communities and industries.[2]

To find a way to face it, the first step is to be aware of the amount of Greenhouse Gas (GHG) emissions we release into the atmosphere. This concept is known as carbon footprint, which can be applied for any product, person, service, company, process or even a country.

Today, many businesses are responding to stakeholder pressure by making commitments to reduce their impact on the environment and boost overall sustainability. After COP26 climate summit in Glasgow[3], more than 150 countries committed to new climate plans to contribute achieving net zero carbon emissions by 2050. Through an ambitious strategy of decarbonisation, reduction targets were set for each decade backed by bold and credible actions.

Being carbon accountable can help companies to:

  • Comply to increasing government regulations and standards.
  • Meet stakeholder expectations, most importantly the public.
  • Identify and prevent financial risks related to climate change.
  • Obtain the information to define a strategic plan for emission reductions and decarbonisation.
  • Build a strong reputation and added value for investors and customers.

The GHG Protocol is considered the best practice known in the industry to calculate carbon footprint. It helps standardising a comprehensive global framework that assesses emissions from private and public sector operations and value chains. This is useful for businesses to provide accountability on their performance and guidance on their hotspots and areas of opportunity, allowing them to take mitigation actions in a strategic way.

In 2021, more than 9 out of 10 Fortune 500 companies used GHG Protocol directly or indirectly.[4] Therefore, we recommend our clients to use it as their framework for their carbon accounting. According to this standard, carbon emissions are classified in 3 categories depending on where their source come from[5]:

  • Scope 1: Direct emissions from owned or controlled sources e.g. on-site electricity generation, heating, cooling, company owned vehicles, fugitive emissions (e.g. refrigerants), agricultural emissions.
  • Scope 2: Indirect emissions from the generation of purchased energy e.g. imported electricity, steam, chilled water.
  • Scope 3: All other indirect emissions that occur in an organisation’s value chain e.g. purchased goods and services, employee commuting, business travel, upstream emissions from fuel extraction, waste management.

At Simply Sustainable, we help our clients to have a detailed understanding of their carbon performance and to identify the main opportunities to achieve significant emission reductions. Our approach consists in five steps:

  1. Operational review: gaining an in-depth understanding of your business, your context and status in the carbon journey.
  2. Determining boundaries: determining which emissions and activities should be within your emissions boundary.
  3. Gathering of data: Identifying the appropriate collection mechanisms and spreadsheets.
  4. Calculating footprint: Calculating emissions for a chosen baseline year to international standards.
  5. Hotspots and reporting: Identifying opportunities within your business operations that have the highest carbon output.

The calculated carbon footprint gives information to build a net zero road map, and it can be used for responding to annual reports, Streamlined Energy and Carbon Reporting (SECR)[6], Carbon Disclosure Project (CDP)[7] and Task Force on Climate-related Financial Disclosures (TCFD)[8].

From commitment to action, we are with you every step of the way on your journey to reducing your carbon footprint.

[1] World Meteorological Organisation. What is climate change?

[2] UN Environment Programme Adaptation Gap Report 2021

[3] UN Climate Change Conference UK 2021 COP26 Goals

[4] Greenhouse Gas Protocol . About GHG Protocol

[5] Carbon emissions breakdown. Compare your footprint.

[6] Education & Skills Funding Agency. Guidance: Streamlined Energy and Carbon Reporting (SECR).

[7] Carbon Disclosure Project. Guidance & questionnaires.

[8] Task Force on Climate-related Financial Disclosures. Final Report 2017.

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