Carbon Footprint: what it is, how to calculate it and its benefits for businesses

Carbon Footprint: what it is, how to calculate it and its benefits for businesses

 

Knowing your Carbon Footprint it's very important to make strategic decisions about the environmental impact of your company. How many greenhouse gases is your company currently emitting? How does your impact compare to your competitor's one? Which is the more effective action to reduce the emissions?

In this post you'll get to know what the carbon footprint is, why it is important, and how performing one can bring greater environmental and economic benefits to your company.

What is the Carbon Footprint?

The Carbon Footprint is an indicator‎ is a estimated impact indicator, or number, of climate change originated from an activity, business, person or territory.

This impact is measured in kilograms of CO2 equivalent (kg CO2eq) and considers the contribution of all gases that can potentially increase the temperature of the planet, in other words, greenhouse gases (GHG). For example, carbon dioxide (CO2), nitrous oxide (N2O) and methane (CH4), among others.

It's important to note that the carbon footprint by itself it's not a metric of sustainability. This is because it focuses exclusively on only one environmental impact - climate change - and doesn't consider other environmental and social impacts. For example, a company may have the best carbon footprint in its industry, but if it uses toxic products or exploits its workers, the company is not sustainable.

However, the carbon footprint is an excellent metric to get you started in sustainability management because it's easier to calculate and communicate than other environmental indicators. If your company is not yet collecting information on its emissions and wants to determine what concrete actions will help curb climate change, the Carbon Footprint will be very useful.

Why is the carbon footprint important?

The excess heat accumulated in the planet due to greenhouse gases creates climate change, which increases the intensity and frequency of droughts and floods, and also affects the bio-diversity, health and economy, among other effects.

With a carbon footprint, you can control and manage your company's contribution to this global issue and identify the best actions to reduce it.

Some companies constantly measure their Carbon Footprint and consider it a critical KPI for their operations. Others measure sporadically, usually aggregated for the whole company or for a specific product. The important thing is to have internal processes to calculate it over time, and use its results to improve operations and market positioning.

Should your company measure its carbon footprint?

While any company can measure their carbon footprint, for some it's more beneficial than others. For example, if you have clients that are starting to demand a measures carbon footprint or you would like to build relationship with businesses committed with climate change, measuring this indicator will be vital to achieve your objectives.

Likewise, if you are interested that your business stands out from the competitionto attract customers or investment, or if your company is part of a industry with high impact on climate changesuch as energy, transportation, chemicals, refrigeration and heating, the carbon footprint can be a great ally. The transition towards more environmentally friendly products and services is powerful and within this trend, companies that can justify their sustainability statements with objective indicators have an advantage.

What are the benefits of measuring the carbon footprint?

If you decide to measure your company's carbon footprint, it will grant various benefits, among which are:

  • Strategic decision taking‎ it allows pinpointing what business lines to continue, close or open.
  • Gain a competitive advantage‎ tons of companies ask their suppliers to measure their carbon footprint, and even more often customers prefer products with a proven lower environmental impact.
  • Reduce costs‎ by knowing which stage of your product or service pollutes more, you can apply efficiency measures to save energy or raw materials. You will also avoid fines or taxes related to the emissions of the productive process.
  • Improve the company's reputation‎ applying carbon footprint reductions with consistent yearly measurements sets the company apart from the competition, improving the market's trust in the company's actions and marketing declarations.

Types of Carbon Footprints

Before measuring, you should know that there are various types of carbon footprint. Here are the three most common ones.

Carbon Accounting

With this footprint, you will know the total contribution to climate change of your company and its subsidiaries. Normally to measure it, the GHGs emitted in the production of all products, services, inputs and activities of your company during a year are considered.

To measure the carbon footprint of your company, you should identify the emissions in three scopes:

  • Direct emissions (Scope 1): these are all greenhouse gases that come directly from the company or activities. For example, vehicle exhaust, boiler emissions and refrigerant leakage from industrial freezers or air conditioning systems.
  • Energy indirect emissions (Scope 2): electricity consumption doesn't generate direct emissions in your company, but it does in the electricity production plants. These are "indirect" emissions. Electricity from thermoelectric plants (coal, gas and diesel) is high in greenhouse gases, while solar and wind electricity have a very low footprint.
  • Other indirect emissions (Scope 3): these are all those emissions that are not controlled by your company, but are necessary for it to function. For example, the gases released by an airplane during an executive's business trip, or the emissions from employees' vehicles. Also included here are the carbon footprint of the company's inputs (which are emitted by suppliers) and the footprint of the company's waste, among others.

With this information, you will discover what contributes most to your company's footprint, and will be able to develop strategies to reduce the impact. You will also be able to avoid fines or taxes related to emissions from your processes, such as burning fuel in boilers, since you will be monitoring emissions.

Carbon Footprint of a product or service

If you are looking for a packaging to show that your product has a smaller footprint than a competitor's, or you want to reduce the impact of a specific product line, this is the footprint you need. It's very different from the previous one.

Unlike corporate footprint, in a product or service footprint all the emissions associated to the production of that specific product or service must be considered. Measure items such as: the electricity used for the production of a product, its transportation, the footprint of its packaging, the footprint of its inputs, the footprint of its use and also its waste. 90% of the carbon footprint of a product can come from its inputs, so don't leave that out!

Knowing the carbon footprint of your product or service will allow you to make environmental self-declarations and increase the trust of your customers, as well as demonstrate the impact your product or service has on climate change. Estimating GHG emissions will also bring you economic benefits, as you will be able to identify polluting stages and apply efficiency measures to save raw materials or energy.

Territorial-based carbon footprint

For companies that have a large territorial scope or are in an industrial zone with many companies, the territorial carbon footprint can be a good option. You can calculate it for a city, a region or even a country.

This footprint follows the logic of a corporate footprint: we have direct and indirect emissions, but instead of associating them to a company, we associate them to a territory. For example, emissions from transportation, waste management and energy generation that occur within the territory are considered.

With the results of a territorial carbon footprint, you will be able to identify the most polluting activities and create concrete actions to reduce impacts. It will allow focusing initiatives, such as replacing lighting in public spaces or starting composting programs, and campaigns, such as encouraging the use of bicycles or recycling, in order to effectively manage GHG emissions. For an industrial neighborhood, it will be useful to identify which company is contributing the most and discover potential opportunities for industrial symbiosis.

Necessary steps to successfully measure your company's carbon footprint

Did you already choose the type of carbon footprint you need and are thinking of starting to ask for data? Before you start, follow the steps below, which follow the ISO 14.060 to ISO 14.068 standards.

  • Define the scope: what year will the carbon footprint be estimated? and what period will be used to compare the results? For example, you can calculate the impact for 2020 and compare it with results from 2018. If you are calculating the footprint for the first time, this can become your "baseline year".
  • Identify sources of GHG emissions: these can come from various activities, such as fuel combustion for boiler operation or transportation (Scope 1), electricity consumption (Scope 2) and indirect sources, such as employees' daily transportation or business travels (Scope 3).
  • Define the type and quantity of GHG emitted: after identifying the activities that generate emissions, it's necessary to identify what type of gas is being released and in what quantity.
  • Determine the impact of each GHG: use the Global Warming Potentials (GWP) for this. The GWP is a measure of how much one kilogram of each GHG contributes to global warming and is different for each gas. The GWP of each gas is compared to that of a kilogram of carbon dioxide (CO2). This is called a "kilogram of CO2 equivalent".
  • Sum the carbon footprint (in CO2eq) of each gas: after obtaining the values of each emission in units of kilogram of CO2 equivalent, you only have to add the values to obtain the total carbon footprint.

How to choose the best expert in carbon footprint?

Measuring the carbon footprint is not easy. A Carbon account is calculated differently from a territorial-based one, and these two are very different of the carbon footprint of products. Reason why we recommend consulting with an expert.
If you want reliable results, it's best to get a team with experience in both the specific type of footprint you need and the industry you are in.
To calculate a corporate footprint, you should look for a consultant with experience in this type of footprint or learn how to calculate it using a system such as "HuellaChile". If you want to publish your results, you will also need a verifier (you can see the list of authorized verifiers at this linkamong which we are included).

On the other hand, to calculate a product carbon footprint, you should look for an expert in product carbon footprint calculation or with experience in Life Cycle Analysis.

Finally, if you are going to calculate a territorial footprint, look for a specialist with experience in territories. Currently, there are not many specialists in this area, so we recommend you broaden your search and consider people with work and/or academic experience in this type of footprint.

The first time you calculate your company's carbon footprint can be very complicated, we recommend that for your first footprint you seek out a high quality consultant. With their help, the following times will be much easier (and cheaper) and you will have robust information to compare your performance in the future.

In addition to their experience, you should consider the characteristics of the service. Consultants could limit themselves to the measurement alone, expanding the service to advising you in making decisions to improve the footprint and even helping your marketing team in communicating the results correctly to the public (making sure you don't fall into greenwashing). It all depends on your goals with the measurement.

Overview

Overall, the carbon footprint can be a great tool to empower your company in the market, boost its reputation and lower costs. To achieve all these, you must start by defining the objective and the type of footprint you'll need. With this information, you'll be able to find the perfect consultant to support you and get the results that will help your company to improve.

IN ECOED, WE HAVE EXPERIENCE IN MEASURING THE THREE TYPES OF CARBON FOOTPRINT TALKED IN THIS POST

If you would like to know more about our services, click here‎ or schedule a free meeting with us to discuss how the Carbon footprint can be useful for your business.



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