How to Calculate Carbon Emissions

ESG reporting
This post is a demonstration of how to calculate carbon emissions correctly.
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June 15, 2023

If you target to fight global warming, your company must focus on cutting down its carbon footprint. Carbon emissions or footprint is the total amount of greenhouse gasses (GHG) emissions that are associated with a company, person, product, or city. This includes tons of emissions made from burning fossil fuels in manufacturing, transportation, and heating. Nitrous oxides and chlorofluorocarbons (CFCs) are also part of greenhouse gasses. 

Learning how to calculate carbon emissions allows you to determine the actual amount that your company is emitting. At the end of the year or ESG (environmental, social, and governance) reporting phase, the calculations determine if the footprint reduction targets were achieved. So, keep reading as we demonstrate the best way to accurately calculate your company's carbon emissions. 

Why Carbon Emissions Calculation and Reduction are Important

No matter the method that you use to calculate greenhouse gasses (GHG) emissions, the unit must be given in tons of carbon dioxide equivalent. Emissions accounting is a standard practice in most large companies, where the task is mainly handled by a consultant. Calculating your company’s emissions, including carbon dioxide and other greenhouse gas emissions, can help you understand your company's contribution towards the fight against global warming. Other reasons for calculating carbon emissions for your business are: 

  • Winning the Support of Stakeholders

Today, the demand for environmental, social, and governance sustainability for businesses is primarily coming from stakeholders. Your company’s customers, investors, employees, and community, are part of the stakeholders, and they want to be associated with brands that are responsible. So, calculating carbon emissions and demonstrating the company’s efforts towards reducing the levels will win you their support. This might be all that you need to get a bigger market share and more funds from investors.  All about the climate reporting here. All about climate risk reporting here.

  • Regulatory Compliance

Today, many governments are working towards achieving carbon-neutral status in line with the Paris Agreement of 2015. Therefore, they have installed regulations requiring companies to cut down emissions to specific levels. For example, the EU is leading the pack with an ambitious plan to cut down emissions by 55% by 2030. 

Calculating carbon emissions correctly will ensure you can demonstrate the level of reduction in line with the policies of your government. Other entities that are demanding calculation, and reduction of GHG emissions include stock exchanges, tax authorities, and licensing departments. All about SBTI on this article.

  • Increasing Productivity and Profits

Most of the methods adopted by companies to cut down carbon and other GHG emissions are very useful in raising productivity. When you shift from inefficient fossil-fuel-powered machinery to electric equipment in industrial facilities, one of the impacts to expect is enhanced productivity. Your company will also enjoy increased profitability because of reduced energy related bills and elevated productivity. 

How to Calculate Carbon Emissions and Reduce Your Footprint 

The whole process of calculating carbon emissions can be broken down into the following stages. 

Step One: Determine the Sources of the Emissions

The main source of carbon emissions and climate change is the burning of fossil fuels in the production line. Here, you need to be thorough by including all the emission sources. For example, what is the average quantity of emissions released into circulation from your production machines and vehicles that transport products to the market?  Does your waste processing release greenhouse gasses? 

What about the electricity supplied to your company by third parties? If the services offered or used in your company also result in emissions, include it. Other activities and factors that might be contributing emissions include lighting, heating, computer use, cooling system for your products, and product development. Try to be as thorough as possible to note every type of gas contributing to your carbon footprint. Do you know the science based targets initiative?

Step Two: Gather Data on Greenhouse Gasses from the Identified Sources 

Identifying all the sources of GHG emissions is only the first step. Next, you need to gather data, ensuring to be as specific as possible. Let’s take the example of energy consumption as a source of carbon emission. You have to start by quantifying the amount of energy that your company used. So, start by gathering all energy-related bills, miles traveled by your company staff, and products moved along the way. 

Move a step further and workout weights of products and breakdown of specific materials. All this data should be organized well, noting the units of every quantity. 

Step Three: Calculate the Carbon Emissions 

Having collected the required data, it is time to get down to carbon emission calculations. Remember that different categories of data and countries might have specific methods of calculation. For example, companies in the UK are required to use the recommendations by the Department for Environment, Food, and Rural Affairs when calculating emissions for electricity, transport, and wastes. If your department, government, or jurisdiction is not specific, consider applying the formula below. 

E = A x EF x (1-ER/100) where: E = emissions, A = activity rate, EF = emission factor, and ER = overall emission reduction efficiency, %.

Does this sound complex? Many are those who find it pretty challenging. The best way to get it right with carbon emissions calculation is to work with a sustainability reporting expert. The professional should also have appropriate environmental management software to correctly make the calculations. 

Step Four: Identify Reduction Opportunities

Once you have calculated your carbon footprint, the next step is cutting it down, and you will need to identify opportunities for reduction. This is a balancing act because you have to try and pull emissions down while maintaining the company's performance on a positive trajectory. Try to make sure that the adopted strategies can also help the company to grow. This is why you should consider working with a consultant

Here are some useful tips for cutting down carbon emissions: 

  • Improve the energy efficiency in the company’s system, from the production line to offices. Try to be as specific as possible about numbers or reduction rates.
  • Shift from traditional forms of energy, such as fossil fuels, to new and greener initiatives. Solar energy is an excellent choice. If you cannot make the big shift right away, include some green sources and plan to scale down fossil fuels. 
  • Buying carbon credits in the emissions market. This method should be your option of last resort. Although it helps to ensure there is a balance and satisfaction, especially on the side of the entities that are reducing more carbon from the atmosphere, the cost can be pretty high. So, it will be a good idea to look for the best mechanisms of cutting down emissions. 
  • Invest in environmental projects, especially those that can help to off-take large quantities of carbon dioxide from the atmosphere. Greening projects near your company or even away can be an excellent choice.

Why You Should Work with a Good Reporting Framework 

As you learn how to calculate carbon emissions, the reporting process also needs to be correctly done. Most stakeholders are not just interested in the figure provided at the bottom of the page. That only marks the first step because stakeholders will want to see all the factors involved. They want to experience the entire process. This is why you need to identify and work with an appropriate framework. 

Reporting frameworks are developed as crucial reporting tools by respected organizations and can help to give the report credibility. Some stakeholders will quickly be persuaded that the information in the report is correct by seeing the logo of top-rated standards organizations. Some good options to consider include: 

This post is a demonstration of how to calculate carbon emissions correctly. Remember that apart from the calculated number or percentages most stakeholders further want to see the efforts adopted to push down the emissions. The best way to get it right with carbon emission calculation is to have a professional by your side and an appropriate environmental management app.

Experts at have been in the industry for years, helping companies to start their noble paths towards sustainability. You should not be left behind, and the complexities of calculating carbon emissions should not stand in your way. Let an expert hold your hand!

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