Carbon footprint is shifting from being a niche topic to being a crucial component of non-financial reporting by organizations. In 2003, only a handful of companies reported their greenhouse gasses (GHG) emissions to the Carbon Disclosure Project (CDP).
This figure shot to over 8,400 in 2019. During this period, CDP established itself as an influential option for sustainability ratings, helping companies, states, municipalities to correctly report their sustainability impact on the environment.
As the pressure from governments, investors, and international standards organizations intensifies, the need for businesses to be more transparent in their sustainability reporting is growing. This transparency is pushing the companies to become more accurate about their carbon dioxide, GHG emissions, and entire carbon footprint. Several methods and standards have been developed to help companies with carbon footprint calculations. This article explores the most common:
Top Three Methods and Standards for Carbon Footprint Calculations
Carbon footprint is the entire amount of greenhouse gasses that a company generates. The method you select to calculate carbon footprint should factor in your enterprise's processes, from the production line to the transport of finished products. So, here are the main methods that you can use to accurately determine the average carbon footprint:
Ghg Protocol Corporate Standard
GHG Protocol Corporate Standard, shortening for Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, is among the oldest standards for company’s sustainability reporting. It was developed in the 1990s when the World Business Council for Sustainable Development (WBCSD) and World Resource Institute (WRI) agreed there was an urgent need to create a standard for reporting GHG emissions and craft good strategies to reduce thm. Do you know how to calculate carbon emissions?
In 2001, GHG Protocol Corporate Standard was published, and it became the most widely accepted model to calculate GHG emissions as well as carbon reporting. About 16 years later, 92% of Fortune 500 firms that were reporting to CDP used the protocol.
The protocol provides clear structures for corporate carbon footprint calculations for all the sources, from energy related gas emissions to vehicles’ exhaust pollutants. One of the things that make GHG protocol stand out from other standards is that it allows for the definition of scopes for different emissions. So, where exactly are your company’s emissions coming from? Is it car exhausts, fuel use, or waste processing? Do you know the GHG protocol?
Check out the main scopes below:
- Scope 1: This scope represents emissions that are released directly by your company. Most of these emissions come from fossil fuels, such as fuel consumption in the production line or food processing every year.
- Scope 2: This scope targets indirect emissions that are generated by other companies affiliated with your organization. For example, what emissions are generated by the power-producing firm to supply your firm with electricity?
- Scope 3: This scope extends far beyond the emissions that are reported in Scope 1 and Scope 2. The scope includes data on all indirect emissions from other entities associated with your firm, especially in the supply chain.
We must indicate that GHG Protocol Corporate Standard emphasizes reporting requirements for both scope 1 and 2. Although the standard recommends that Scope 3 emissions data be included, it is not a major step. All about the climate reporting here.
GHG Protocol Scope 3 Standard
As we have highlighted, the GHG Protocol Corporate Standard does not put a lot of focus on Scope 3 emissions. After it became apparent that Scope 3 emissions were significant, GHG Protocol Corporate Standard moved to close the gap. They developed the GHG Protocol Scope 3 Standard and published it in 2011. How to be carbon neutral?
This standard comprises 15 categories that a company needs to report. It also defines the minimum criteria for all the 15 categories that every company using the standard has to report. The bottom line is that every company must report on all the categories, and transparent justifications must be provided where it is impossible to do so.
GHG Protocol Scope 3 Standard has become very helpful for companies getting started in their sustainability efforts because they come with easy-to-follow instructions and a list of the best practices.
ISO 14064
ISO 14064-1 is an international standard developed to help corporations report their greenhouse gasses emissions. It outlines the main requirements and principles at the company level for both quantification and removal of emissions. Working with ISO 14064-1 does not just help with carbon footprint calculation, but also makes it possible for companies to look beyond GHG emissions. Well, the focus is to counter global warming, but what lies beyond there?
By imagining the risks and opportunities, your company will be able to prepare better and achieve higher levels of sustainability. The Hong Kong Stocks Exchange (HKEX) borrowed from this standard when defining the sustainability reporting requirements for listed companies. This focus into the future is very attractive for the investors targeting steady company growth.
Benefits of Reducing Your Company’s Carbon Footprint
The primary goal for cutting down your carbon footprint is helping to keep the planet clean and healthy. However, your company will get a lot more benefits, including the following:
- Saving money: When you identify areas of your business that are taking a lot of energy and make crucial changes, it is an excellent way to keep down the cost of operations.
- Meet client demands: More customers want to get information on the levels of greenhouse gasses emissions and the strategies installed by companies to address them. If your efforts are impressive, the reporting consistent and accurate, the customers will want to be associated with your company.
- To meet regulations: Many governments are adopting strategies targeted at achieving carbon-neutral economies. For example, it will be difficult to buy diesel and petro cars in the UK by 2030. Therefore, efforts to keep the carbon footprint, such as a shift to electric cars, can help you stay ahead of the expected changes.
- Better access to capital: Investors are extra careful and want to only direct their resources to responsible companies. Calculating your carbon footprint and setting out strategies to cut the rates down will convince investors to work with you.
The Importance of a Reporting Software for Carbon Footprint Calculation
The methods and standards for carbon footprint calculation listed above are some of the best on the market, and you can count on them for accurate results. However, we must indicate that following the calculation process manually can be a monumental task. This is caused by a large number of parameters and complex analyses that are required.
To get it right, you will need to have appropriate sustainability reporting software. Company executives find the applications very useful because, in addition to tracking data for GHG emissions calculations, they also help with the entire process of ESG sustainability reporting.
So, you can innovatively combine the two by including carbon footprint reduction as part of the company’s sustainability efforts.
A good sustainability management program can also be your shield from the serious danger of greenwashing. It can help you to track data during the reporting phase to make information in the sustainability report accurate and verifiable. The software will also help you to work with the right units, from kilograms (KG) to pounds (lbs), but give the answer in tons. Indeed, you can even generate mini-reports to check the progress of the strategies adopted for enhancing sustainability.
When it comes to addressing global warming and its associated challenges to the globe, every company must correctly determine its carbon footprint. This post highlighted the top three standards and methods that you can use for carbon footprint calculation. We must indicate that it can get pretty complex, and it is prudent to have all the tools and computer programs.
You should consider working with a professional and the best sustainability management software for the best results. Visit Diginex.com to learn more about carbon footprint calculation, sustainability reporting, and strategy formulation for long-term business success.
