In the 21st century, climate change and global warming have become critical challenges that are forcing businesses to change their operational strategy towards a more sustainable approach. A vital part of this shift is carbon footprint management, a strategy that measures and reduces the greenhouse gases that businesses emit.
The current climate crisis, characterised by rising sea levels, extreme weather events and ecosystem disruption, is largely caused by these emissions. Carbon footprint management is, therefore, not just an activity that leads to environmental mitigation; it is a crucial business strategy. Businesses that monitor and reduce their carbon emissions can contribute to the global fight against climate change while improving operational efficiency, saving costs and enhancing their reputation.
This article aims to highlight the importance of carbon footprint management in the face of global warming and to provide businesses with a practical approach to this complex but rewarding task.
Why should companies implement carbon footprint management as a part of their ESG strategy?
The main reason is the CSRD legislation, which already requires the largest companies with over 250 employees or a turnover of over €40 million to report their footprint. There will also be a knock-on effect on smaller companies that are their suppliers and will be expected to supply data on their footprint.
Carbon footprint analysis and reduction are also closely linked to mitigation and adaptation measures that help companies reduce risks from global warming. Mitigation involves reducing greenhouse gas emissions to prevent further climate change. Adaptation focuses on adapting corporate strategies and activities to cope with the impacts of climate change and reduce the damage caused.
By combining these two strategies, businesses can effectively manage their carbon footprint and cope with the challenges that climate change poses to their organisation. Carbon footprint management will also help companies to streamline purchasing and procurement, increase efficiency-related financial savings and improve corporate reputation in the eyes of stakeholders.
How to start measuring your carbon footprint?
One of the main pillars of carbon footprint management is carbon footprint measurement. In general, it is "the complete set of greenhouse gases (GHG) emitted directly and indirectly by individuals, events, organisations or products, expressed as carbon dioxide equivalent (CO2e)" [source]. This equivalent includes the 7 main GHGs and helps form a unified measurement metric.
Measuring the carbon footprint has several steps:
1 Setting the organisation's goals
Setting the objectives for footprint measurement and management involves assessing risks and opportunities and analysing legislation that requires footprint reporting in some cases.
2 Setting the methodology
The two primary methodologies are ISO 14064-1 and the GHG Protocol. Select only one and follow that - each has specific categories of counting items and sub-rules that determine what is counted and how. In practice, however, the overall footprint sum is the same for both approaches. Another recognised methodology is PAS 2060, which is also essential for carbon neutrality and is the only one that sets precise rules for achieving it.
Consider also the general rules for carbon footprint reporting, which are based on the relevance of the items counted, their completeness, consistency, transparency and accuracy. These steps are particularly important for auditing. Assign roles within the organisation - responsibility for data collection, strategy, calculation, validation, control, analysis, etc.
3 Set carbon footprint boundaries directly linked to the company
There are three possible approaches: inventory-based, operational-based, and economic input-output. Work with a consultant who can advise you on the route.
4 Setting scopes
Here we mainly talk about the "Scopes" defined by the GHG Protocol.
- Scope 1 is the company's direct emissions and sinks (e.g., carbon storage) (in simple terms, everything that happens under your roof outside of energy).
- Scope 2 is mainly purchased energy, gas and heat.
- Scope 3 is the company's indirect emissions - from your purchases and suppliers to your customers' products.
Although many companies only report Scope 1 and 2 for now, new CSRD legislation will also require Scope 3 reporting from 2024; including all three emission scopes is essential for effective carbon footprint management.
5 Data sources and collection
Data collection needs to be set up as soon as possible. Most companies do not collect data and therefore, data collection is not possible immediately. Data collection can take several years to be accurate, due to the preparation of supplier questionnaires, data collection from suppliers, new measurement approaches, etc. In fact, a large amount of data is needed in the data collection that is generally not readily available. A good data collection setup is essential for success and saves the most time.
6 Footprint calculation
For this step, it is important to work with an expert. Different items have different emission factors for calculating the carbon footprint. There are tens of thousands of emission factors, and selecting them is difficult. However, for essential items such as energy-related emissions, many sources of emission factors exist and can serve as a starting point.
The ideal approach to carbon footprint management
- Get your carbon footprint management strategy and data collection right
- Don't be afraid to set ambitious targets. It's always better to set a higher target and not meet all of it than to set too easy targets that don't motivate companies to innovate.
- Count everything. A company's carbon footprint is made up of thousands of items. Start with the largest, most numerous, regular or most significant items and gradually expand the list.
- Ensure that your goal is genuinely company-wide, does not come from an individual initiative, and that the company's management, including the top management, is primarily involved in carbon footprint management.
- Minimise carbon offsets and focus on sustainable emissions reduction and reduction.
Beware of greenwashing
Companies often tend to set unrealistic targets such as "carbon neutral in 5 years" or "net zero by 2030" to communicate them through marketing and PR. But to communicate without greenwashing you need to have precise, internally aligned targets backed by credible data. With the advent of the new EU greenwashing directive, companies must communicate their carbon reduction targets and highlight their calculations transparently.
For example, claims of carbon neutrality are unacceptable if only part of the operations or products are neutral. Unless companies have precise data, set strategy and an independent audit, they should not communicate carbon neutrality or zero emissions. If a company labels a product as carbon neutral, it should be calculated according to PAS 2060, building on neutrality.
A new business strategy for sustainability and resilience
It is increasingly apparent how critical carbon footprint management is to sustainable and resilient business operations in the 21st century. The stakes are high - it is no longer just about profitability and economic survival of businesses, but about the survival of our planet. Managing and reducing your carbon footprint is not just an ethical obligation; it is a fundamental business strategy that supports operational efficiency, cost savings and reputation management.
In the face of accelerating climate change, businesses must increase their efforts to measure, monitor and reduce carbon emissions. This is a call to action for every organisation. A passive approach is not the answer. Regulatory requirements are tightening, stakeholder expectations are rising and the risks associated with inaction are increasing.
Remember, it's not about getting everything perfect the first time. Sustainability is a journey that requires continuous learning, adaptation and improvement. Start with what you can measure, then gradually expand your scope as your capacity grows. Most importantly, aim for real, tangible emissions reductions, not carbon offsets.
(Image by frimufilms on Freepik)