The climate crisis is here. And it's not too late to do something about it. To do that, we have to cut carbon emissions in half by 2030 globally and reach net zero by 2050.
The best way to get involved as a business? Understand how much your business emits, and start to reduce it. There’s a strong business case for it too.
Cutting carbon can help you:
Stand out from the competition,
improve profit margins,
boost brand awareness,
enhance employee satisfaction,
earn new investments, and
get ahead of upcoming policies.
If you’re not sure why you should measure your footprint, or you want to learn more about how you can take advantage of these benefits, read our previous article and learn why calculating your companies carbon footprint can’t wait until tomorrow.
But if you’re here, you’re probably already convinced.
Once you’ve decided it’s time to measure your carbon footprint, now what?
Before You Footprint: What You Need to Know
There are a few things you need to know before you dive into calculating your carbon footprint.
First things first:
Business Footprint vs Product Footprint
You need to decide what kind of footprint you’re going to do. Are you going to look at your entire operations or just your products?
Each style of footprint gives you a different set of information to act on. The footprint of your business operations is what most people have in mind, and that’s what we’ll cover below.
This footprint gives you a sense of the amount of carbon dioxide and other greenhouse gases your business emits on an annual basis. While this is a great place to start and an important step that every business should take, it doesn’t tell you about environmental impacts beyond emissions.
However, when you look at your product impact, you can see the non-emissions impacts your business has too. This includes various environmental stressors like water pollution, ecosystem degradation from mining or deforestation, labor impacts, landfill lifetimes, toxin transfers, and others.
Ultimately, your company’s climate goals will determine which footprint you need to calculate.
Here, we’ll focus on the operations footprint.
Understanding Emissions Units
Before we get much farther, you should also understand the units used to talk about carbon footprints.
You may be familiar with carbon dioxide as the main cause of concern for global warming, but there are other greenhouse gases we need to worry about: methane and nitrous oxide, just to name two.
Of course, reporting each one separately could get confusing quick and make it harder to act.
“Do I go after methane first? Or nitrous oxide? Or carbon dioxide? What’s even the difference? How do I know what to do for which? Ah! Panic!”
That’s why we keep things simple and calculate your footprint in terms of carbon dioxide equivalent (CO2e).
This way everything is captured in one, easy-to-understand number, so you don’t have to worry about getting drowned in the details.
It’s not perfect though. One metric ton of methane can count as either 25 tons of carbon dioxide or 84 tons depending on the timescale. Still, it’s easier than counting each one separately.
Once you understand the units, it’s time to think about scope.
The scope of your carbon footprint
Based on the Greenhouse Gas (GHG) Protocol, an international standard for carbon footprints, there are three scopes, or kinds of emissions, to consider:
Scope 2, and
Who would’ve guessed.
Of course, when we look beyond the boring names, we see that they don’t really tell us much about what each scope actually means.
Here’s a quick overview:
What’s in Scope 1?
Scope 1 includes all the direct emissions from your business. This focuses on the emissions from any equipment operated by your company like your HVAC, on-site generators, etc. If your company owns and operates a fleet or even just a vehicle, the mileage from that is counted here too.
What’s in Scope 2?
Scope 2 includes the emissions from the electricity that powers your business. Each electrical grid is powered differently. Some regions/cities use a lot of renewable energy. Others rely heavily on fossil fuels. This affect the indirect emission of anyone using electricity, which is all of us!
What’s in Scope 3?
Scope 3 includes all the other indirect emissions associated with your business from all the things you try not to think too much about. This includes office equipment purchased, outsourced manufacturing, shipping of goods for sale, product use, business travel, and employee commuting. In short, this is your supply chain emissions.
Given everything it includes, Scope 3 can be the hardest to calculate and the largest source of your emissions. Typically, this can be between 60-95% of an organization's total emissions.
What you need to keep in mind
What scopes you calculate is up to you, but what you choose will have a big impact on your ability to reduce emissions.
Most businesses we work with only want to calculate Scope 1 and 2 because it’s the easiest. We can’t blame them. Scope 3 can be intimidating. But when you leave it out, you might end up overlooking the majority of your emissions.
For an example of how emissions breakdown by scope for a business, check out this graphic from the Maple Leaf Foods corporate sustainability report.
As you can see, if you were to eliminate all your scope 1 and 2 emissions, if you never touch scope 3, your business could still be responsible for tens of tons of emissions every year. If you do that and claim to be carbon neutral, that could open you up to claims of greenwashing and make your customers distrust you.
Still, the choice is yours.
How to Calculate Your Company’s Carbon Footprint
There are three main steps to calculating your company’s carbon footprint:
Collect the relevant data,
Gather “emissions factors,” and
Calculate your footprint.
We’ll look at each one.
Step 1) Collect the relevant data
The first step is to gather the data you need to give your consultant or feed into a calculator. The exact data you need depends on the scopes you decided to pursue.
For scope 1, this includes:
Natural gas utility bills,
The amount of fuel purchased for company-owned vehicles, including forklifts
Types of vehicles owned by company
You should be able to get your utility bills and fuel bills from your controller or accountant.
Scope 2 is pretty simple to gather. You’ll just need to collect the bills and invoices from your electrical utility company and get them all in one place.
Collecting scope 3 data can be the most challenging. The specific, third-party data you’ll need to collect will depend on your relationship with them and the work they perform for you.
The simple part of scope 3 comes from business travel and employee commuting. You should already have all receipts and documents you need to calculate travel-related emissions. Commuting is a little trickier.
You can either make estimates about how far away your employees live – for instance, you could say that everyone lives within 20 miles of the office – or, to be more precise, you could send out a survey to your employees asking them the length of their commute. Of course, the challenge with this is the same with any employee survey: getting everyone to fill it out!
There’s also the consideration of the upstream emissions associated with the use of any products sold by your company. It takes effort, but if you don’t consider it, you’re missing a lot.
Gathering all of this data might sound daunting, but if you hire W2R or another consultant, we’ll help you determine what you need to collect, where you can find it, and how you can get it all organized.
If you have a medium-sized business with around 50 employees, it won’t take any more than 8 total hours to pull it all together.
Step 2) Gather the emissions factors
Once you’ve gathered the data, the next step is finding the factors that will help you convert all of this into the CO2e metrics that we’re looking for.
If you work with W2R, we’ll take care of this step for you.
But if you want to calculate your footprint yourself, here’s where you can find what you need depending on where you’re based:
If you’re in the US, you can get these emissions factors from the EPA Emission Factors Hub.
If you’re in the UK, you can find the same information from DEFRA.
If you’re located somewhere else, you’ll have to do some digging or just use either the EPA or DEFRA factors.
Step 3) Calculate your footprint
Now, it’s time to get down to actually calculating your carbon footprint. There are three different approaches you can take to calculating your carbon footprint.
Your first option is to do it yourself. If you go the DIY route, you’ll need to compile a custom spreadsheet where you’ll plug in everything you pulled together in steps 1 and 2. Ideally, you’ll separate them out by scope, so you can get a clear view of each set of emissions.
The DIY route makes sense if you’re just trying to get ballpark figures and don’t care too much about accuracy.
A slightly more accurate option is to use a third-party calculator.
If you’re in the US, you can use this calculator from the University of California Berkeley.
There’s also the 2030 Calculator for businesses that make and sell physical products.
Another option is the calculator from Climate Impact which pairs directly with their offsetting program. A word of caution: avoid investing in offsets until you come up with a carbon reduction plan, but we’ll talk about this a bit more below
No matter the case, if you use a third-party calculator, you won’t have insight into their methods, and the results won’t be tailored to the specifics of your business. If you’re okay with that, choose one of the above and dive in.
The third option, if you want a robust calculation customized to your business is to hire a consultant. With their specialized knowledge and experience, a carbon footprint consultant can take all the information you collected and get a footprint figure that’s as accurate as the data allows. They can also help you turn the information into action by helping you set goals and create a carbon reduction plan.
Interpreting Your Results
Once your footprint’s calculated, it’s time to understand what it all means and what you can do with it.
One of the first challenges is assessing the accuracy of your footprint. If you go the DIY route or use a third-party calculator, it can be hard to know how accurate your calculations are, but as long as you gathered all the data inputs correctly, you’ll have a good estimate.
No matter what, the Scope 3 emissions will be your largest source of uncertainty, so you’ll want to do what you can to nail those down. This is essential, so you can easily identify the largest sources of emissions and eliminate them early. Once you have those emissions identified and nailed down, you want to set long-term goals, make a reduction plan, and track success.
At a minimum, you should aim to cut your emissions in half by 2030 and eliminate them entirely by 2050. These goals will put you in line with the Paris Agreement and the Science-based Targets Initiative.
You also need to know how you’ll monitor progress. You could monitor absolute annual emissions or establish an “emissions intensity target,” a fancy way of saying the CO2e per dollar of revenue. How you assess your progress is up to you.
Part of this also includes the frequency of footprint calculations, as we will discuss below. Are you going to do this quarterly, semi-annually, or annually? The choice is yours. You just need to determine what makes the most sense for your circumstances.
We wouldn’t recommend that you track your footprint more than quarterly. If you monitor monthly or weekly, you might not notice any changes week over week, which can make it hard to keep trying.
How Often to Do Your Footprint
Scope decided; the next question is how often to calculate your footprint? The answer depends on the capacity and resources you’ve got.
If you’re a small business and you plan on calculating your footprint yourself with an online calculator or a spreadsheet you put together, you could consider running the numbers every quarter. This will let you keep a close eye on your progress and know when and where you need to adjust.
On the other hand, if you hire a consultant like W2R Solutions and you have a limited budget, it might be best to only conduct a carbon footprint calculation once a year. With a consultant, you’ll get a more accurate assessment. The drawback is that you won’t be able to adjust throughout the year if you’re off target.
The more often you calculate your footprint, the easier it is to stay on target.
When a plane flies from one city to another, it’s off course most of the journey, but the pilot makes constant tiny corrections that lets them land exactly where they want to.
That’s the same approach you should take. You don’t want to wait until you’re supposed to be at your destination to check your heading. You want to keep an eye on things along the way.
So, how can you set your baseline, establish goals, and monitor progress when it comes to carbon?
Is Now the Time to Purchase Offsets?
Our clients ask about carbon offsets all the time. Sometimes, they’ll ask about offsets before we’ve even finished calculating their carbon footprint.
If you’re already wondering if it’s a good idea to purchase offsets right now, at the start of your journey, we have the answer.
Yeah, carbon offsets are all the rage. But if the first thing you do is buy enough offsets to reach “net zero” as soon as you have an emissions estimate, you’ve defeated the whole point.
Carbon offsets are a long-term strategy. Yes, we need to draw down carbon from the atmosphere, but offsets should be a last resort for a business.
You should understand upfront what your emissions are, how you can reduce them, and what you can’t easily eliminate.
You need a plan to get rid of all the emissions you reasonably can. Only when you’ve found the emissions you can’t cut should you even begin to consider purchasing offsets. Otherwise, you’re just greenwashing. And no one wants that.
Making a Carbon Reduction Plan
So, you’ve got your carbon footprint, and you understand what it’s telling you. Now, how can you make that carbon reduction plan?
Check back in two weeks for our next article on the subject, or subscribe to our newsletter to get the article delivered right to your inbox.