Carbon Footprint: What is it and why is it Important?

What is a Carbon Footprint?

A carbon footprint measures the amount of carbon dioxide and other greenhouse gases (GHG) produced by an organisation or event. These gases contribute to climate change by trapping heat in the Earth's atmosphere. A carbon footprint is typically measured in units of carbon dioxide equivalent (CO2e), the most common greenhouse gas.

Carbon footprints result from organisations consuming energy in their operations, value chains and producing waste, all of which can result in GHG emissions. For example, an office building has a carbon footprint from using electricity for lighting, heating, and cooling. It generates waste in a landfill, producing methane (a potent greenhouse gas).

Reducing an organisation's carbon footprint can involve a variety of strategies, such as improving energy efficiency, switching to renewable energy sources, reducing waste, and making adjustments to their supply chain. These strategies can help an organisation save money, reduce its environmental impact, and improve its reputation among stakeholders.

As the effects of climate change have come into focus in recent years, there has been increasing pressure on organisations to reduce their carbon footprints and address climate change. Investors, customers, and employees are increasingly looking for companies that are taking action to reduce their greenhouse gas emissions. In addition, regulators worldwide are creating rules requiring organisations to report an accurate carbon footprint. Many organisations find that it is in their best interest to accurately measure and reduce their carbon footprint to ensure compliance, avoid climate risks, and improve their standing as progressive organisations.

Types of Carbon Footprints

The sum of a carbon footprint comes from multiple emissions sources and activities within an organisation. However, all of these activities can be broken down into two main categories:

• Direct emissions: Also known as primary footprints, or scope 1 under the GHG Protocol, direct emissions occur from sources controlled or owned by an organisation. For example, the direct emissions associated with fuel combustion in an organisation's boilers, furnaces, or vehicles.
• Indirect emissions: Also known as secondary footprints, indirect footprints are further divided into scopes 2 and 3 under the GHG Protocol:
  • Scope 2 carbon footprints result from purchased electricity, steam, heat, or cooling.
  • Scope 3 emissions typically make up the vast majority of most organisations' carbon footprints and include all sources not already included in an organisation's scope 1 and scope 2 boundaries. They result from activities from assets neither owned nor controlled by the reporting organisation, including upstream and downstream activities in a company's value chain. Scope 3 includes all of the emissions related to a product's use and disposal stage, the mining of raw materials to make a product, employee commuting, and much more.

Carbon Footprint Categories

There is no standardised list of carbon footprint categories, and the specific categories used can vary depending on the organisation. However, common categories in an organisation's carbon footprint include the following:

• Transportation: emissions from vehicles, airplanes, and other forms of transportation
• Energy: emissions from direct and indirect use of electricity, heating, and cooling in facilities
• Industrial Processes: emissions from manufacturing, construction, and other industrial activities
• Agriculture: emissions from the production of food and other agricultural products
• Waste: emissions from the disposal of waste in landfills and incinerators
• Land Use: emissions from the conversion of forests, wetlands, and other natural habitats to agricultural or urban uses
• Products: emissions associated with the production, use, and disposal of products
• Services: emissions associated with the provision of services, such as tourism and entertainment

These categories are not exhaustive, and other carbon footprint categories may be used depending on the specific circumstances and goals of the analysis.

Carbon Footprint Examples

Every organisation has different activities which produce emissions. Understanding the common activities in a business and sector gives companies a better idea of what to measure and where their emissions hot spots may be. Here are some examples of where organisations in certain sectors find the majority of their carbon footprint:

• A logistics company may have a large carbon footprint from the fuel consumption of its trucks, buses, and other fleet vehicles and the emissions from the goods they purchase and sell.
• A manufacturing company may have a significant carbon footprint from the energy used in its production processes and purchased electricity, as well as from the emissions associated with extracting and transporting raw materials and producing its products.
• A bank may have a significant carbon footprint from the energy used for lighting, heating, and cooling, as well as from its employees' commuting and business travel emissions. Still, the vast majority of a bank's carbon footprint will come from its financed emissions related to its loans, investments, and other financial services.
• A retail company may have a significant carbon footprint from the procurement of the products and services they sell, the transportation of goods to its stores, and the disposal of waste generated by its operations and sold products.
• A healthcare company may have a significant carbon footprint from the energy used in its buildings and from the emissions associated with medical waste disposal.

An organisation's specific carbon footprint will depend on various factors, such as the size and scope of its operations, the types of products and services it provides, and the specific technologies and practices it uses.

How Can an organisation Calculate Their Carbon Footprint

There are several methods organisations can use to calculate their carbon footprint. The first step an organisation must take on a carbon footprinting journey is to understand its operational and organisational boundaries, enabling them to identify the activities they need to focus on measuring. Once a company knows the extent of what they want to measure, it can use one of the following methods to measure the activities within those boundaries:

• Inventory-based methods: These methods involve identifying and quantifying the sources and sinks of greenhouse gas emissions within an organisation's boundaries. This can be done by conducting a thorough inventory of all relevant activities, such as energy use, transportation, waste generation, and industrial processes.
• Operational control methods: These methods focus on the direct emissions under the organisation's control, such as emissions from company-owned vehicles and buildings. These methods can calculate the direct emissions part of an organisation's carbon footprint by accounting for all the emissions it controls directly.
• Economic input-output methods: These methods use economic data and input-output analysis to estimate the carbon emissions associated with an organisation's activities. This approach considers the emissions associated with an organisation's direct and indirect activities, including the emissions associated with the production of goods and services that the organisation purchases.

Activities, such as miles traveled, amount of fuel used, or economic data, are multiplied by an emissions factor to estimate the carbon emissions associated with specific activities or products in Carbon Dioxide equivalent. Emission factors represent the average emissions associated with a given activity or product and can be used to estimate an organisation's carbon footprint based on its specific activities and operations.

By using tools such as Persefoni's Climate Management and Accounting Platform, companies can simplify this process by focusing their efforts on collecting activity data and allowing software to automate the calculation process and sourcing of third-party data, such as the 25,000+ emission factors housed in the platform. The flexibility of Persefoni's emission factors to work with varying levels of data granularity allows companies to create effective strategies to start reducing their carbon footprint.

Steps to Reduce an organisation's Carbon Footprint

Measuring carbon footprints is just the start. Arguably the most important part is reducing them. As companies set ambitious goals, such as net zero and carbon neutral, it will be essential for them to start using footprint data to identify focus areas. Within a decarbonisation strategy, there are many steps that a company can take to reduce its carbon footprint. Some examples include:

• Implementing energy-efficient technologies and practices: This can include upgrading to energy-efficient lighting and HVAC systems, using renewable energy sources, and implementing best practices for energy conservation.
• Reducing transportation emissions: This can include implementing telecommuting and flexible work arrangements to reduce the need for employee commuting, reducing business travel by airline, optimizing transportation routes and schedules, and purchasing fuel-efficient or electric vehicles.
• Reducing waste: This can include implementing recycling and composting programs, reducing packaging and other materials, and maximizing the use of reusable and recyclable products.
• Supply Chain Decarbonization Strategy: Includes changing procurement practices, swapping out raw materials for recycled or low carbon-intensity materials, and purchasing products with lower footprints.
• Offsetting emissions: This can include purchasing carbon offsets and investments in projects that reduce greenhouse gas emissions, such as renewable energy or forestry projects.
• Engaging stakeholders: This can include communicating with employees, customers, and other suppliers about the company's efforts to reduce its carbon footprint and seeking their input, support, and feedback on further reducing emissions.

These are just a few examples of how companies can reduce their emissions. Companies must develop a comprehensive strategy for reducing emissions and regularly review and update this strategy to continually improve their environmental performance.

Calculate Your Corporate Carbon Footprint with Persefoni

Most large companies now have an estimate of their carbon footprint. Whether they have calculated it through a rudimentary calculation based on their economic input and output or if they have calculated it based on the most accurate activity data available, the whole process can be simplified by using carbon accounting software. Making the carbon footprint calculation process less onerous frees up more time and resources for companies to create effective strategies for reduction. Schedule a demo to see how Persefoni can simplify the process of providing your organisation with an accurate carbon footprint.