For a growing number of sectors, it is now a business imperative to understand and report on the environmental impact of business operations — especially in terms of carbon emissions.
Navigating the complexities of carbon emission reporting can be challenging. This post will break down the key concepts and methodologies for carbon footprint measurement, so you can effectively manage and reduce your emissions.
Understanding Carbon Footprint Measurement
A carbon footprint refers to the total amount of greenhouse gases (GHGs) emitted directly or indirectly by an organization, individual or product, typically expressed in carbon dioxide equivalents (CO2e). For businesses, this measurement calculates the environmental impact of their operations and helps them identify key areas where emissions can be reduced.
Defining Carbon Emissions Measurements in Business
While this post will focus primarily on GHG inventories, the terminology around measuring carbon emissions in business can be confusing. It's important to understand the difference between the general concept of a business carbon footprint, product carbon footprint, and the more structured approach of a GHG inventory.
Business Carbon Footprint
A carbon footprint is a broad calculation encompassing all emissions attributed to an organization. Carbon footprints can serve as a high-level indicator of environmental impact.
Product Carbon Footprint
A related but distinct concept is the product carbon footprint, which refers to the total emissions associated with a specific product throughout its lifecycle, from raw material extraction through to end-of-life disposal or recycling.
This differs from a business’s overall carbon footprint because it focuses on the environmental impact of a single product rather than the organization as a whole. The timeframe and scale of product carbon footprints can vary, such as calculating emissions over the product’s lifespan or isolating a portion of the business’s overall emissions that are tied to that product.
GHG Inventory
A GHG inventory is a detailed, methodical process used by businesses to systematically measure their emissions, usually following a recognized standard like the Greenhouse Gas Protocol.
This inventory focuses on quantifying emissions within defined operational boundaries, covering different sources such as fuel combustion, electricity use, and supply chain activities.
With this level of oversight, businesses can create targeted strategies for emission reductions, meet compliance standards, and set voluntary sustainability goals.
Take a closer look: A Decarbonization Journey with Neiman Marcus Group
Breaking Down the Key Components of a GHG Inventory
GHG inventories divide emissions into three primary scopes, each representing a distinct aspect of a business's carbon emissions. These scopes help businesses systematically organize their data and identify key sources of emissions.
Scope 1: Direct Emissions
Scope 1 refers to direct emissions that come from sources owned or controlled by the business. These are emissions that occur directly from activities within the company’s operations, such as:
- Fuel combustion in company-owned vehicles or equipment
- On-site manufacturing processes that release GHGs
- Stationary combustion from boilers or furnaces
Since these emissions are fully within the control of the business, they often present the most straightforward opportunities for reduction. Upgrading equipment, switching to cleaner fuels, or enhancing operational efficiency can significantly lower Scope 1 emissions.
Scope 2: Indirect Emissions from Purchased Energy
Scope 2 emissions account for the indirect emissions associated with the generation of purchased energy — typically electricity, steam, heating, or cooling that is produced off-site but consumed by the business. Although these emissions occur outside of the company’s direct operations, they are attributed to the business because they result from its energy consumption.
Energy efficiency measures, such as upgrading lighting systems, optimizing HVAC usage, and sourcing renewable energy, are common strategies businesses can implement to reduce their Scope 2 emissions. Switching to renewable energy providers or investing in on-site renewable energy generation can further reduce the carbon footprint associated with purchased energy.
Scope 3: Emissions Across the Value Chain
Scope 3 covers all other indirect emissions that occur throughout the company’s value chain, both upstream and downstream. This includes a wide range of activities that the business does not directly control but are critical to its operations, such as:
- Emissions from suppliers producing raw materials or components
- Transportation and distribution of goods
- Employee commuting and business travel
- The use and disposal of sold products by customers
Scope 3 emissions often represent the largest portion of a business’s overall carbon footprint, but they are also the most challenging to measure and reduce. Companies must engage with suppliers, logistics partners, and customers to identify areas where emissions can be minimized, such as through sustainable sourcing, product design improvements, or encouraging lower-impact behaviors among consumers.
Take a closer look: Navigating Greenhouse Gas Reporting: Best Practices for First-Timers
Methods and Tools for Carbon Footprint Measurement
When businesses undertake the process of measuring their carbon footprint or conducting a GHG inventory, they rely on well-established methodologies and tools. Below are the key methodologies and tools commonly used in this process.
Quantification Methods
The Greenhouse Gas (GHG) Protocol
The Greenhouse Gas Protocol is one of the most widely recognized frameworks for measuring and managing GHG emissions. It sets global standards for creating GHG inventories and is used by businesses and governments alike. The GHG Protocol provides detailed guidance on how to categorize emissions into Scopes 1, 2, and 3, ensuring that all major sources of emissions are accounted for.
The GHG Protocol Corporate Standard is particularly valuable for businesses because it helps standardize their reporting processes, making it easier to compare emissions year over year and against industry peers.
Life Cycle Assessment (LCA)
While the GHG Protocol is focused on organizational emissions, life cycle assessment (LCA) is a methodology used to measure the environmental impact of individual products.
LCA examines the emissions associated with a product throughout its entire lifecycle, from raw material extraction through production, distribution, use, and disposal. This makes LCA particularly useful for businesses seeking to understand and reduce the carbon footprint of their products.
LCA can also play a role in Scope 3 assessments, especially when evaluating emissions from the supply chain or customer use.
Publicly Available Emission Factor Sources
To calculate the carbon emissions from different activities, businesses need access to reliable emission factors — values that quantify the amount of GHGs emitted per unit of activity (e.g., per kilowatt-hour of electricity used, or per gallon of fuel burned). There are several publicly available databases that provide these emission factors, allowing businesses to calculate accurate GHG inventories.
Key sources include:
- EPA’s Emission Factors Hub: A comprehensive resource providing emission factors for a range of sectors, including power generation, transportation, and manufacturing.
- International Energy Agency (IEA) Data: The IEA offers emission factors specific to energy-related emissions, which are widely used in Scope 2 calculations for energy consumption.
- IPCC Guidelines for National Greenhouse Gas Inventories: While designed for countries, the IPCC guidelines are also used by businesses to calculate emissions in line with global standards.
Using these sources ensures that companies can apply standardized emission factors, improving the reliability and comparability of their carbon footprint assessments.
Measurement Tools and Technology
Measuring a business’s carbon footprint or conducting a GHG inventory can be made more efficient by using specialized technologies and software to streamline data collection, calculation, and reporting processes.
Carbon Accounting Software
Dedicated carbon accounting software platforms allow businesses to track and manage their GHG emissions across all scopes (1, 2, and 3). These tools integrate data from various sources, such as energy consumption, fuel usage, and supply chain activities, and automatically apply the appropriate emission factors to calculate the total carbon footprint.
Enterprise Resource Planning (ERP) Systems with Sustainability Modules
Many companies leverage their existing ERP systems by adding sustainability modules that track carbon emissions alongside financial and operational data. Leading ERP providers like SAP and Oracle offer add-ons or modules that allow businesses to integrate GHG tracking directly into their operational workflows.
Internet of Things (IoT) Devices
As part of the data collection process, IoT devices play an increasingly important role in capturing real-time data related to energy usage, resource consumption, and operational efficiency. For example, IoT sensors can monitor energy use in manufacturing facilities, track vehicle fuel consumption, or measure the efficiency of HVAC systems.
Sustainability Dashboards and Analytics Tools
In addition to accounting software, businesses often use sustainability dashboards and analytics platforms to visualize their carbon footprint data and track progress over time. These tools aggregate emissions data from multiple sources, presenting it in an easy-to-understand format that allows sustainability teams to identify trends and set reduction targets.
Importance of Accuracy and Verification
Accurate measurement of a business's carbon footprint is crucial for effectively managing and reducing emissions. Precise data enables organizations to pinpoint major sources of emissions, develop targeted reduction strategies, and track progress over time.
Inaccurate or incomplete measurements can lead to misinformed decisions, regulatory non-compliance, and missed opportunities for carbon reductions.
The Verification Process
Verification (or audit) ensures the credibility and reliability of carbon footprint data. By undergoing third-party verification, businesses can validate the accuracy of their GHG inventory, identify any data gaps or inconsistencies, and ensure compliance with industry standards and regulatory requirements.
Verification is also critical for maintaining stakeholder trust, as it demonstrates transparency and commitment to sustainability goals.
Inventory Calculation Process
Conducting a greenhouse gas (GHG) inventory involves a systematic process that ensures all relevant emissions are accurately measured and reported. Each step in the process builds on the last, helping businesses develop a comprehensive understanding of their carbon footprint.
Below is a breakdown of the key steps involved in performing a GHG inventory.
1. Define Inventory Boundary
The first step in the inventory process is to define the inventory boundary, which establishes the limits of what will be measured. Businesses must decide which facilities, subsidiaries, and activities are included, ensuring that the selected boundary aligns with reporting standards like the GHG Protocol. Clearly defining the boundary helps avoid double counting or under reporting emissions.
2. Organize Emission Sources into Appropriate Scopes and Categories
Once the boundary is set, emission sources must be organized into the appropriate scopes, as outlined above. This step categorizes emissions based on their origin and ensures that each source is accounted for. Proper categorization is crucial for consistent reporting and for aligning with recognized sustainability frameworks.
3. Collect Data
Data collection is the foundation of any GHG inventory. Businesses need to gather accurate information from a variety of sources, including energy consumption records, transportation logs, waste management data, and supply chain activity. Data can come from internal systems, utility bills, vendor reports, and IoT devices, among other sources. The more detailed and comprehensive the data, the more accurate the inventory will be.
4. Identify Emission Factors
With the data collected, the next step is to apply emission factors to quantify the actual GHG emissions. Emission factors translate activity data (such as fuel consumption or electricity use) into emissions expressed in carbon dioxide equivalents (CO2e).
5. Verify the Accuracy and Completeness of the Data and Calculations
Once the data is collected and emission factors are applied, the next step is to verify the accuracy and completeness of the calculations. This includes reviewing data sources for consistency, checking for any assumptions made during the process, and identifying any gaps in data.
6. Calculate the GHG Emissions for Each Emission Source
After data and emission factors have been confirmed for accuracy, the actual calculation of GHG emissions can take place. For each emission source identified, the appropriate data is multiplied by the corresponding emission factor to determine the total emissions for that source. This process is repeated for each source across all three scopes, and the totals are aggregated to provide a comprehensive view of the business’s carbon footprint. Businesses can also opt for third-party verification at this time to further ensure that their GHG inventory meets industry standards and is credible for external reporting.
7. Prepare a Report Detailing the Methodology and Results of the GHG Inventory
The final step in the inventory process is to prepare a comprehensive report that details the methodology and emission factors used and any assumptions or data limitations. This report provides transparency for stakeholders, outlining the business’s emissions profile and how the inventory was conducted. It is also an essential tool for internal teams working on emissions reduction strategies.
8. Consider Disclosure of Calculated Emissions Totals in Sustainability Reports
Once the inventory is complete, many businesses choose to disclose their calculated emissions in sustainability reports. This transparency allows for year-over-year performance tracking, benchmarking against industry standards, and demonstrating progress toward carbon reduction goals. Public disclosure of emissions totals also helps build trust with customers, investors, and other stakeholders by showing a commitment to sustainability and corporate responsibility.
Take a closer look: Ready, Set, Go: Creating a Climate Action Plan to Reach Your Science-Based Targets
Need help simplifying your carbon footprint calculation? Discover how Antea Group can assist you with comprehensive climate change and carbon management solutions. Learn more about our Climate Change Advisory services.