How to calculate your business' carbon footprint

Four steps to calculate and reduce your carbon footprint

Here at Impacti, we recommend tackling your carbon footprint calculation in four steps. We've developed the guide below based on the experience of our founders - since way back in the early days of 2008 - advising +500 offices in +140 countries to manage their carbon footprint and achieve climate neutral goals. This simple guide is designed to help you calculate a carbon footprint aligned with leading GHG accounting methodologies.

1. Define your boundaries

The first question to ask is "What's the scope of my carbon footprint?". To answer this, think about the business activities that generate GHG emissions. Do you power your offices with electricity? Do you use fuel in company cars? Do you travel to conduct business? How do your employees commute to work?

Here it's useful to think about these "emission sources" as Scope 1, 2 and 3 emissions, groupings set out in the GHG Protocol. Most companies get started by measuring all Scope 1 and 2 emissions and the most significant Scope 3 emission sources.

• Scope 1: These "direct" emissions are released by fuels you burn and energy you generate on-site to power or heat your facilities (e.g. for electricity, lighting, heating, air conditioning, vehicles, machinery etc.)
• Scope 2: These "indirect" emissions come from energy that you purchase from the grid or other external energy provider. This differs from Scope 1 because the energy is generated by somebody else and delivered to your company premises for use.
• Scope 3: These are all other "indirect" emissions that are generated across your value chain - both upstream and downstream. “Upstream” emissions result from the materials, energy and services you purchase, people you hire and assets you lease. “Downstream” emissions relate to the distribution, use and disposal of goods and services you sell and investments you make.

Some examples of Scope 3 emissions include business travel, employee commute, emissions from the products you sell as well as the materials you source. It’s important to include Scope 3 emissions as they typically cause most of a company’s carbon footprint (often more than 80%!). Even when these activities are outside of your direct control, you can influence them by adjusting your own operations. It's a challenge to measure all Scope 3 emissions especially when you're first starting. You can first focus on getting quality data to calculate your most significant emission sources and expand the scope of your carbon footprint with time.

Sounds complex? Just start small, with your main Scope 1 and Scope 2 emissions and sources that you control. And then expand from there over time.

2. Collect your data

Once you've decided what activities to measure, it's time to gather the data. When you first start, you may discover that you don’t have the best data at hand to make accurate calculations of all your GHG emissions. The GHG Protocol sets out three levels of data quality:

• Measured: This refers to actual consumption data on the amount of fuel or energy used in your offices, vehicles, equipment, products and services. This data results in the most accurate calculations, if available.
• Estimated: Many companies only have access to expense data (e.g. the amount of money spent on fuel). This can still be useful because there are ways to turn this data into estimates of consumption.
• Proxy: Sometimes you just don't have access to the data, such as when you rent office space and others control the billing. In these situations, you can look for data from similar facilities to come up with a proxy estimate.

The ultimate goal is to get actual measured data for all your emission sources to get the most accurate carbon footprint calculation. But don’t worry, no business has accurate data for all their emission sources. Many methods exist for you to make reasonable estimates for now and then put in place measures to get better data for future carbon footprints.

3. Analyse your results and set goals

Next, it's time to plug in the numbers and see the emission results. Here's where you can turn to GHG accounting methodologies like the GHG Protocol and ISO 14064-1. You'll also need to find out the emission factors that apply to your specific business operations. Once you've pulled all that together, the magic happens - your data turns into useful business intelligence and insights that can help you climate-proof your business in smart ways. What can you learn from your data?

• Your carbon hotspots: The activities that generate the most GHG emissions.
• Your emission reductions: The impact you achieved through your greening efforts.

Many companies at this stage decide to set climate targets. Doing so can show that your business is committed to making real change. Such targets can take many forms:

• Overall goals - to reduce emissions, be climate neutral or achieve net zero.
• Emission-specific goals - such as reducing emissions from electricity use in offices or staff commuting.
• Action goals - such as switching to green electricity or electric vehicles.

Make sure to choose a baseline year - the year 0 - from which you'll measure improvements. With all this set up, you're now ready to design initiatives to green your operations in strategic ways that contribute to your climate goals and tackle your carbon hotspots.

4. Report and take action

Finally, you're ready to get recognized for your climate actions. At this point, you can purchase certified carbon offsets to offset your carbon footprint. Remember however that offsetting should be used to compensate for unavoidable carbon emissions - the priority is to take actions that reduce emissions.

Companies are sharing their carbon footprint results in many ways - on their websites, staff newsletters, annual reports and marketing materials. You may be able to attract new investors or secure contracts from buyers who reward climate champions. And you can join the growing number of business partnerships like the SME Climate Hub or quality for certifications like the Climate Neutral certification to stand out in the market.

It's important to use a reputable carbon accounting methodology and be consistent in the way you calculate your carbon footprint every year so that you can make comparable and trustworthy claims on your achievement. That's why it's essential to use a carbon footprint solution with an up-to-date methodology and allows storage of multiple years of carbon data.

Get in touch

Here at Impacti, we've developed a SaaS technology solution designed especially for small and medium businesses to make climate action simple. Sign up now to get instant access or book a demo with our CARBON experts to learn more.