Environment & Sustainability

How to calculate the carbon footprint of a company

Established methods for determining corporate carbon footprints in accordance with the GHG Protocol and ISO 14064

6 minutes07/28/2022

By Sandra Gottschall (ConPlusUltra)

Entrepreneurial responsibility is currently undergoing a challenging process of transformation. This ranges from the EU taxonomy – part of the European Green Deal – to the upcoming revisions to sustainability reporting (set out in the EU CSRD) and legislation on due diligence in relation to supply chains. One thing is certain: companies have a key role to play in driving forward the sustainable transition in the society as a whole. They must become increasingly transparent to their stakeholders by scrutinizing themselves and their supply chains in accordance with the ESG criteria. Some of the relevant methods, standards and criteria for such reporting are still being developed, while further challenges such as the war in Ukraine, supply bottlenecks, and skyrocketing energy prices force the companies to make ad hoc strategic realignments.

Yet, despite the wide-ranging challenges in relation to entrepreneurial responsibility, there is one topic that connects these various issues: the climate crisis. When it comes to evaluating the highest risk – and greatest responsibility – of our time, methods to assess and optimize greenhouse gas emissions have made such strides forward in recent years that we now have detailed and valid calculation methods as well as internationally applicable databases at our disposal. This means that in this large-scale transformation process, there is one stable parameter that the companies can build on: their carbon footprint.

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Calculating a company’s carbon footprint

A corporate carbon footprint is calculated on the basis of measured or estimated consumption data (natural gas, oil, biomass, electricity, fuel, paper, materials, etc.) and emissions factors known as CO2 equivalents. These consist of CO2 (the most widely emitted greenhouse gas by volume) as well methane and nitrous oxide, which are converted into CO2 equivalents. Calculating a corporate carbon footprint is not just a one-time task. Instead, this data is updated every year with the goal of progressively reducing emissions through emission abatement measures, with constant monitoring of actual emissions. The entire process of calculating a carbon footprint is a cycle of continuous improvement, making it an optimal tool for long-term management of operational climate protection measures.

A corporate carbon footprint is composed of all direct and indirect emissions generated by the entire organization. It therefore requires comprehensive recording and analysis of the company’s emissions within clearly defined system boundaries. The analysis calculates emissions using available data such as consumption figures (e.g. annual electricity consumption, annual fleet mileage) and allocates them to organizational units (e.g. headquarters, production sites, external service providers), processes, products and services. The foundation for carbon footprint calculations is the international ISO 14064 standard, while the three scopes of the GHG Protocol are used to make distinctions between different emissions sources:

The 3 scopes in the GHG Protocol

  • Scope 1 emissions (direct):

    These are emissions that occur from sources within the examined system boundaries. This includes emissions associated with the company’s consumption of energy (e.g. gas) or vehicle fuels (diesel), as well as emissions generated by buildings and plant.

  • Scope 2 emissions (indirect, upstream):

    These are emissions that occur in the generation of energy purchased by the company, usually in the form of electricity or heating from energy service providers (e.g. district heating).

  • Scope 3 emissions (indirect, upstream and downstream):

    These are all gray emissions that are caused by the company’s activities but are not within the company’s control, such as production materials, consumable materials, packaging, waste disposal, logistics and employee commuting. These emissions occur in both, the upstream and downstream of the company.

There are various methods of converting consumption data into CO2 equivalents. The main principle is that companies should make improvements every year in terms of data quality and result validity, and should also focus on the main details. The following table outlines some of the options:

Company data x Emission factor

Example

Measurable data x Primary data

Units of product x Emission value per unit

Measurable data x Physical/technical factors

Truck transport volume (tkm) x Emission value per tkm

Monetary data x Monetary-based factors

Machinery value (€) x Emission value per unit of value

Master data (proxy) x Industrial average value

Office space (m²) x Emission value per m² of space

In addition to correctly applying the standards mentioned previously, it is particularly important to observe the basic principles set down in the GHG protocol – namely relevance, completeness, consistency, transparency and accuracy – which follow the principles of financial reporting.

Carbon footprints at the touch of a button

Since 2021, all necessary indicators for the carbon footprint at the Dussmann Group can be input online. It enables the QHSE team to monitor in real time, and intervene swiftly during the reporting process if any abnormalities or problems arise. Learn more about the background of this success story.

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The big picture: Carbon footprints and professional climate protection management

In the future, carbon footprints will be subject to stringent audits. With this in mind, a key long-term target must be to develop a sound, unobjectionable data collection and calculation method. Companies should therefore establish a professional approach to climate protection management in order to meet these future requirements.

The general approach to footprint-based corporate climate protection management can be divided into the following steps:

The 5 steps of carbon footprint-based climate protection management

  • Calculate the carbon footprint (Scopes 1 & 2); conduct a materiality analysis (Scope 3)

  • Identify hotspots and potential ways to reduce emissions

  • Plan and implement specific reduction measures

  • Develop a long-term climate strategy for Scopes 1, 2 & 3

  • Conduct regular monitoring through an annual carbon footprint review

Your voyage of discovery with the carbon footprint

Experts agree that, in addition to conventional financial indicators, CO2 emissions will soon become the key environmental indicator for climate protection, for banks, auditors, investors, customers and, last but by no means least, regulators and legislators. The good news is that methods to calculate this indicator exist and have been widely tried and tested.

Carbon footprints highlight emissions hotspots and potential optimizations – and take companies on a voyage of discovery to explore their own activities, their suppliers’ operations and their customers. This process does not create data graveyards and instead generates useful information for product developers as well as procurement, production, marketing and sales specialists. Eco-friendliness and sustainability are the key standards of the future and will generate massive competitive advantages.

Sandra Gottschall Expertin für die Berechnung des CO2-Fußabdrucks
About the author

Sandra Gottschall is a Climate Neutrality Project Manager at ConPlusUltra. She holds a degree in Sustainable Energy and Bioresource Management and has over 10 years’ professional experience in corporate consultancy in the fields of climate protection management, sustainability reporting, carbon footprints and climate communications.

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