Calculate your company's carbon footprint: Your guide for 2024

Calculating your company's carbon footprint in 2024 is a necessary step towards measuring the total greenhouse gases (GHG) emitted directly and indirectly by your business operations, expressed as equivalent tons of carbon dioxide (CO₂e).

This comprehensive process includes the evaluation of all sources of GHG emissions across the company's value chain, categorised into direct emissions (Scope 1) from owned or controlled sources, indirect emissions from purchased energy (Scope 2), and other indirect emissions (Scope 3) such as the production and transportation of purchased materials and the use of sold products and services.

By accurately assessing these emissions through data on fuel consumption, electricity use, and resource utilisation and applying emission factors, companies can set realistic reduction targets, comply with environmental regulations, and implement sustainable practices. Understanding and managing the carbon footprint is crucial for combating climate change, improving operational efficiency, and enhancing the company's public image.

Why is it important to calculate your company's emissions?

Calculating a company's carbon footprint is compulsory for sustainability. It provides insights for informed decision-making, regulatory compliance, and effective decarbonisation strategies. As global awareness of environmental impacts grows, so does businesses' demand for transparency and accountability. This calculation forms the bedrock upon which companies can build their sustainability efforts, aligning them with broader environmental goals and stakeholder expectations.

Calculating a company’s carbon footprint will support in:

Benefit of CCF calculation	Detailed explanation
1. Setting and achieving emissions reduction targets	Calculating emissions is the first step in setting science-based targets for GHG reductions. It provides a baseline against which progress can be measured, ensuring that targets are achievable and aligned with global efforts to mitigate climate change. The Paris Agreement and related frameworks emphasise the need for robust, transparent, and harmonised emissions measurement to support practical target setting and strategy development.
2. Identifying emissions hotspots	This exercise helps companies identify the most significant sources of GHGs within their operations and supply chains, which is critical to enabling practical decarbonisation efforts.
3. Regulatory compliance	Governments worldwide enact stringent regulations to curb greenhouse gas emissions. Adhering to these mandates ensures legal compliance and positions a company as a responsible entity in the eyes of regulators and the public.
4. Corporate reputation and stakeholder trust	Key stakeholders like customers, investors, employees, and suppliers increasingly scrutinise companies’ commitments and actions to manage their environmental impact. Public disclosures, such as those through the Carbon Disclosure Project (CDP), are crucial for maintaining credibility and accountability.
5. Strategic planning	Understanding a company's emissions profile is essential for strategic planning towards sustainability. It enables businesses to identify high-impact areas, set science-based targets, and implement effective reduction strategies, thus securing their long-term viability in an increasingly low-carbon economy.
6. Financial risk management	Climate-related risks can significantly impact a company’s economic performance. By understanding their emissions profile, companies can assess their exposure to carbon-related risks and integrate this understanding into their risk management and strategic planning processes. For financial institutions, measuring financed emissions helps manage climate-related transition risks and opportunities, as they can identify carbon-intensive hotspots in their portfolios.
7. Operational efficiency and cost savings	Monitoring emissions can increase operational efficiency and cost savings. Companies can implement measures that reduce emissions and lower operational costs by identifying inefficiencies in energy use and other processes. Energy conservation and efficiency upgrades are common strategies for reducing Scope 2 emissions, which result from the consumption of purchased electricity, steam, heating, and cooling.

What KPIs are essential in emissions measurement?

Carbon accounting is a data-intensive field requiring precise key performance indicators (KPIs) to measure and manage emissions effectively. Here are the main KPIs crucial for the measurement stage:

KPI	Definition
Corporate Carbon Footprint (CCF)	This KPI involves determining all emissions across Scopes 1, 2, and 3 to provide a comprehensive overview of the company’s current emissions status.
Supply chain emissions	Measure the emissions associated with the supply chain and specific suppliers to understand the broader impact of business operations.
Emission hotspots	Identify key areas where emissions are concentrated. This helps prioritise decarbonisation efforts and make informed decisions about critical areas of improvement.
Intensity values	Break down total emissions into context-specific metrics, such as emissions per revenue unit or employee. This provides a clearer picture of efficiency and areas needing improvement.
Emissions by entity	Analyse emissions data by different entities within the company to pinpoint the most emissive parts of the business. This alignment helps strategise targeted emission reduction efforts.
Year-over-year trends	Track emissions over time to evaluate progress towards annual targets. This KPI offers critical insights that guide ongoing decarbonisation strategies and ensure alignment with long-term sustainability goals.

Companies can achieve a thorough and actionable understanding of their emissions profile by focusing on these KPIs.

The challenges in measuring companies’ emissions

Measuring a company’s carbon footprint is a complex task fraught with various challenges. Companies that anticipate and address these challenges will achieve better project speed and outcome accuracy.

Scope and boundaries

The three scopes of GHG emissions—Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (other indirect emissions)—present varying degrees of complexity. According to CDP, only 45% of companies report Scope 3 emissions, which are typically the most significant and challenging to quantify. The GHG Protocol emphasises that all relevant emissions sources within the chosen inventory boundary must be accounted for to compile a comprehensive and meaningful inventory.

Data availability and quality

Access to reliable and consistent data remains a significant hurdle for many companies. A Global Reporting Initiative (GRI) study found that 90% of organisations surveyed faced difficulties obtaining accurate and comprehensive emissions data. Additionally, 80% of respondents identified the need for standardised methodologies and tools as a barrier to practical carbon accounting.

Variability in reporting standards

Companies often use different emissions reporting standards, such as the Greenhouse Gas Protocol, ISO 14064, or CDP, leading to discrepancies and inconsistencies in the data. As of 2023, only 56% of the companies listed in the S&P 500 reported their emissions data using a recognised standard.

Supply chain emissions

Measuring emissions from complex and global supply chains presents another significant challenge. Estimates indicate that approximately 60% of global emissions originate within supply chains. However, obtaining accurate data from suppliers, especially those in developing countries, remains a significant obstacle.

By recognising and addressing these challenges, companies can improve the accuracy and efficiency of their emissions measurement efforts, paving the way for more effective carbon management and reduction strategies.

How do you calculate your company’s carbon footprint?

Accurately calculating your company’s carbon footprint is essential for effective sustainability management. This process involves gathering business activity data and applying scientifically derived emission factors. Below is a comprehensive guide to mastering this calculation, ensuring accuracy, and overcoming common challenges.

The principle of carbon accounting

The core principle of carbon accounting involves quantifying the emissions generated by your company’s operations. This is done by collecting data on various business activities and applying emission factors derived from scientific research. Emission factors convert the raw data into a measure of CO₂ equivalent (CO₂e) emissions, offering a numerical representation of your carbon footprint.

Formula to measure carbon emissions — How do you calculate your company’s carbon footprint?
Credit: Plan A

Collecting business activity data

Business activity data encompasses various operational metrics, such as:

The amount of electricity consumed in the office (measured in kWh)
The amount of petrol burned in company cars (measured in litres)
The distance travelled by train for business trips (measured in kilometres)

According to the Greenhouse Gas Protocol, data must be collected across all operational categories. The type and quality of data collected directly influence the accuracy of carbon footprint calculations.

Examples of business activity data include:

Electricity usage in kilowatt-hours (kWh)
Fuel consumption in company vehicles measured in litres
Business travel distances in kilometres

The Greenhouse Gas Protocol outlines the specific categories from which these data are gathered, ensuring comprehensive coverage of all operational activities.

Applying emission factors

Emission factors (EFs) are crucial for converting business activity data into CO₂e emissions. These constant numbers are derived from extensive research conducted by carbon accounting teams and sourced from various reliable databases. Key sources include governmental public databases (e.g., UBA for Germany, DBEIS for the UK, Ademe for France), statistical agencies, and data providers.

Critical aspects of emission factors include:

Definition and application: Emission factors are defined and applied to specific emission categories, including Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions). Each category has unique factors that must be meticulously applied to relevant business activities.
Data quality indicators: The quality of emission factors is influenced by several variables: geography, time, technology, completeness, and reliability. High-quality emission factors enhance the accuracy of carbon footprint calculations.
Matching business activity data (BA Data): Accurate carbon accounting requires matching business activity data with the correct emission factor. This involves ensuring the EF aligns with the specific unit of BA data, such as kgCO₂e/kWh, kgCO₂e/l, or kgCO₂e/km.
Correct allocation: Emission factors must be correctly allocated to their respective categories following the Greenhouse Gas Protocol framework. This ensures that emissions are calculated accurately and consistently.

Accurate emission factors are vital as they directly influence the precision of carbon footprint calculations. Various methods and sources exist to obtain these factors, and the approach can vary by country. For example, France’s Base Empreinte® provides open data access, simplifying the acquisition process. In contrast, other regions may require compiling data from multiple sources, including research papers and purchasable datasets.

Challenges in managing emission factors

Finding and updating: Identifying, updating, and compiling emission factors annually is time-consuming and resource-intensive. This process is necessary to maintain the accuracy and relevance of carbon accounting workflows but does not directly enhance a company's sustainability strategy.

Streamlining with dedicated tools

A carbon accounting software like Plan A can streamline the management of emission factors. Plan A’s platform offers a comprehensive, accurate, and up-to-date repository of emission factors. Our research team has consolidated hundreds of thousands of emission factors from dozens of countries worldwide, continuously updating them with the latest values to ensure the highest accuracy in carbon accounting.

By leveraging such advanced tools, companies can simplify and centralise their carbon accounting processes, ensuring reliability and precision in their sustainability reporting.

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Using conversion factors

In scenarios where companies lack primary data—data gathered directly from company operations—they often rely on National Averages (NA) estimations. These estimations are crucial for filling data gaps and ensuring that emissions are not underestimated.

Our carbon accounting team at Plan A specialises in modelling conversion factors (CF) to bridge these data gaps. Unlike simple emission factors, conversion factors involve more complex formulas and comprehensive input data. These inputs can include various organisational metrics such as full-time equivalents (FTEs), working days per week, and energy consumption per employee (e.g., kWh/month/employee).

Critical aspects of conversion factors include:

Filling data gaps: Conversion factors are essential when primary data is unavailable, ensuring a complete and accurate emissions calculation.
Complex formulas: The formulas used in conversion factors are more intricate, drawing from diverse organisational data points to provide accurate estimates.
Organisational metrics: Inputs can include FTEs, working days per week, kWh/month/employee, and other relevant operational data.

Companies must gather extensive and precise business activity data to calculate emissions across all operations accurately. This involves primary data and modelled conversion factors to supplement any missing information.

Collecting and matching extensive business activity data with the correct conversion factors requires significant resources and active involvement. This process is vital for producing the most accurate carbon footprint results. Software to manage your emissions, like Plan A, can streamline this process by simplifying and centralising data collection. Our platform makes the process collaborative, intuitive, and reliable, ensuring that all necessary data is accurately captured and utilised. By leveraging such advanced tools, companies can enhance the precision of their carbon accounting, ensuring that their sustainability strategies are based on robust and comprehensive data.

Which methodologies and standards should be used for calculating carbon footprints?

The Greenhouse Gas Protocol is the leading corporate GHG emissions accounting and reporting standard. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development, the GHG Protocol provides extensive guidance to meet various GHG accounting requirements:

The Corporate Accounting and Reporting Standard: This standard offers a step-by-step guide for companies to measure and report their GHG emissions. It covers all six greenhouse gases identified by the Kyoto Protocol, ensuring comprehensive coverage.
The Corporate Value Chain (Scope 3) Standard: This standard enables companies to account for GHG emissions throughout their entire value chain. Including indirect emissions from upstream and downstream activities promotes a more thorough understanding and management of environmental impacts.

Adhering to these standards ensures that businesses can perform carbon footprint calculations that are consistent, transparent, and comparable. This consistency helps track performance internally over time and allows for meaningful comparisons with other organisations externally.

What comes next after the company's carbon footprint calculation?

Convince your leadership to invest in decarbonisation: Leadership teams must understand decarbonisation's financial and reputation benefits. Encouraging investment in sustainable technologies and practices can lead to long-term cost savings and align with global shifts towards green policies. Leaders should view decarbonisation as a compliance exercise and a strategic advantage.

Set decarbonisation targets: Setting ambitious yet achievable decarbonisation targets is essential. These targets should be aligned with scientific consensus and best practices to ensure they contribute meaningfully to global efforts to mitigate climate change. Companies should also provide these targets as transparent and measurable to track progress accurately.

Communicate your net-zero goals: Your company's commitment to achieving net-zero emissions is vital for stakeholder engagement and transparency. This includes detailing the steps the company plans to take, the targets set, and the progress made. Effective communication helps build trust and pressure competitors to take similar actions.

Implement decarbonisation action plan: A robust decarbonisation action plan involves prioritising actions based on their potential impact, cost-effectiveness, and feasibility. This plan should include a mix of short-term wins and long-term investments to gradually reduce the carbon footprint, such as switching to renewable energy sources and improving energy efficiency across operations.

Continuous improvement of your emissions reduction strategy: Sustainability is a continuous journey that requires constant evaluation and adaptation of strategies. Regularly reviewing and refining your approach to emissions reduction ensures that the company remains on track to meet its targets, adapts to new technologies or regulations, and continuously improves its environmental impact.

Accurately calculating your company's carbon footprint is critical to sustainable business practices. Companies can set and achieve meaningful reduction targets by understanding and measuring emissions across Scopes 1, 2, and 3, complying with regulatory requirements, and enhancing their corporate reputation. Utilising precise KPIs and overcoming challenges related to data quality, reporting standards, and supply chain emissions ensures a comprehensive and reliable emissions measurement.

Implementing robust carbon accounting methodologies, such as those outlined by the GHG Protocol, and leveraging carbon accounting software like Plan A can streamline the process, making it more efficient and accurate. These practices support effective decarbonisation strategies and drive operational efficiency and cost savings.‍

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